We’ve all been aware of the benefits of organizing your team with a small, cross-functional core team structure since the early 1990s when Wheelwright and Clark published their seminal research in “Revolutionizing Product Development”. My colleagues and I used to joke that your entire core team should be able to fit inside a minivan.
Today, the principle is being popularized by companies like Amazon using the two-pizza rule – a team shouldn’t be larger than can be fed by two pizzas. Whether pizzas or minivans, whether you apply it to core new product development teams or innovation teams, the benefits of this team structure haven’t changed.
Let’s take a look at how you can apply this cross-functional core team model in your company and what its benefits can be.
The Core Team Defined
Core teams are small, cross-functional teams with responsibility and authority for the delivery of new solutions. The core team approach goes well beyond a gathering of functional liaisons. Core team members fully represent all areas of the organization that contribute to the innovation process and are jointly accountable for market success.
Joint accountability is where the model starts to differ from the siloed, “over the wall” or serial approaches of the past, which saw individual team members held accountable to their vertical functions and measured primarily on the achievement of functional objectives.
Core teams are an effective way to break down functional silos as they move decision making and accountability towards a project-centric model where development happens concurrently across functions, and market success is the primary measurement of team-member success.
Think of it as rugby team, moving down the field in a scrum formation versus a relay race where the baton is passed from one person to the next.
Core teams typically consist of up to eight members with a diverse set of skills and a core team leader. The core team leader in this model is more of a mini general manager than an expert product manager or senior developer. The emphasis is on cross-functional team leadership and, ideally, this person approaches innovation with a business mindset.
There is no one-size-fits-all model for core team membership. Staffing is customized to the needs of specific projects. That said, it is helpful to establish a starting point or base structure for a typical project.
The “core team wheel” graphic below shows two sample core teams – one for a typical existing business team and the other for a new growth innovation team. The wheel is meant to reinforce the move away from a vertical hierarchy with rigid functional silos to a structure where all team members are equals with a common objective of business impact.
The core team maps to a network of individual contributors. This outer wheel is referred to as the extended team. Extended team members are individual contributors who play a key role in supporting the core team. They join the team as their skills are needed.
Core Team Characteristics
Joint Accountability
Core team members hold each other accountable and have a shared sense of responsibility for the market success of their products. This shift in responsibility away from functional objectives to team-based success is one of the more difficult transitions for large companies.
Functional managers who are used to having the ultimate say in resolving any issues feel like they are giving up their decision-making authority and control. However, properly applied, the core team approach frees functional managers up to focus on building departmental excellence – people development, tool development, functional process development, and functional strategies.
The functional manager’s role shifts from project-level decision-maker to project supporter while pushing project-level decision-making to the ones closest to the issues. This concept can be reinforced by modifying incentive and reward systems to promote team-based behaviors over management by functional objectives. For example, 50% or more of a team member’s performance evaluation could come from peer project team members using team-based performance measures.
Communication
In large organizations, effective communication needs to take place across functional boundaries and up and down the corporate hierarchy. The more functionally siloed an organization is, the more tangled communication becomes, as information has to move horizontally across multiple functions and vertically up and down organization levels. The small, cross-functional core team structure short-circuits this approach and is designed to replicate the communication efficiencies of a small startup within a large organization.
Decision Making
Innovation and new product development requires teams to make hundreds of decisions each week. Timely decision-making is critical. Nothing slows a team down more than the team member who feels the need to go up the chain of command to get “permission” to make a decision.
Using the core team approach, teams are staffed with empowered decision-makers who are trusted to fully represent their function. The role is much more than that of a functional liaison or coordinator. Core team members have knowledge of functional strategies and know how best to apply them to project-level decisions in the context of a cross-functional, jointly accountable team.
For new growth innovation projects, team members work together to prioritize and test “leap of faith” assumptions, experiment to surface customer insights, and progress toward a scalable solution with each team member contributing a perspective from his or her area of expertise.
Core Team Roles and Responsibilities
Core Team Leader Responsibilities
The primary responsibility of the core team leader is successful execution of the product development or new growth innovation project. The core team leader functions as the “general manager” and is accountable for both team and product success. This person has organizational clout, effectively removes barriers to team success, and is the first person the CEO calls if they want an update.
Specific core team leader responsibilities include the following:
- Maintain responsibility and accountability for achieving business impact
- Drive team activity from problem validation through successful commercialization and scale up
- Reinforce project objectives, guide critical trade-off decisions, keep the team moving at start-up speed
- Maintain accountability to the governance team or new venture funding board
- Evaluate performance of core team members
Core Team Member Responsibilities
Core team members are accountable for ensuring successful contribution for their defined area of responsibility. In addition, core team members have shared responsibility in working with the core team leader towards the overall success of the project. Core team members fully represent their functional area for project activities and are the functional representative responsible for project decisions. Team membership is designed to ensure cross-functional representation and collaborative project execution.
