Cross-Functional Dynamics in New Product Development

Managing cross-functional teams is one of the challenges of new product development, yet how members from different functional areas come together, interact, and arrive at consensus is a poorly-understood process. After a pilot study, the authors conducted interviews with 40 managers (representing all the key functions) from 10 different firms to better understand the human interactions across the functional area. Three major finding emerged from the study. First, the relative participation and contribution of production groups were significantly less than that of other groups. The R&D groups tended to have the highest participation and contribution and in a sense “owned” the new product activities. Marketing performs relatively more tasks, yet participates less in new product decision making. Second, participation and contribution were related. That is, when participation of a functional group was low, so was its contribution. To create a sense of ownership and get the best contribution, it is important to get early participation and to allow all members of the team to analyze the new product opportunity. Third, cross-functional cooperation was weak in most of the firms studied. Importantly, efforts designed to increase a functional group’s participation in new product decision making may result in that group performing more tasks, but not necessarily increasing its cooperation with other groups. These finding suggest several human interaction issues. Because of the apparent ownership of new product activities by R&D, this group may be less excited about cooperating with other, and indeed other groups are more likely to be asked to cooperate with R&D. R&D may believe that new product pursuits do not concern other groups such as production. As a related point, R&D may be more concerned about serving the needs of future customers, while production’s concern may be more about current customers. The author found that the contributions of marketing and production were most likely to increase as a result of specific senior management activities, in particular (1) pressuring R&D groups into sharing control, and (2) forming cross-functional teams to manage new product decisions and work flows. In the forms where cooperation was poor, there were little or no efforts designed to promote collaboration among the groups.