Beyond crossfunctional
collaboration
St tt t November
Stuttgart,
N
b 2010
This study explores how companies can go beyond "classical",
task force-based cross-functional collaboration
OBJECTIVES
Assess the status of
"classical" crossfunctional collaboration
METHODOLOGY AND SAMPLE
• Exploratory approach based on semi-structured interviews
• Approx. 20 1-2 hour interviews with senior managers
• Broad spectrum of different industries, company sizes and
functions:
Explore approaches
how to successfully
"go beyond"
Derive
D
i recommendations
d ti
as basis for discussion
and development needs
Turnover [EUR bn p.a.]
p a ] Function
Industry
Engineered
products
Other
36%
<0.5
29%
29%
Source: Roland Berger study "Beyond cross-functional collaboration"
Consumer
goods
g
Other
Organization
36%
21% 14%
14% 21%
IT & telecommunication
>5
>0.5
>1
SCM
General
mgmt.
26%
29%
14%
21%
14%
Procurement
2
Key insights of the study
1
Functions still dominate today's corporate structures – However, increasing need to
integrate across functions
2
Companies rely on "classical"
classical , task force-based cross-functional collaboration to overcome
functional barriers – Its use is wide-spread
3
However, "classical" cross-functional collaboration is often not successful – Insufficient
incentives and fear to loose power as main reasons
4
Companies need to adapt their management system to go beyond "classical" crossfunctional collaboration – 3 elements are most important
A Implement alternative organizational models – Especially network structures
expected to gain importance
B Strengthen roles which facilitate collaboration – Especially staff to operatively drive
or additionally support a project/process/task will become more important
C Improve the skills of the employees to prepare them for less hierarchical/structured
environments
5
Many companies are prepared to implement major organizational changes – However,
systematic change management is required
6
Our view: Depending on the industry, network and process organizations will significantly
grow in importance; companies need to look for a solution tailored to their needs
Source: Roland Berger study "Beyond cross-functional collaboration"
3
1
Functions still dominate today's corporate structures – However,
increasing need to integrate across functions
"Functions dominate today's
p
structures"
corporate
Fully
agree
REQUIREMENTS
FOR THE FUTURE
54%
Growing global
integration
Increasing customer
requirements
31%
More complex
p
structures
and processes
8%
Exhausted "functional"
potentials
8%
Fully
disagree
Functional
specialization, silos
Cross-functional
integration
0%
Source: Roland Berger study "Beyond cross-functional collaboration"
4
1
BACKUP
"Today, our decision structures are mostly functional. That doesn't
fit with tomorrow's requirements."
Further interview quotes
DOMINANCE OF FUNCTIONS
REQUIREMENTS FOR THE FUTURE
"We have several organizational
dimensions But functions own the
dimensions.
resources/budgets."
"Global competitive pressure rises day
by day
day. An integrated view is required to
tap hidden potentials."
"Organizations exceeding a certain size
require specialized staff clustered by
functions/sub-functions. That's a given."
"We have mostly realized the potentials
on a functional level
level. Now our focus are
cross-functional improvement teams."
"Functions dominate more than they
should "
should.
"Global networks especially in
Engineering are currently installed to
meet tomorrow's customers demand."
"Our people are developed within their
respective function."
Source: Roland Berger study "Beyond cross-functional collaboration"
"As processes become more complex it's
i
important
t t that
th t people
l gett a broader
b d view."
i
"
5
2
Companies rely on "classical", task force-based cross-functional
collaboration to overcome functional barriers
"Classical cross-functional
collaboration is widespread"
Fully
agree
DEFINITION
58%
"Classical" cross-functional collaboration
33%
8%
• … involves staff from different functions
• … goes beyond
b
d th
the d
daily
il iinteraction
t
ti b
between
t
ffunctions
ti
• … implies cooperation to reach a common goal
0%
Fully
disagree
0%
• … is based on task forces,, i.e. comes on top
p of dailyy work
• … AND TAKES PLACE WITHIN THE EXISTING
ORGANIZATIONAL STRUCTURES
6
2
BACKUP
"A few years ago, we have introduced multi-functional teams
comprising procurement, engineering, quality and logistics."
Further interview quotes
"We have many cross-functional circles. We use them e.g. to identify cost
reduction potentials, optimize our products, prepare and implement large
outsourcing contracts and so on."
"We use cross-functional teams on two occasions:
1. To deliver large client projects
2 As value analysis teams to identify product
2.
product-related
related cost reduction potentials.
potentials "
"We use cross-functional collaboration mainly to deal with
special projects, e.g. the setup of a new production site."
Cross-functional
functional collaboration is claimed by many
many. Reality
Reality,
"Cross
however, often looks different."
Source: Roland Berger study "Beyond cross-functional collaboration"
7
3
"Classical", task force-based cross-functional collaboration is
often not successful – Several reasons are important
"Classical cross-functional
collaboration does not work
in many cases"
Fully
agree
g
MAIN REASONS
4.0
High
impor
importance
45%
3.0
2.9
36%
2.8
2.6
2.6
2.1
9%
1.0
Low
importance
0%
Fully
disagree
9%
Insufficient
incentives
Source: Roland Berger study "Beyond cross-functional collaboration"
Fear to
loose
power
Insufficient
"Silo
Insufficient Insufficient
g
g methods
resources thinking"
training
8
3
BACKUP
"The concept of cross-functional collaboration remains undisputed. Implementation, however, often falls short of expectations."
