- Posted by metre22
- On September 1, 2016
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- company organization, company organization by function, Metre22 Blog
Over the years, we have seen dozens of functional organization designs succeed and a few that have not worked as well as intended. By a functional design, we mean one which is primarily based on functions such as Marketing, Sales, Product Engineering, Finance, etc. We contrast this with a business unit design, which is primarily structured based on a grouping of products and services or a geography. It would take a larger discussion to address a fully matrixed organization design (a hybrid of functional and business unit designs), so in this post, we’ll address success in a functional design.
While there are many individual behaviors that contribute to an effective functional organization, four are particularly important:
- Willingness to serve internal customers with the same commitment with which we serve our external customers
- Willingness to hold one another – and ourselves – accountable for the commitments we make to each other
- Ability to collaborate and work effectively in cross-functional teams
- Ability to lead or follow, depending on the work to be done
Willingness to Serve Internal Customers
Employees and leaders within a company are often customer-focused. This is a terrific foundation on which to build. However, in a functional organization, doing anything to meet the needs of our external customers requires that we also meet the needs of our co-workers in other functional areas.
Functional designs create specialized collections of organizational capabilities. As such, no single organization “owns” all of the resources required to achieve key objectives. For example, if we want to create a new product for the market, we must involve many different functional units, spread across the organization, often under different senior leaders.
If we do not think of the people in other functional areas as internal customers, we will most likely fail to meet their needs consistently, and, ultimately, fail to meet the needs of our end-customers in the marketplace. A functional design will work effectively only if we serve our internal customers with the same commitment with which we serve our external customers.
Willingness to Hold One Another – And Ourselves – Accountable
Once we make a commitment to an internal customer, we must be accountable for meeting that commitment; and we must hold others accountable for the commitments they make to us.
If none of us honors the commitments we make to each other—and there are no organizational consequences for not doing so—then no meaningful work will be completed on time, on budget or in accordance with requirements. Over time, this will result in a failure to meet the commitments we have made to our valued external customers.
In addition, failure in meeting our commitments erodes the trust among functional areas. When this happens, each functional area tries to replicate the required capabilities in their own organizations, which undermines the organizational design and results in increased cost, duplication of effort, decreased consistency, and, ultimately, inconsistent customer service experiences.
If we want to meet our commitments to our customers and clients and demonstrate high performance, then we must ensure that we have an effective, well-functioning organization—one that holds everyone accountable for the commitments they make to each other.
Ability to Work Effectively in Cross-Functional Teams
In a functional organization, accomplishing meaningful work comes through combining resources from various functions into temporary, project-focused cross-functional teams. Some have called these “purpose-driven” teams. Thus, a functional design will only be effective if everyone can work effectively in cross-functional teams.
At an individual level, there are two key challenges when working in a cross-functional team: managing temporary relationships with people with whom you may be unfamiliar, and balancing priorities across multiple teams.
Cross-functional teams are most often born based on the pursuit of specific organizational goals and then formally disbanded after the goal achievement. For instance, creating a cross-functional team to develop a go-to-market plan for a new product offering. Such teams are often comprised of people who have not worked with one another in the past.
This lack of familiarity can hamper the effectiveness and productivity of the team if team members are unwilling to trust one another at the outset, or unwilling to honor their commitments because they know the specific relationships are temporary (see previous key behaviors). High-performing cross-functional teams are built on trust, so grant each team member your trust at the outset and build on it by clearly defining roles, team leadership, and the team’s objectives. Meeting the commitments you make to one another as the project advances will further strengthen the trust among team members.
One of the ways that team members fail to honor their commitments is by mismanaging priorities across multiple teams. Most team members will also be members of other cross-functional teams. Thus, each team member must effectively manage and prioritize their work across multiple projects.
There is an endless supply of advice on how to manage multiple priorities, so find what works best for you and stick to it, so that you will not be overwhelmed by your participation on multiple teams, and you will able to manage priorities effectively, enabling you to consistently meet the commitments you make to your team members.
Ability to Lead or Follow
One additional challenge faced by all members of a cross-functional team is rotating leadership. In a typical business unit structure there is one usually one ultimate leader. In a cross-functional team, leadership may need to rotate based on the specific task at hand.
For example, on a cross-functional team tasked with developing a prototype of a prospective new product, someone from Market Research or Product Management may lead the early specification of requirements. Then, someone from User Experience Design may take the lead on defining the look and feel of the product. Next, someone from Product Development may take the lead on building the prototype. Finally, someone from Marketing or Relationship Management may lead the execution of the testing of the prototype with selected customers. Depending on the way the functional organization was designed, it is likely that all of these functions do not report to a single executive.
As the project progresses, each member of the cross-functional team must move nimbly from leader to follower, as required. High-performance teams are focused on achieving the goal, not on who is in charge. Demonstrate this quality yourself, and hold your team members accountable for doing likewise.
If everyone is able to exhibit these four behaviors consistently, everyone will benefit and the functional organization design can help the combined company succeed.