Magic of cross-functional teams

This article was inspired by a survey of Estonian product managers, revealing that cross-functional teams achieve better alignment with business goals and improved information flow.

My experience with cross-functional teams began about 10 years ago when we adopted them at SK ID Solutions. We also transitioned to cross-functional product teams at Textmagic, where I was the product manager for Touchpoint.

What are cross-functional teams?

A cross-functional product team has most of the resources needed to operate independently, allowing them to handle product development and maintenance by the team itself. 

Typically, such a cross-functional team has a clear domain/problem space in which they operate and create value for the company and its customers.

What roles should be included in cross-functional teams?

Typically, these roles include a product manager, designer, tech lead, and developers.

Depending on the organization, the team may also include a product marketing manager, user researcher, or analyst. Depending on the organization's quality assurance process, QA experts/testers may also be part of the team.

At SK ID Solutions, our entire development was outsourced, and the in-house cross-functional teams included product managers, integrators, dev-ops engineers, and testers. In teams with a greater focus on legal and compliance matters, we also had a dedicated lawyer.

In summary, there is no definitive list of roles that must be in a cross-functional team. It depends on the specific needs and characteristics of the organization and the goals the team needs to achieve.

Cross-functional team management models

Matrix

In this model, the company has cross-functional teams, but the direct manager of team members is not the cross-functional team leader, but rather the manager of their specific function/competence (for example engineering, design, QA).  

For example, testers may be assigned to various cross-functional teams, but they have an overarching manager, such as the Head of QA.

The advantage of this model is that managers are familiar with the specific discipline and can better support the development of team members in their roles.

In my opinion, the downside of this model is the potential for double management, leading to inefficiency. It’s crucial for all parties to understand which topics should be discussed with which manager, and functional managers need to recognize that they do not define the content of the work—that comes from the cross-functional team.

According to my knowledge, this is the most commonly used model when cross-functional teams are implemented.

The described matrix structure is also used by the well known Spotify product organization model. Model uses matrix structure involving Squads, Tribes, Chapters, and Guilds.

1. Squad: A Squad is a small, cross-functional team focused on a specific area or product. Each Squad operates with a high degree of autonomy. The Squad has a Product Owner/Product manager, who is responsible for prioritizing work and ensuring that the Squad is delivering value. However, the PO/PM is not the "direct manager" in the traditional sense.

2. Chapter Lead: This role is the closest to what might be considered a "direct manager" in the Spotify model. A Chapter Lead is responsible for people management within a specific discipline across different Squads. For instance, all engineers in various Squads might belong to the same Chapter and report to the Chapter Lead. The Chapter Lead is responsible for performance reviews, career development, and professional growth of the individuals in their Chapter.

3. Tribe Lead: A Tribe is a collection of Squads working in related areas. The Tribe Lead oversees multiple Squads but focuses more on coordinating work between them and ensuring alignment with broader company goals. The Tribe Lead is more of a facilitator than a direct manager.
   

Image source: https://www.productledalliance.com/going-agile-using-the-spotify-model/

The matrix cross-functional team model can be used in a way where cross-functional teams are temporarily formed for a specific mission. It’s important that a team member is not part of multiple missions at once; otherwise, the sense of team cohesion is lost, and the individual becomes merely a resource allocated for a "project," which means we can't fully realize the benefits of the cross-functional team approach.

Cross-functional team lead as direct manager

This model is clearer for all parties, as each person understands who their direct manager is, and all topics are managed by a single individual. 

The drawback of this model is that the cross-functional team leader is usually the product manager, which means that, in addition to product management, they also have to focus on people management related activities.Another disadvantage of this approach is the impact of concentrating both direct leadership and product direction within the same person. This can lead to potentially lower quality input from subordinates. There’s a reason why management often struggles to receive quality input and feedback from their team members—it comes down to who has the power to fire. People often hesitate to challenge their direct managers.

I also see that with this approach, it’s necessary for the organization to establish routines for people in the same role across teams to share experiences and learn from each other. 

It's important to understand that in this model, each team member is usually a stronger expert in their field than the team leader. While the team leader may not be able to provide specific role-based advice, they should be able to use a coaching management style to help specialists find their own answers or direct them to the right person for assistance. 

In my opinion, this model is better suited for smaller companies with fewer (1-3) product teams.

Pros and cons of cross-functional team model

What I see as the advantages of cross-functional teams:

• The main advantage of having a cross-functional team is to guarantee that the team has dedicated necessary resources and knowledge to achieve its goals.

• Improved empowerment - faster and more independent decision-making processes and, consequently, greater ability to execute actions and solve problems

• Increased responsibility and ownership: when the team consists of specialists from various fields, it often increases each member's sense of responsibility and contribution to the final result

• Improved communication between team members

• A stronger sense of team unity among colleagues working together

• Solutions are often more comprehensive, considering a broader range of factors, since the team consists of specialists from different fields

• Typically less time spent in various meetings. Or if you don't use cross-functional teams, what is the main reason for that?In cross-functional teams, the need for various meetings is reduced because decisions can be made and problems solved internally within the team without the constant need to involve other departments.

• Better domain-specific knowledge among team members

Challenges associated with cross-functional teams:

• The team must understand that there are other stakeholders as well, and their information needs must still be met.

• Collaboration between different cross-functional teams: since all teams are independent, more attention needs to be paid to how teams exchange information and coordinate activities that affect multiple teams. I believe the CPO and CTO play key roles here in creating an environment where information flows and product teams move in unison as needed.

• Sometimes, there may not be enough work for a particular role within the team, while another team might feel a shortage of resources for that same role.

Is it worth of implementing?

Despite some challenges associated with cross-functional teams, I believe that this management model yields usually better results.

It was also indicated by the survey conducted among Estonian product managers in summer 2024. Here are some indicators that reflect the quality of management and the differences in organizations that use cross-functional teams and those that do not.

Read the full summary of the survey: https://www.tpg.ee/p/product-management-survey-2024-summary. 

The majority (~55%) of survey respondents said they use cross-functional teams, but there are still quite a few organizations where this model is not implemented.

Implementing cross-functional team model may initially cause some confusion like with all changes, but in my experience, it is worth it.

Share your experiences working in cross-functional teams in the article comments.
Or if you don't use cross-functional teams, what is the main reason for that?