Applying knowledge management principles to enhance cross ... - LPIS

Applying knowledge management principles to enhance cross-functional team performance Mirghani Mohamed, Michael Stankosky and Arthur Murray

Mirghani S. Mohamed is Assistant Director, Information Systems & Services, The George Washington University, Washington, DC ([email protected]). Michael A. Stankosky is Lead Professor, Institute for Knowledge Management, The George Washington University, Washington, DC (mstanko@ gwu.edu). Arthur J. Murray is CEO, Telart Inc., Boyce, VA ([email protected]).

Abstract Traditional organizations with heavy internal competition, rigid functional silos and undue compartmentalization exhibit sub-optimal performance by inhibiting critical knowledge ¯ows. Cross-functional teaming attempts to solve this problem by building organizational connections across functional silos. However, merely bringing members of formerly isolated departments together produces only marginal increases in performance. Any synergistic collaboration is likely to arise serendipitously and unpredictably. We propose a systematic approach for combining the principles of knowledge management and cross-functional teaming in ways that purposefully enhance knowledge ¯ows and result in signi®cant improvements in organizational performance as measured by cost, time and quality. Keywords Knowledge management, Learning organizations, Resource allocation, Cross functional teams

Introduction While there is an abundance of literature on the individual subjects of cross-functionality and knowledge management (KM), there is a notable lack of discussion regarding how the two can be effectively combined. Each concept embraces different yet complementary solutions for the same set of organizational problems. The potential for synergy is obvious. The successful application of KM necessitates interaction among multi-disciplinary groups of people as a basic requirement. Cross-functionality cannot be effective without sharing knowledge among team members. In many organizations cross-functionality plays a signi®cant role in binding organization units together and providing a superlative medium for competence gains and productivity enhancement. Nikolenko and Kleiner (1996) argue that in a functional hierarchy of a vertically built company, individual jobs and information ¯ow are geared towards control. The crossfunctional teams of the horizontal company do not require the same level of formal managerial control because their work is aligned with customers' needs, and ``controlled'' by a judgment of the ®nal result. Webber (2002) concluded that as organizations move into the twenty-®rst century work challenges will continue to increase and the need for cross-functional teams (CFTs) will be great. Therefore, it is important for organizations to understand how to achieve maximum bene®t from cross-functional teaming. Stebbins and Shani (1995) stated that collaborative knowledge teams give corporations an edge on creativity and innovation. Cross-functionality is a special teaming effort that generally

DOI 10.1108/13673270410541097 VOL. 8 NO. 3 2004, pp. 127-142, ã Emerald Group Publishing Limited, ISSN 1367-3270

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successful application of KM necessitates `` The interaction among multi-disciplinary groups of people as a basic requirement. '' leads to enhancement in ef®ciency and effectiveness of the process and reduction in multi-task lead-time and redundancies (Goulden, 1995; Anumba et al., 2001; Shipley, 1994; Zhang and Cao, 2002; Proehl, 1996; Jones, 1994; Webber, 2002; Koch, 1995) ). However, few if any of these results have been directly linked to KM, especially with regard to the evolutionary progression of team dialogue. A few investigators such as Benson and Dresdow (1998), Barker et al. (1998), Calabrese (1999), and Fernandes and Raja (2002) mention the importance of knowledge sharing within CFT structures, but not how knowledge is managed within these teams. The value that KM brings to mixed teams results from the potential for enhancing and leveraging knowledge ¯ows among heterogeneous sources across space and time. It is well established that knowledge in general does not obey the law of diminishing returns; the more it is dispersed and shared the more productive and effective it becomes. The main theme behind blending cross-functionality and KM is to achieve signi®cant competitive advantage through constructing a whole with a value greater than the sum of its individual parts. This synergistic effect is especially feasible in the case of intangible capital, namely, the collective brainpower. The best milieu for enhanced knowledge exchange is massive, enterprise-wide crosshierarchical and interdisciplinary teamwork. Such an intricate and complex system needs to be managed and purposefully guided. This is where the management component of KM comes into play.

Knowledge management: a four-pillar approach Under the ®erce competition of the current networked economy many organizations are searching for ways and means to improve their sustainability, effectiveness and innovation status through the structuring and restructuring of their workforces. As a result, embedding KM and other collaborative strategies in their business process is becoming more important. In his KM conceptual framework professor Michael Stankosky of the George Washington University upholds KM on four well-built pillars, namely, organization, leadership, technology and learning (Stankosky, 2000). The same fundamental idea may be applied to CFT. Because of numerous dependencies on the business ecosystem in which the initiative is carried out, there is no generalized formula to determine the exact contribution of each of these pillars to the organization's competitive advantage. However, it has been generally accepted that each of these pillars must be operating to some degree in order for knowledge management to be successful. Leadership KM involves changes that may not easily gain the organization's acceptance unless the leadership mobilizes the middle managers to provide an environment conducive to the widespread sharing of knowledge. Pan and Scarbrough (1998) report that management and leadership play a critical role in establishing the multi-level context needed for the effective assimilation of KM practices. The authors quote Bob Buckman of Buckman Laboratories, saying that: ``The climate we create as leaders has a major impact on our ability to share knowledge across time and space''. They summarized the leadership role in KM and crossfunctionality into two elements: overcoming resistance to change; and dismantling barriers to communication, both across the organization and between different levels of management. For cross-functionality and KM to work together, leadership needs to promote cross-functional relations that bring people together and reward them for taking shared corrective actions or reaching mutually valuable solutions. Leadership needs to stay away from meddling and forcing

