Cross-Functional Teams in 2025

The industrial revolution's focus on efficiency led to specialized roles, mirroring machine functions. This division of labor optimized production but created work silos, limiting workers' knowledge to their narrow tasks. This siloed approach became the norm, prioritizing maximum productivity over providing people with understanding the bigger picture.

‍For a time, this siloed approach worked. The production line made a certain sense when it came to assembling a physical product - keep the blinkers on, don’t get distracted.  But then we shifted into the knowledge economy - people using their minds more than their bodies in their work, with machines and AI waiting to take over mundane, repetitive tasks - and the silos started to become a limitation.

It’s taken a while, but bit by bit organisations are coming back to the practical ideas of hunter–gatherer diverse, cross-functional teams, of frequent and low friction collaboration, as the way to make ‘ knowledge work’ - well, work. 

Even the factories that still make the big mechanical products are starting to move away from the siloed approach, recognising that people need to connect more to the whole, and to each other. Toyota revolutionalised the automotive industry with what it was able to achieve via the Toyota Production System and the birth place of Lean.

‍‍‍But if your organisation is building digital products and services, there is an even higher likelihood that you will need a wide range of experts working closely together to launch a new product to market. A good example is the growth market of Generative AI-enhanced products. These products require expert involvement from legal, cyber security, data privacy, marketing and more (Matthew Skelton’s talk The AI-savvy Operating Model is a good explainer of why cross-functional teams are important here, and the perils of not working in this way).

As new working practices spread within an organization and build on early successes, the number of cross-functional teams within the organisation grows. It does not take long for the number of people working in these teams, and the interactions between the teams to exceed the level of complexity which our ‘social brain’ can work with effectively.

A system providing a single source of truth for teams becomes essential to provide good quality, widely accessible information on what the teams are; their purpose and how they are organised together; who is in the teams, the role they play and the work they are doing – and how that work aligns to strategy and outcomes.

The data underpinning this representation is often either poor quality and fragmented, severely impairing the organisation’s ability to plan well, and to measure and report effectively with the perspective of cross-functional teams.

Without addressing this challenge, the organisation is exposed to increased risks and inefficiencies affecting decision making and the delivery of value for the organisation. Senior leadership experience delays and challenges in obtaining key management information needed to optimise the organisation for better outcomes. The current process for connecting teams and work is inefficient, involves connecting data from multiple systems and spreadsheets, and often omits bottlenecks.

The better understanding of context teams have, the better able they are to make decisions that will be well aligned and drive outcomes that connect back to the organisation’s strategy. As each team is delivering incremental value towards a common goal, it is essential to ensure a consistent  shared understanding of the goal and context around it.

However, in fast moving environments with high degrees of uncertainty, it’s hard to keep the shared context and alignment that enables the fast flow of value to consumers and customers. As the level of cross-team coordination and handover required increases, progress slows. Each team is focused on its own priorities so as soon as one team needs support from another it creates an interrupt. 

Post-COVID, more and more organisations accommodate hybrid working. While the flexibility is to be welcomed, it does mean people who work together can end up having different days in the office, which adds to existing team variables, such as teams in different office locations and timezones.

The impact of this new dynamic is that people need to be far more intentional about how they work, how they communicate and collaborate (synchronously or asynchronously), their boundaries, scope, tooling and practices. Communication within teams and across teams in the hybrid scenario quickly becomes highly complex  - both on a day-to-day basis and for longer term planning and goal setting.

It is now less likely that organisations will be able to have completely in-person “big room planning” events, so unless management excludes some people from cross-team planning, online synchronous or asynchronous approaches are essential for teams to plan on the same page.

When ways of working evolve but ways of funding don’t, it can create major obstacles for teams trying to deliver value for customers and consumers. Too often funding is tied to a particular project and there is no continuous follow-on planned and agreed. Once a project is completed, the team working on it may disband, some individuals leave the organisation, and valuable learnings and expertise are lost.

For a deeper dive on the funding challenge, check out our Field Guide on Capacity-based Funding.

Starting with an organisation's strategic priorities provides a firm base from which cross-functional teams can operate smoothly. From here, any cross-team dependencies can be addressed, and then the individual teams’ priorities. While there is no one-size-fits-all solution, ongoing and transparent discussions with a clear visualisation of work across teams can bring everyone together. This usually includes:

You can find more on the categories of tools in the ecosystem in our short guide:  https://www.teamform.co/guides/the-top-tools-to-manage-cross-functional-teams 

Our friends at Team Topologies offer guidance on how to address alignment challenges. Their focus is on limiting the number of concerns that individual teams have to address, and which require coordination. A good case study of this thinking in action is Amazon’s 2 Pizza teams approach that they used to create AWS. By defining clear team boundaries and communicating clearly how teams should interact with each other (the Team API), the level of coordinating work and the cognitive burden on individual teams is reduced.

The hybrid working model seems to be here to stay, even if some organisations have started to impose a minimum number of days in the office. As discussed above, this way of working requires people to be much more intentional about how and when they communicate and collaborate. Companies like GitLab have now adopted an async-first model, which includes charters that people sign up to to get the most out of this approach. 

For more on optimising work across the in-person, hybrid, and fully remote spectrum, take a look at Johanna Rothman and Mark Kilby’s book: From Chaos to Successful Distributed Agile Teams: Collaborate to Deliver and Sumeet Gayathri Moghe’s book:  The Async-First Playbook.

The right funding model is one of the cornerstones of a productive cross-functional team. Moving to more responsive funding models, usually from project-based funding to capacity-based funding, supports long-lived teams that are able to flex and optimise their capabilities to deliver value for the consumer or customer over time, rather than being driven (and disrupted) by project start/end deadlines, often accompanied by delay and hiatus before initiating a follow-on phase of work, and loss of talent as people are re-deployed to other active work in the meantime.

The main requirement? Curious minds. The desire and ability to adapt and continue learning. Businesses need to move away from the hire and fire model that selects people based on the specific skills required for one specific project, this does not support learning as an organisation. 

Rather than hiring on the latest technology trends (AI being the latest example), hiring for problem solving, analytical and softskills will yield far better results in both the short and long term. Information is only becoming more accessible through technology, so investing in communities of practice in your organisation will help with cross-pollination of ideas, concepts and practices. 

With hybrid and asynchronous working, being able to effectively and efficiently community is becoming more important than ever. These skills will help your organisation take advantage of the possibilities of AI, and so much more too.

Ultimately, this should see cross-functional teams working to achieve a larger outcome, and often far beyond a single team of teams or value stream. Krishna Kumar explores this in his post, Value Networks and Value Streams.

Cell-based teaming and architecture models (referred to as Amoeba Management System, as pioneered by Japanese company Kyocera) are also gaining in popularity. This is a move towards a more independent, more networked or ecosystem-based set of teams. Haier in China is the classic example of this.

Lastly, we refer again to Matthew Skelton’s talk about AI and teaming in which he points out that things are not that different, we just need to be thoughtful and deliberate about how teams work, collaborate and commit.