Organisational structures and cross-functional teams

The nature of the industry and the product being developed will influence the choice of structure. The organisation structure will affect considerably the way its activities are managed. The use of cross-functional teams increases creativity in a new product development, leading to shorter development time and higher product innovation.

Teams and project management

The concept of having teams of individuals from different functions with different knowledge bases is a recent development. New product project teams in small to medium sized organisations usually consist of staff from several different functions who operate on a ‘part-time’ basis. In larger organisations, where several projects are in progress at any one time, there may be sufficient resources to enable personnel to be wholly concerned with a project. Ideally, a project team will have a group of people with the necessary skills who are able to work together, share ideas and reach compromises. This may include external consultants or key component suppliers.

Functional structures

NPD is a cross-disciplinary process and suffers if it is segregated by function. The traditional functional company structure allows for a strong managerial layer with information flowing up and down the organisation. Each function usually would be responsible for one or more product groups or geographical areas.

Another common approach used by large manufacturing companies is to organise the company by product type. Each product has its own functional activities. Some functions, however, are centralised across the whole organisation. This is to improve efficiency and provide common features. This type of structure supports the notion of product platforms, where a generic group of technologies are used in a variety of products. It allows a high degree of technology transfer between product groups, which is one of the key arguments in favour of a centralised R&D.

Matrix structures

The use of a matrix structure requires a project-style approach to NPD. Each team will comprise a group of four to eight people from different functions. A matrix structure is defined as any organisation that employs a multiple-command system, also including related support mechanisms and associated organisational culture and behaviour patterns.

Matrix structures are associated with dual lines of communication and authority. They are seen as cross-functional because they involve bringing people together from two or more separate organisational functional areas.

Features and benefits of a matrix organisational structure:

  • Provision of additional channels of communication. The combination of a matrix structure and business teams ensures that there is extensive lateral communication between functions. Communication skills are also developed as individual business team members learn the “language” of the other functions.
  • Increase in informal communications channels. There is an increase in informal networks between personnel from different functions. These develop from friendships and cooperation formed as a product of formal linkages.
  • Increase in informal loads. Individuals collect more information. This information is brought back into the function and disseminated amongst colleagues in the group.
  • Increase in diversity of individuals. Employees work with a variety of people from different backgrounds and disciplines across the organisation. This type of working environment enlarges an individual’s experience and outlook and provides them with an improved understanding of the organization’s entire activities.

Corporate venturing

The idea behind corporate venturing is that fledgling businesses should be given the freedom to grow outside the constraints of an existing large, established organisation. New ventures should be sheltered from the normal planning and control systems. Ideally they should be given high-level sponsorship from senior management, but must be able to manage their own relationships with other companies.

An internal corporate venture is a separate organisation or system designed to facilitate the needs of a new business. Companies usually adopt an internal corporate venture when the product involved is outside their existing activities.

Project management

Project has to be well planned, managed and controlled. Achievable targets and realistic objectives help to ensure a successful project. Additionally, ensuring that resources are available at appropriate time contributes to good project management.

Reducing product development times through computer-aided design

When concurrent engineering is used in conjunction with other management tools, the results can be very impressive. For example, the aerospace and automobile industries have been using computed aided design (CAD).

Adapted from

Trott, P., 2008. Innovation management and new product development. Pearson education.

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