We have seen many times in the past that even under the pressure of delayed project people refuse to take short-cuts in their work. They are obsessed with the quality of their work. Still you get 13,4 million hits for “Quality Manager” in Google. Adapted from #nofearbook from Pekka Viljakainen: Next generation professionals require leadership that match their values in work: they are native social networkers expecting availability of all information, they are passionate about their profession and they have strong sense of responsibility. In addition to leadership we have to have a structure in our organization that fully utilizes these values. With inefficient structure we unfortunately still need people who “manage the quality” and manage plenty of other things as well.
Some organizational hierarchies, steering groups and operative manager roles become obsolete when an organization is structured in cross-functional teams instead of functional silos. There are other opinions also indicating that “coordination by managers” can exist also in cross-functional world (slide 146). They may exist. But are they needed? In fact we should be more interested whether we can utilize full potential of our passionate, native social networkers with strong sense of responsibility better with cross-functional teams than seating them in functional silo.
When comparing functional teams and cross-functional teams we have to take into account the size of the organization. In most of the companies the functional silos are not just functional teams but may consist of 1000 people and many teams. Similarly cross-functional project oriented structure often means that many teams are collaborating around one project. Please remember that when we use the term team, we mean a group of people: a team or a project or a department.
Disadvantages of Functional Teams
In this setup the organization is structured in silos that are based on functions eg from the V-Model. Teams are formed around specialization, waterfall phase or similar.
We have seen that steering of this kind of organization requires layers of operative managers and steering groups that filter the collected information and pass them up. Each layer has their own responsibility and authority to make decisions and optimize their function. At some point there is a layer that covers the whole value chain and has the ability to optimize the whole. The layering creates lots of waste in terms of delayed and inaccurate information, misinterpretations and sub-optimization.
Milestones and handovers are common in organization built on functional teams. Usually budgeting is based on the organizational structure. Therefore each function ensures with milestones and strict handovers that the other functions do not ruin their business. Problems are seldom solved with cooperation. In waterfall organization it is easy to blame others from your problems.
Hierarchical structure, milestones and handovers make the functional teams resistant to change. We have seen that some functions existed in the organization only because it was included into handover criterion. The function was killed only when it became a part of bigger entity and it was understood that it is obsolete. Parkinson’s Law also works here: Functional teams expand their duties to cover the time and the budget that is reserved for it.
Functional organization has tendency to form cross-functional teams whenever there are severe problems. These tiger teams have the authority to collaborate through organizational borders. They have a goal that is related to the whole value chain not only to a function. This is clear evidence that we acknowledge cross-functional organization being more efficient. But we still fall back to the silos when the storm is over. Cross-functional teams are actually institutionalized tiger teams.
It is interesting to notice that people with experience, knowledge and interest to the whole value chain and not only to a single function are often selected as operative managers. This may indicate that also informal leadership with strong focus on value stream can only emerge in organizational structures that are cross-functional. That is, structures where the teams’ focus, goals and context cover the essential part of the value stream and the interest is aligned with true stakeholders including customers.
Why Cross-Functional Teams
Hierarchy in Functional Organization is built to coordinate between the silos, optimize the function and avoid catastrophes. Operational excellence can be achieved only with seamless collaboration at all levels through the whole value stream without handovers. This means that the structures in the organization must be cross-functional. In Cross-Functional Organization the steering and management is ‘outsourced’ to everyone: Next gen professionals that are passionate, native social networkers with strong sense of responsibility. Excellent results expected!
Transformation to Hybrid Organization
Small organizations are good examples how excellent results can be achieved with cross-functional teams. Against common Agile misconception, this does not mean that the big ones should shrink their complete value stream into team of five Developers serving all stakeholders. Sometimes specialization of teams are needed for efficiency. And bigger cross-functional structures for scale. We need a Hybrid Organization that consist of both functional and cross-functional teams where the pulse, the budget and the goals are in cross-functional direction. In hybrid organization one single functional team cannot be late, short on resources or over/under the budget. It would be sign of unwanted spin-off in value stream.
Some people believe that the functional competence will disappear in cross-functional structures. I believe in passion to your profession. I believe that people who are good at something will find similar people and start the collaboration. We don’t need the DP1 to that.
At this point it is already quite clear that for the seamless collaboration around the value stream we need the complete value stream in all locations where work is done. Multi-site development requires complete value stream in all sites. Until hologram videoconferencing is invented.
So what is left then for the managers to manage? In cross-functional organization their job is to grow structures that adapt to the changing environment. Structures that support the self-steering hybrid organization to respond to changing needs of their all stakeholders. Easy? I didn’t say that.