February 24, 2022

Cross-functional organizations – critical success factor in digital transformations

A critical success factor for any digital transformation initiative is to create a cross-functional organization where IT and business units collaborate towards a common goal.

Cross-functional organizations – critical success factor in digital transformations

A cross-functional organization challenges the traditional organizational structures and roles within an enterprise.

Adopting new digital technologies is not an option anymore; the question is how fast you can implement those emerging technologies that give you a competitive advantage. Most CEOs and startup founders are considering implementation of a new technology but many of them still do not realize that business & IT alignment is crucial when it comes to successful digital transformation.

Establishing digital centers of excellence is a proven way to address this challenge. It is actually the only way to have a successful digital business. Also, you need to follow a certain strategy that is based on a few key principles regardless of the industry vertical you are part of.

Identify Your Digital Capabilities Needs

The first step toward digital transformation and a cross-functional organization is to identify those digital capabilities that will benefit business the most. Start with the areas that will benefit you immediately and will provide you with competitive advantages.

Every business is facing specific challenges and thus adopting those technologies that provide solutions to your specific needs is a key factor during your digital transformation. Only then, you should look for digital capabilities that offer and create new business opportunities.

A Forrester research reveals that 56% of organizations are already in a process of digital transformation. The million dollar question is whether they are doing it the right way.

Source: Forrester Research

The good news is that according to the survey close to 40% of respondents do realize that their organization’s digital transformation is single most important factor when business strategy is concerned.

Move Towards Cross-functional Organization

Organizational silos are one of the main obstacles for digital transformation. Technology, marketing, sales and operations should work together and in synchrony to make your digital business work.

Traditional organizational structure and roles do not work in the digital age. Cross functioning provides the means to both identify and implement those advanced technologies that will benefit you the most.

Sales and marketing have different goals and thus you might be tempted to adopt solutions that actually do not add value to your overall operations. Your IT department might have ideas that will improve a specific side activity but does not give you the competitive advantage you need in the long-term. That is why all these departments should be transformed into a cross-functional organization where different people, from different departments and with varied experience are generating ideas how to transform your business into a digital one.

Eliminate Hierarchies within Your Organization

You evidently need to adopt a digital thinking for your organization to be able to succeed in the age of artificial intelligence and machine learning. However, you also need a way to escalate problems and find the right solutions. Organizational hierarchies are another major obstacle to the digital transformation. Aligning business and IT is not enough, you need to make a cross-functional organization with as little hierarchies as possible.

Cross-functional groups are well suited for resolving conflicts but the C-level group can also be a point for escalation for troubled teams. Clear boundaries between areas of responsibility does not help your shift toward digital – collaborative cross-functional and self-directed teams are what you need to achieve it. Exploring and implementing new ideas requires a structure where anyone is free to provide expertise that helps your overall strategy.

Source: Gartner

It is encouraging that 33% of CEOs surveyed by Gartner consider corporate structure development a top business priority. The problem with digital transformations is that you need not only develop your corporate structure but also instill a digital mindset and eliminate most of the hierarchies. Thus, you get the necessary gelling between your digital teams and those departments that run your core business activities.

Establish Digital Centers of Excellence

Each of your departments has difficult needs and ideas which digital capability to be adopted and how the entire process will look like. This is good – you have professionals who want to put their expertise to practice. However, it might not work, sadly.

You need a roadmap and you need teams that are able to work together while prioritizing each teams’ needs and having the whole picture in mind. An organization cannot undergo a digital transformation in one step; there are multiple projects to be completed and multiple technologies to be adopted. Furthermore, many of your employees should obtain a very different, digital mindset.

If you want your organization to become both cross-functional and customer-centric, you need to think big but make small steps. It is not about thinking globally and acting locally. It is about creating centers of excellence that can cope with all the challenges you face during a process of digital transformation.

Collaboration Is a Key Factor

As we said above, cross-functional teams are the key to successfully adopt a new technology and all the related business process changes. Hence, collaboration is a key factor when you undergo digital transformation.

Old roles are no longer valid and business functions are getting as diverse as possible. Organizational silos are a major obstacle and encouraging collaboration between teams and functions is mandatory. This enables innovation, communication and boosts sales in the end.

Taking crucial business decisions is always a hard task but making them in the context of a cross-functional organization where everyone has his say enables you to go ahead smoothly. Lack of willingness to share and collaborate can ruin your efforts and in result take away the competitive advantages you are aiming at. Control of processes and process ownership should not become a barrier to shifting toward a digital business.

Concluding Words

Promoting business-savvy IT professionals is a major factor for success when you are moving toward a cross-functional organization. They should be able to understand what each and every team within the organization needs and have the bigger picture in mind.

Actually, a working cross-functional organization is a one where no one can tell who is in IT and who is in business and marketing. You need cross-functional IT team leaders to get to that point but this is achievable once you adopt a digital mindset and realize that the time has come for organizations to change both their structure and rethink roles within the organization.

Claes Widestadh Author

Claes Widestadh

Interim COO