Implementing Technological Change with Cross-Functional Teams

OVERVIEW: In an effort to produce quality products more quickly and at less cost, Chrysler Corporation has instituted a cross-functional system of platform teams within the organization. Many facets of the organization, including R&D, now benefit from being more directly involved in the production process. Whereas in the past, departments worked as separate entities, specialists from each now come together to work more efficiently within one of the four major platform teams. And, with the success of their new products, Chrysler realizes that limited resources--if focused and organized--do not necessarily have to be a liability. By bringing the gap between those who invent and those who implement, Chrysler is emphasizing the spirit of teamwork along all stages of product development and technological change. Chrysler's first turnaround, the company's storied come-back of the early- to mid-1980s, is a familiar story by now. But our more recent turnaround (which is still going on) is, I believe, an equally impressive story. What makes it impressive, in my view, is the degree to which we have been successful in implementing "teamwork" concepts into virtually everything that we do--including our research and development. Traditionally, Chrysler, like virtually all other Western automakers, was organized around vertically oriented, "chimney-like" functional departments (Figure 1). (Figure 1 omitted) Each department--Design, Engineering, Procurement Supply, and so forth--was pretty much a world unto itself--a silo, if you will. The Design department, working more or less in a vacuum, would design a car and then (as represented by the larger arrows on Fig. 1) "shove it out the door" to the Engineering department. But, because Engineering hadn't been fully involved in the process, changes for feasibility would invariably be required--resulting in what I call "re-do loops" (the broken lines). Then, Engineering, in a vacuum itself, would engineer the car and shove it out the door to Procurement & Supply to buy parts and components from suppliers. But again there would be more re-do loops, because our suppliers had been in a vacuum of their own. The same thing would happen all the way down the line until, finally, all of the re-do loops started to look like a massive fur-ball! The results, sadly, were mammoth costs, uncompetitive product development times and, last but by no means least, "lowest-common-denominator" cars and trucks. That's because, even though there were intense turf battles all along the way, the sense of "ownership" for a complete vehicle was so diffuse it was almost as if nobody was responsible for it! TOPPLING THE CHIMNEYS After a lot of soul-searching, we took a brave pill and radically restructured our company's organizational system. Figure 2 illustrates what we did: Essentially we toppled the old functional chimneys and replaced them with cross-functional product development teams--what we call our "platform teams. "(Figure 2 omitted) We have four major platform teams in place: one each for small cars, Jeep vehicles and pickup trucks, minivans, and large cars. Each of these teams is made up of specialists from all the old functions, including our key suppliers. Indeed, our suppliers are critically important to us, both because they provide us with no less than 70 percent of our parts, and because they also supply us, more and more, with a whole lot of R&D. They feel safe about doing that because of the way we treat them. In fact, I would maintain that the relationship we have with our suppliers is widely considered to be the closest in the domestic auto industry--what some have called an "American-style keiretsu. " The term I like to use is "virtual enterprise"--it really is as if we are becoming one big, seamless value-added chain. Of course, a lot of companies have had so-called "matrix" organizations, but often without a lot of success. …