Cross-functional Communication as a Strategic Organizational Capability
Early in my career as a marketer I was introduced to the idea that good companies meet the needs of their markets while great companies create markets. Strategy gurus and business schools teach a similar idea, one that is rooted in economics and goes like this: all else being equal, profits tend to be high for those who can see and exploit opportunities earlier than others. The reason being, the more efficient the market the shorter the window of opportunity – others will follow and soon compete away share or profit margins. In other words, exploiting opportunities faster than our rivals is critically important to successful entrepreneurial venturing. But, how can we ensure that these opportunities (identified by the strategic planning function of the organization) are more efficiently and effectively executed (at the team level)?
The strategy literature suggests that there are a few key success factors of entrepreneurial activities, including foresight, organizational skill, luck and responding to the competitive environment. On the other hand, the organizational literature suggests that proper training, goal-alignment, motivation and incentives drive organizational success. Consequently, I believe one element deserves special attention as it is often overlooked: Cross-functional communication. At the project- or team-level this can make or break any strategy, no matter how good it looked on paper when the consultants delivered it. After all, communication itself is needed to determine the skills, to communicate the goals and to drive the motivation of those who make up the team.
Reflecting on my previous core team experience in Fortune 500, small-cap and higher-education environments, I believe that good cross-functional communication is a key factor for fast and successful execution of opportunities. Specifically, I have observed three behaviors, which I believe drive 80% of a team's quality of communication and to a large degree overall team performance.
While several elements need to come together to create good cross-functional communication, three things I suggest team members spend more time on include, telling a compelling story; sharing underlying data and assumptions; and communicating sooner and more often.
Tell a compelling story. A compelling story should create alignment among people's beliefs and behaviors. In my experience, a compelling story is usually the first step in team communication. A compelling story should highlight Why this project is important to the overall mission of the company and the employees, What success looks like, Who will be involved and What will be expected of them. How success will be realized is also critical but usually crafted later by the team under the direction of the planning or project management leadership.
A compelling story is not a business case full of facts and data. PowerPoint slides full of facts and data do not provide the emotional call-to-action that will be needed to motivate people to overcome the challenges ahead faster than the competition. Facts and data must be present in the rationale, but they alone do not motivate teams to outperform rivals. When the number of problems outweigh the number of wins on a team, people need something to re-energize and stimulate the passion required to push ahead quickly.
Share underlying data and assumptions. A clear and logical presentation of the assumptions that led to the approval of the project should be provided. People want to know that they are chasing a real opportunity and not inexperienced intuition. As a result, some level of debate is healthy, if needed, before the team agrees with the conclusions.
I find that assumptions should be categorized as either commercial or technical. Commercial assumptions represent beliefs about the customer, the sales process, marketing requirements and financials while the technical assumptions represent project related costs, product or customer performance and development timelines and milestones. Additionally, spending more time upfront vetting data and assumptions will reduce the amount of adverse events later.
Communicate sooner and more often. Just as important as what assumptions get communicated is how often the assumptions are revisited and updated. It's obvious that the sooner data and assumptions are communicated the sooner important decisions can be made. This also means a clear line of communication should exist between the project team and the executives overseeing the project. First, it's important to prevent surprises – especially in public companies. Additionally, executives' opinions and insights may be valuable in solving problems and making tough decisions.
A less obvious result of communicating sooner and more frequently has to do with the speed at which projects fail. Failing fast can be just as critical to organizational success and employee morale as having a successful market entry. Keeping some projects alive too long presents great opportunity costs to the overall organization.