Team leads, managers, entrepreneurs know cross-functional teams mean greater productivity and creativity.

In today’s workplaces, strictly-enforced departmental boundaries only restrict growth.

Because products, services, and tech solutions change rapidly from cutting-edge to old hat, you need an all-hands-on-deck approach to innovation.

What is a Cross-Functional Team?

In a world that’s quickly evolving, it’s important to set up nimble, cross-functional product teams that can iterate quickly on ideas.

– Shamim Mohammad, CarMax CIO

In an MIT Sloan interview, Mohammad explains how his company sets up Agile product teams. CarMax recognizes with three key roles:

A product manager with a broad range (typically, not IT) skills

An IT person with development/engineering expertise

A user-experience (UX) designer

Mohammad says his company’s executives define problems and provide key performance indicators for projects, but don’t tell teams how to find solutions.

With this freedom and instant cross-departmental feedback, teams develop ideas at a much faster pace.

They take smart risks, accept mistakes as part of the trial-and-error process, and work more creatively.

University research teams often define cross-functional teams by the uniqueness of their members.

Typically, product teams include colleagues from various departments like engineering/IT, purchasing/logistics, marketing, and manufacturing.

Another, results-based cross-functional definition involves the way diverse teams can create “meaningful uniqueness” and “new product innovativeness” to bring novel products to market.

So, what does cross-functional mean for team leaders and managers on the ground?

How can business owners and entrepreneurs adopt this business model?

How can you adjust it to meet your specific requirements?

As you read through this article, remember – cross-functional team leadership means understanding people on a deep level.

You’ll need to break up cliques, create groups of experts from various fields, and assign smart challenges to your cross-functional teams.

Become an observer of human nature and get to know the psychology and the expertise of each individual you oversee.

The 9 Benefits of Cross-Functional Collaboration

Teams go through many phases of development as they learn to work, innovate, and communicate effectively.

Get to know your teams and their members.

Look for the root causes of innovation (such as the features of cross-functional teams listed below) in your top-performing teams.

Support these elements in your weaker (and newer) teams to facilitate growth, productivity, and creativity.

1) A Sense of Challenge that Spurs Innovation

If you see an example of “clumping” (people with similar skills and personalities grouping together), shuffle the deck and assign them to different teams.

Don’t just do this out of the blue, however.

Let your new team members know you’ve put them in cross-functional teams to shake things up a bit. Tell them you expect growing pains, friction, and a substantial learning curve.

Frame this challenge as an opportunity for people to prove themselves in a new environment.

Let your employees know that each of them represents their department as the most knowledgeable person on their specific team.

Sure, they can share ideas with people in their field when needed, but they’ll spend much of their workdays with colleagues from outside their comfort zone.

When people have to work and think in new ways, it spurs innovation and creativity.

Sure, it will cause some confusion and frustration at the outset – but that’s the point. Bringing people together in new ways (over time) helps them grow past their perceived boundaries, make smart mistakes, and take better risks.

Consider cross-functional teams a calculated investment. You’ll see a dip in productivity at first, and a major surge as your various teams learn to work together.

By understanding the various types of teams and their motivations, you can fix/reshuffle these work groups in ways that improve (not further exacerbate) your situation.

2) A Trust that Fosters Creativity

Smart leaders build trust by extending it to others.

Encourage the project managers of your cross-functional teams to lead by example.

From meeting deadlines and upholding promises to demonstrating active listening skills, team leaders must set the bar for their team members.

In return, you can show trust in your team leaders/project managers by only criticizing them in private, backing them up with difficult colleagues, and encouraging them to experiment with crazy new ideas.

Let people see you giving your project leads (and members) permission to fail.

Listen respectfully to all ideas; a culture of acceptance and creativity begins at the top.

Get to know people at all levels of your organization in and out of the workplace.

By showing a genuine interest in your employee’s wellbeing, you can learn more about everyday workflows “in the trenches” and find out how things really get done by your company.

3) Create Structures that Lead to Success

In a recent Harvard Business Review article, a researcher pointed out that almost 3 in 4 of all cross-functional teams fail.

Some of these factors are common to all projects: staying on schedule and on budget, sticking to specifications, serving real customer needs, and staying aligned with the overarching corporate mission.

Much of the trouble with cross-functional teams arises from the issue they combat: departmental silos.

People tend to clump together with others that speak their lingo and think/interact the way they do.

Even more so than regular teams, cross-functional groups need strong leadership, clear expectations, appropriate resources, and measurable outcomes.

4) Pan-Organizational Communication

Still, why is collaboration important?

Why bother with cross-functional collaboration, if these teams are more-than-likely to fail?

Cross-functional communication is an art. When leaders get it right, they can realize massive surges in product appeal, revenues, and brand loyalty.

Just imagine how many experts from vastly different departments had to come together to create the iPhone. Recently, Apple employees have spoken with the press (often in colorful language) about the heady early days of the smartphone revolution.

Top talent began disappearing from departments across the organization (in complete secrecy) as the corporation began assembling one of the greatest cross-functional teams of all time.

Of course, you don’t have to operate in secrecy.

Smart executives facilitate the sharing of ideas between team members and between teams.

Unless you’re planning a stealthy development phase for a product that could redefine the world as we know it, you can benefit from transparency.

Encourage your team members to communicate more openly with team building exercises.