Specific core team member responsibilities include the following:
- Make project-level decisions on behalf of their function or area of expertise
- Enlist the support of other resources and from extended teams
- Negotiate functional resource needs and assignments
- Provide leadership and direction to extended team members
- Maintain overall responsibility for a functional area’s performance and budget
- Evaluate performance of extended team members and the core team leader
The Extended Team
Extended team members play a key role in supporting the core team and typically join as their skills are needed. They are identified jointly by the core team members responsible for the relevant activities and the functional managers who manage their allocation across the innovation and new product development portfolio. They are allocated to projects on phase-gate approval or as an outcome of a new venture board funding meeting. Extended team members stay with a team only as long as they are needed and can often support multiple projects.
Specific responsibilities include the following:
- Provide functional and subject-matter expertise
- Execute project tasks in accordance with the project plan
- Render a professional opinion on matters outside the core competencies of the core team
- Work closely with core team members to ensure alignment between their work and project goals
Building a team with diverse skills is a foundational component of any team. This is especially important when dealing with bold innovation where the team is dealing with conditions of high uncertainty. You want entrepreneurial people who can manage chaos and wear multiple hats. Look for a balance of the following skills:
- Solution Designer: Creatively applies technical and customer experience design skills to build the MVP, prototypes, and design experiments for rapid, low cost learning. This person has expertise in the science or specific technology you are using.
- Customer Zealot: Emphatic about the customer and customer job to be done; empathetic; personable. This is the person who leads the way with “outside-the-building” validated learning activities, including deep customer problem understanding.
- Connector: Understands the inner-workings of the organization and partner ecosystem, mines a network of partners and co-creators, removing internal and external barriers to get things done.
- Visionary Core Team Leader: Leads the charge, rallies the troops, keeps the team inspired, has a business mindset, is tenacious, persuasive, and resolves conflicts.
Serial vs Parallel Development
Serial development is the practice of one function waiting for the completion of an upstream deliverable before handing it off to a downstream function. It takes time, slows knowledge transfer, is subject to interpretation, and leads to finger-pointing when something goes wrong.
Parallel development, the practice of conducting interdependent tasks at the same time, is ideal for the type of integrated problem solving enabled by the core team structure. Core teams reinforce the rich, face-to-face, two-way communication and timely interaction needed to anticipate issues and avoid downstream surprises.
In the following graphic, adapted from Revolutionizing Product Development by Wheelwright and Clark, the arrows depict communication across functions and the darkened task bars represent knowledge transfer. Note how overall cycle time is shortened with parallel versus serial development.
Core Team Formation and Project Duration
With new product development for the base business, the core team is identified and staffed upon confirmation that the idea fits company strategy and is worth an investment to fully define the solution, validate major assumptions, and plan the project.
In most companies with a phase or stage-gate process this milestone is known as concept phase approval. Extended team members become involved as they are needed for planning and new product definition activity, and as trade-offs between product requirements, design approach, schedule, budget, and resourcing considerations are made. The size of the extended team typically changes throughout, with members rotating on and off depending where the product development is in planning, design, test, and launch phases.
For innovation, it is best to keep the extended team as small as possible, pulling in support resources from the base business as needed and on a limited basis while major solution assumptions are tested. The ideal team size is two to three people during the early stages when validating the customer problem and riskiest business model assumptions.
Project support resources and overall project spending will gradually increase as major unknowns are de-risked and the project progresses toward product/market fit and is eventually ready to scale. Along the way, the core team will need to tap into support functions such as legal and compliance, HR, finance, sales, and marketing for guidance to protect core business assets as the core innovation team experiments with customers.
Corporate Leadership’s Role
Instead of tinkering with details or getting pulled into functional disputes, the core team approach frees senior leadership to focus on new growth strategy, portfolio management, development pipeline governance, functional skill development, and ongoing operations.
For base business new product development, leadership governs the pipeline, making go/no-go business decisions at key project milestones. These milestones, or phase gates, are windows into the project. As long as the team is on track, core teams are empowered and funded to execute projects between the gates. For new growth innovation, the governance team (shown below as the Venture Funding Board) establishes areas of focus, sets opportunity size guidelines, sets customer discovery guard rails to protect core assets, and provides a “safe space” for innovation teams to operate.
The following graphic summarizes the organizational model with accountability to leadership for both the base business and for new growth innovation core teams.
Conclusion
Most companies today have some form of a cross-functional team structure. The practice has been around for over 30 years. However, it is not enough to put people from different functions on a team.
At your next core team meeting, look around the room. Could you feed everyone in attendance with two pizzas? Could you fit everyone comfortably inside a minivan? If not, try restructuring your team with a small, empowered set of individuals at its core, clear roles and responsibilities, decision-making authority, extended team support, effective core team leadership, and joint accountability for solution success.
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