Further interview quotes
FAILURE OF "CLASSICAL"
CLASSICAL CROSSCROSS
FUNCTIONAL COLLABORATION
"A few years ago, we have introduced
multi functional teams comprising
multi-functional
procurement, engineering, quality and
logistics. Success is so so."
"We
We use cross
cross-functional
functional teams on
several occasions. Results are OK, but
can definitely be improved."
"In
In many cases there is limited
commitment to support cross-functional
projects unless the 'What's in it for me?'
is evident to everybody."
Source: Roland Berger study "Beyond cross-functional collaboration"
REASONS
"Main reasons for insufficient cross-functional collaboration are a lack of capacity
and other priorities in daily business."
"Defining cross-functional processes
alone is not enough
enough. Our employees
often do not have sufficient understanding of interlinkages to make crossfunctional collaboration a success."
"Silo thinking is also a problem of the
generation."
"One main hurdle is to 'force' people out
off their
th i daily
d il work
k and
d gett th
them iinvolved
l d
in the cross-functional team."
9
4
Companies need to adapt their mgmt. system to go beyond "classical" cross-functional collaboration – 3 elements are most important
Key elements of the "management system"
STRATEGY
Objectives
Performance
…gives clear guidance and defines measureable
performance improvement targets
Incentives
A
Primary
organization
…ensures
ensures a closed loop of objectives
objectives, incentives
and measureable performance (controlling/KPIs)
STRUCTURE & PROCESSES
Secondary
organization
Processes
B Roles & responsibilities
Company standards
C HR Management
Values/culture
…focus the available resources on the defined
objectives
…define and organize collaboration based on
hierarchical structures and the sequence of work
ENABLERS
…steer corporate behavior in addition to the
formal organization (structure & processes)
…emphasize
emphasize "soft facts"
Most important to successfully go beyond "classical cross-functional collaboration
Source: Roland Berger study "Beyond cross-functional collaboration"
10
4
A
Companies need to implement alternative organizational models –
Especially network structures expected to gain importance
Primary organization: Importance of alternative models
3.4
3.5
3.3
2.8
4.0
4
0
High
importance
2.2
2.1
1.0
Low
importance
Project
organization
Importance today
Network
organization
Process
organization
Importance tomorrow
Source: Roland Berger study "Beyond cross-functional collaboration"
COMMENTS
Project organization
• Organizational setup to cope with complex, singular challenges, e.g. matrix project organization
• Goes beyond "classical", task force-based
collaboration by integrating various areas within
projects on a regular institutionalized basis
Network organization
• Consisting of independent organizational
elements driven by common goals
• Goes beyond "classical", task force-based crossfunctional collaboration by strong common goals/
incentives and coordination principles
Process organization
• Organization along (end-to-end) business
processes, e.g. order-to-delivery
• Goes beyond "classical"
classical , task force
force-based
based cross
crossfunctional collaboration by eliminating functional
borders along the process
11
4
A
EXAMPLE PROJECT ORGANIZATION
Project organizations typically combine the traditional line
organization with an institutionalized project management
Matrix project organization of an aerospace & defense company
COMMENTS
LINE ORGANIZATION
Function
1
Module
1
Function
3
Function
n
End
d-to-end
resp
ponsibility
Project
management
g
team
Function
2
• Matrix project organization
with the dimensions
Module
2
Module
3
ORGANIZATION OF PROJECT 1
Module
1
Module lead
– Project (responsible for
content/scope,
t t/
timeline
ti li
and cost)
– Line (responsible for
resources,, know-how
and quality delivered)
• End-to-end responsibility
of project (development,
production maintenance)
production,
• Involvement of line functions varies by project stage
Functional team members
Key account
Source: Anonymized client example
►Currently,
y, project
p j
organig
zations are mainly used as
secondary organization
12
4
EXAMPLE NETWORK ORGANIZATION
A
Network organizations are typically used to coordinate mostly
autonomous entities, e.g. competence centers or offices/sites
Global Roland Berger network organization
COMMENTS
FUNCTIONAL COMPETENCE CENTERS
INDUSTRY COMPETENC
CE CENTERS
S
Corporate
Development
Automotive
Consumer
Goods &
Retail
Engineered
Products &
High Tech
…
Marketing &
Sales
Operations
Strategy
…
• Global network
organization comprising
– 5 functional and 9
i d t competence
industry
t
centers
– 36 offices worldwide
• Flexible staffing of projects based on required
functional/industry competence and local market
expertise
►Currently, companies use
such network structures
only selectively, e.g. to
coordinate
di t th
their
i global
l b l
R&D activities
Roland Berger office
Source: Roland Berger Strategy Consultants
13
4
A
EXAMPLE PROCESS ORGANIZATION
Process organizations are focused on key business processes
with additional processes to support the main activities
Process organization of a metal products company
COMMENTS
Mgmt.
processes
Business
process
Service
processes
Support
processes
Strategy
Planning
Leadership
Controlling
Project management
Product
management
Development
Warehousing
Marketing
Quality
mgmt
mgmt.
