November 21. 2023 by Mike Manazir – (4-5 minutes)
Cross-functional expertise refers to the ability of individuals or teams to possess knowledge, skills, and understanding across different functional areas or departments within the organization.
A notable example of a business that struggled due to a lack of cross-functional expertise is Nokia, once a global leader in the mobile phone industry. In the early 2000s, Nokia was the dominant player in the mobile phone market, with a market share that exceeded 40%. However, the company faced several challenges that ultimately led to its downfall.
1. Siloed Departments: Nokia had separate divisions for hardware, software, and services. These divisions operated with limited collaboration, hindering the development of integrated products.
2. Internal Competition: Different departments within Nokia often competed against each other instead of working together. This competition led to redundancy and inefficiencies.
3. Resistance to Change: Nokia was slow to adopt touchscreen technology and smartphones, as it was hesitant to disrupt its existing profitable feature phone business.
As a result, Nokia’s innovation and market share declined, leading to a dramatic downfall. Nokia’s mobile phone business was acquired by Microsoft in 2014, effectively marking the end of Nokia’s reign as a mobile phone giant.
By contrast, in the early 2000s, Ford was also facing significant challenges. The company was losing market share, suffering from declining sales, and had a complex, bureaucratic organizational structure. Different departments within the company were often working in isolation, resulting in a lack of collaboration and innovation. Additionally, Ford was burdened with a large amount of debt. It was months away from running out of cash.
Alan Mulally, a former Boeing executive, was appointed as the CEO of Ford in 2006 (featured in the book American Icon: Allan Mulally and the Fight to Save Ford Motor Company by Bryce G. Hoffman). Mulally brought a fresh perspective to the company and transformed the organizational culture by initiating –
1. One Ford Vision emphasizing the importance of teamwork, collaboration, and a unified purpose across all functions and regions. This vision aimed to break down silos and foster cross-functional expertise.
2. Weekly Business Plan Review (BPR). During these meetings, top executives from different functions would come together to review the company’s performance and discuss strategies. This practice encouraged open communication and transparency.
3. Data-Driven Decision-Making. Mulally insisted that executives use data to support their proposals and encouraged a more analytical approach to problem-solving.
4. Empowering employees at all levels to contribute ideas and solutions. He believed that cross-functional expertise should not be limited to top management but should be embraced throughout the organization.
As a result, Ford had a remarkable turnaround. Market share and profitability increased, leading to Ford being the only one of the “Big Three” American automakers to avoid bankruptcy during the financial crisis of 2008. Alan Mulally’s leadership and his commitment to cross-functional expertise played a pivotal role in Ford’s resurgence.
Here’s five key steps for leaders to start building cross-functional expertise within their teams and organizations –
1. Lead by Example: Demonstrate cross-functional collaboration through your own actions and behavior, actively participating in cross-functional initiatives.
2. Promote Communication: Encourage open and effective communication across functions by creating channels for information sharing and holding regular cross-functional meetings.
3. Foster a Collaborative Culture: Develop a company culture that values collaboration and cross-functional problem-solving. Recognize and reward such behavior.
4. Cross-Functional Teams: Form cross-functional teams for specific projects, ensuring diverse representation from various functions and empowering them to drive results collaboratively.
5. Feedback and Improvement: Encourage feedback from team members and stakeholders involved in cross-functional projects, and use it to continuously improve processes and collaboration.
By focusing on these key steps, leaders can lay a strong foundation for building cross-functional expertise within their organizations.
To solve complex problems, we must build bridges
between the silos of specialization.
-Pearl Zhu
Lead from your heart. Lead to Win.
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