Schedule regular meetings for teams to interact, share their progress, and cross-pollinate ideas.

Companies benefit from cross-functional teams (even if they fail) by simply getting people from different departments in the same room.

Because cross-discipline work often involves unexpected innovation, don’t just expect product design improvements.

Your team might not create the next iPhone – but they might discover a systems improvement that dramatically cuts expenses in a wide range of departments.

For example, one of your cross-functional teams might find a quick and easy way to track their time and share workflow reports. Wouldn’t all your other teams benefit from this knowledge?

By facilitating cross-team collaboration, you can locate efficiencies in surprising areas of your organization.

Even after people complete projects and return to their departments, they will still have the perspective (and personal relationships) they gained by working in cross-functional teams.

Your organization will reap many rewards – both short-term/tangible and long-term/cultural.

5) Clarity and Courage in Cross-Functional Teams

Confusion is fine; it’s a healthy part of a learning process.

– Martin Echavarria, Coherence Managing Partner

In this Huffington Post interview, Echavarria encourages cross-functional teams (and all of us) to embrace confusion. Groupthink takes over when people agree with each other without understanding.

Give your team members the freedom to ask clarifying questions and own up to their confusion. Communication is a two-way street, after all.

Many people feel afraid to speak up in meetings, especially when they don’t understand something.

Savvy executives form cross-functional teams precisely because confusion leads to communication. By putting people together who don’t speak the same industry lingo, you force them to reframe their ideas in more general language.

They have to put aside differences and learn more about their colleagues’ ways of doing things.

By doing so, you bypass the normal way of doing things and foster creativity.

6) A Common Corporate Language

When your employees work together in cross-functional teams, they will likely find it difficult to communicate, at first.

However, they will eventually create new ways of talking and writing about their specialties in ways their peers can understand.

By embracing the confusion inherent in cross-functional teams, corporations can learn to talk to each other, leverage new technologies, and provide truly original customer solutions.

The managers of Bell Labs famously brought together scientists and engineers with diverse skill sets. These executives created a risk-free corporate culture that encouraged failure as a necessary part of growth.

This experiment in the social factors that lead to breakthroughs led to the invention of the vacuum tube, which revolutionized hundreds, if not thousands, of industries.

Imagine how productive your entire company would be if people across your various departments understood the basics of each other’s specialties.

Encourage your various teams to create a common corporate language and share it across departmental boundaries.

7) Speed

In the 1950s, Northwest Mutual Life (NML) created some of the earliest cross-functional teams to study the vast impacts computer technology would have on their business.

As a result, this company got a leg up on the competition that lasted for decades. By the 1980s, the ubiquity of computers in the workplace put a premium on people and processes that could keep up with these machines.

Because NML dedicated early resources to both cross-functional teams and business computing, their IT department dominated the industry.

Cross-functional teams, when managed properly, can dramatically decrease cycle times, spread knowledge of new technologies across organizations, and (of course) develop stunning new products and services.

In high-tech industries where change occurs at astounding rates, cross-functional teams can mean the difference between riding the cutting-edge and falling behind your competitors.

However, as the Internet of Things spreads like a tidal wave across the traditional business landscape, almost every company can benefit from creating cross-functional teams to leverage new technologies.

8) Freedom to Fail Forward and Win Big

Because cross-functional teams work together like superhero teams, each person gets to play the role of expert.

Sure, Maria from accounting might not get much of a chance to share the new ideas she picked up in college with her more-experienced departmental colleagues.

However, in an interdisciplinary team, she would know more about accounting than anyone else.

New, shy, and introverted employees may enjoy the freedom of leaving the departmental silo and speaking with a new authority.

When creating cross-functional teams, allow both the teams and their members a certain amount of self-management.

Teammates (certainly at first) may not understand the need for certain specialty work. Giving team members some daily self-assigned time can act as a pressure valve, of sorts.

For example, Phillipe from IT could use this period to update the web-development work he does on behalf of the work; meanwhile, Cristina (the project leader) could write up progress updates to her supervisors and receive ongoing leadership training.

Teams can manage themselves to some extent – especially special exercises for cross-functional teams.

Have team members determine if they have the skills/support they need to meet their goals.

If not, listen to their suggestions for adding people to the team with vital skills and removing redundant members.

However, pay close attention to clique-building and groupthink behaviors; if you suspect a group of friends of co-opting a team, break up these team members and insert people with different skills/personalities.

9) Ownership of Unique Projects

Finally, cross-functional teams will always work better when they know they’ll get appropriate credit for their work.

Sure, many companies occasionally have teams (or their representatives) meet to discuss higher-level strategy. These people may come up with great ideas in meetings, but they feel most connected to their specific departments.

However, when you designate cross-departmental work as a major priority, you need to reward these teams as teams.

A multi-function team doesn’t just come together to innovate; these people don’t simply return to their departments after strategy meetings.

They work closely together on real-world projects on a regular basis. Give them (both individually and as groups) the credit, praise, and tangible rewards they deserve for their work.

Let them see their projects through to completion and get the intrinsic and extrinsic motivations they need to do their best work.

Everyone needs to feel the satisfaction of putting their stamp on a valuable initiative and gaining recognition for their hard work.

Let cross-functional teams get the glory they deserve for facing the challenge of inter-departmental collaboration!