Source: Anonymized example
Sales
Engineering
Purchasing
Sheet metal
forming
Strategic
purchasing
Production
technology
Production
Paint shop
Technical
service
HR/
organization
Assembly
Service
Transportation
Continuous
improvement
Financial
accounting
IT
• Process organization
comprising
– 9 product groups
structured
t t d along
l
th
the
standard business
process
– 4 internal suppliers
pp
(paint shop etc.)
organized as service
processes
– Centralized mgmt
mgmt. and
support processes for
all product groups
►Currently, process organizations
ti
are primarily
i
il used
d
by service companies
14
4
B
Companies need to strengthen roles which facilitate collaboration
– "Driver" and "body lease" expected to grow in importance
Roles & responsibilities: Roles facilitating collaboration
3.7
3.7
3.6
3.2
2.9
4.0
4
0
High
importance
2.7
1.0
Low
importance
"Manager"
Importance today
"Driver"
"Body lease"
COMMENTS
"Manager"
• Overall responsible for project/process/task
• Level of escalation
• Decision-maker
"Driver"
• Drives the project/process/task on the operative
level ("Kümmerer")
( Kümmerer )
• Moderates between different stakeholders
• Partially supports (operative mgmt. support)
"Body lease"
• Flexibly supports the project/process/task.
wherever needed
• Trouble-shooting/fire-fighting
• "On top" resource to standard plan
Importance tomorrow
Source: Roland Berger study "Beyond cross-functional collaboration"
15
4
C
Companies need to improve the skills of their staff especially to
prepare them for less hierarchical/structured environments
HR management: Required abilities
3.5
3.2
3.5
3.2
3.0
4.0
4
0
High
importance
2.5
1.0
Low
importance
Ability to
"see the big
picture"
Importance today
Ability to
"convince
without being
able to give
orders"
orders
Ability to
"perform in a
less structured
environment"
COMMENTS
"See the big picture"
• Ability to understand and evaluate global causeand-effect chains and trade-offs
• Required to achieve a global optimum despite
more complex structures, processes etc.
"Convince without being able to give orders"
• Ability to steer peers towards a common goal on
a voluntary basis
• Required whenever there is no formal disciplinary
power (or this power is not to be used)
"Perform in a less structured environment"
• Ability to cope with higher degree of freedom and
insecurity
• Required to unlash creative potential and
manage fast
fast-changing
changing environments
Importance tomorrow
Source: Roland Berger study "Beyond cross-functional collaboration"
16
5
Many companies are prepared to implement major organizational
changes – However, systematic change management is required
"Companies are reluctant
p
major
j
to implement
organizational changes"
Fully
agree
g
ROLAND BERGER
CHANGE MANAGEMENT APPROACH (overview)
C
0%
Implementation: Employees
B Design: Middle management
A Concept: Senior management
IV
20%
Shape culture ("allowed to do")
• Anchor a culture in line with the
vision, create room to maneuver
• Embed a process of permanent
change
50%
• Ensure sustainability
• Develop competencies/abilities
30%
Fully
disagree
0%
I
– Project-related training
– Workplace
p
training
g
• Promote networks and collaboration
(knowledge management, bestpractice management)
III
Develop capabilities ("can do")
Source: Roland Berger study "Beyond cross-functional collaboration"
Define content of change ("should do")
• Design a vision of change and set goals
Culture
Cu
tu e
Content
Co
te t
• Define metrics and measure target
achievement
Communication &
leadership
Capabiliti
ities
• Develop strategic content for
communications
• Create energy for change and
sustain it
Commitmentt
• Set incentives, reward success
• Ensure broad-based involvement of
the organization
II Create commitment ("want to do")
17
6
Our view: Depending on the industry, network and process
organizations will significantly grow in importance
Organizational models per industry (schematic)
Lot size
COMMENTS
Process
organization
Mass
production
In addition to the
nature of the industry/
company, other factors
determine the structural organization
"Classical" orgadimensional (func(func
ni ational models:
nizational
models • 11-dimensional
Single
orders
Network
organization
Innovation
BioTech
SemiCon
tional, divisional, …)
• 2-dimensional (matrix
of products and regions)
• Hybrid (combination of 1and 2- dimensional models
Project
organization
Aerospace &
Defense
IT
• Company strategy
• Market positioning
• Market environment
• Communication
technology
Automotive
Machinery
Consumer
electronics
Utilities
Cost
Industry
driver
• Legal requirements
• Management
philosophy
D
Dynamic
i internal
i t
l and
d external
t
l changes
h
require
i review
i
and
d optimization
ti i ti
off organizational
i ti
l structures
t
t
Today
Tomorrow
Alternative organizational models
Source: Roland Berger study "Beyond cross-functional collaboration"
Expected movement
18
6
Organizations dominated by functions do not fit today's needs –
Companies should look for a more tailored solution
Source: Arend van Dam; Roland Berger study "Beyond cross-functional collaboration"
19