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mechanisms, while at the same time foster the learning environment to motivate employees to experiment. Organization The organization pillar is critical in that it demonstrates how we must amalgamate the detached heterogeneous bodies of knowledge to work, interact and think in concert. Having said that, traditional organizations with heavy internal competition, rigid functional silos and undue compartmentalization may generate critical barriers that isolate various departments into disconnected islands with little bene®cial communication between them. Such hierarchical organizations slow down change, lengthen the decision making process and imprison innovation. Since traditional organizations are vertically structured around tasks and functions, they are not suitable for sharing knowledge at the organization level. Analogously, other elements of hierarchical structure such as rigid adherence to organization charts hamper knowledge ¯ow. Prior to the 1980s, the economy was built primarily on tangible assets, while the organization was fully strati®ed and duties were often rigid and in¯exible. During that period, it was acceptable to model the enterprise using hierarchical organization charts. The organization chart illustrates the mechanistic ¯ow of responsibilities, supremacy, and sometimes autocracy and power of the boss, all of which are an inseparable and indisputable part of the traditional organizations. In contrast, improving the company's core competency in the current networked economy depends on leveraging and sharing of knowledge more than managing the people themselves. Accordingly, the real power must now shift not only to those who acquire the knowledge, but more importantly to those who possess the talent for leveraging knowledge. Therefore, boxes and solid or dotted elements of the organization charts cannot represent these inventive practicalities of modern organization; i.e. knowledge cannot be boxed. Additionally, organization charts cannot represent team internal dynamism, multilevel coordination, and tacit knowledge that span departmental borders. Hierarchical organizations inhibit rapid change because of the time required to traverse even a few layers of bureaucratic strata. One driver of modern organizations is the need for quick adjustment to market demands. Nikolenko and Kleiner (1996) state that organizations are subject to a variety of constantly changing internal and external in¯uences, such as the emergence of a knowledge-based economy that is characterized by the rapidly expanding in¯uence of communications and information technologies. In response to these challenges, new forms of organization structure have emerged: the horizontal organization, the network organization and the virtual corporation. The ¯attened organization structure minimizes cross-functional boundaries and opens the necessary channels for exchanging ideas and sharing knowledge. This may entail de-layered organizations architected around processes and not around functions. For effective knowledge sharing rigid multi-layers must be softened and morphed into blurred non-restrictive boundaries for cross-functionality and community networking. Organization ``structure'' is vital for how it harnesses the knowledge, and strategically directs it towards agility and competitiveness. A main premise of KM is to collaborate throughout the organization and to capitalize in the collective people's intellectual capabilities. Pursuing this line of logic, Gustafson and Kleiner (1994) observed that team participation is a collective idea: power produced by employees taking responsibility for quality and productivity, managing their work, and developing their skills and knowledge about the organization and themselves. Such collective knowledge and resources will bring better decisions with greater support for implementation. Accordingly, this should eventually lead the organization to excel in its core competence and to effectively and ef®ciently improve pro®tability and/or services. Technology While many consider technology as an end-solution, proper knowledge management treats technology as an enabler. This is especially critical as enterprise-wide CFTs become more

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geographically dispersed and declining budgets constrain travel and relocation. The George Washington University Institute for Knowledge Management (IKM) is faced with this situation. IKM is managing and coordinating its highly diverse brain trust by con®guring a suite of processdriven tools that span the full project/organizational life cycle, from initial planning to ®eld implementation and dissolution (Murray and Katz, 2003). Learning CFTs have to be well-informed and highly trained through involvement and education before they can work together effectively. For CFT to be successful all those who are involved in any project must pool their knowledge and skills to contribute to decisions across an organization's boundaries so as to generate better results in a shorter period of time. Given the importance of a strong organizational learning climate, leadership needs to take the initiative for sponsorship and support of the efforts in this direction. However, due to the diverse background of the team members, leadership should not assume that cross-functional thinking happens overnight, especially in organizations traditionally characterized by functional isolations, domain dissimilarities and centralized management.

Achieving effective cross-functionality When communication collapses and employee morale goes down, the organization becomes ineffective, incompetent and in a state of confusion. Bringing people together to alleviate these symptoms will give them the sense of ownership, responsibility and accountability to ®gure out the proper solution. This is healthier than hiring a consultant to decipher homegrown intricacies. Lack of communication results in minimal feedback and reduced double-loop learning that may eventually lead to an intellectually dead organization. This is typically a characteristic of rigid hierarchical organizations, where learning happens in one direction due to barriers that con®ne the information value chain path to a top-down relationship. This one-way information path mostly takes the form of instructions and commands from the boss, with no chance for second opinion from subordinates. Therefore, strictly bureaucratic and hierarchical organization is antagonistic to the concept of learning and knowledge sharing. Such organizations will be log-jammed with procedures, policies, rules, regulations, instructions and commands that unquestionably leave no room for innovation. In most cases CFTs are built to bring together managers, workers, experts and facilitators, regardless of their titles, to tackle a project or to solve a shared problem for a ®nite period of time. Cross-functionality provides a platform and effective means of leveraging knowledge to solve problems or to make multi-disciplinary decisions. The importance of establishing CFTs is not only to congregate the know-how, but also to identify who knows what from within and outside the CFT membership. The combination of collegial relations, personal competence, multi-skills, tacit knowledge, diversity and technology will assist in leveraging the collective brainpower of the organization. For instance it has been con®rmed by many researchers that face-to-face meetings are the key driver for knowledge transfer and crystallization of new ideas and best method for manifestation of alternative opinions (Swan et al., 1999; Bennett and Gabriel, 1999; Hankinson, 1997). Moreover, Gustafson and Kleiner (1994) observe that making a variety of knowledge and information available to a team could bring about a greater number of possible approaches to a problem, which could lead to a better quality of response. Working as a team to prepare problem solutions will lead to a better understanding and greater acceptance of the decision because the employees themselves, who possess heterogeneous knowledge, developed the solution. However, this diversity of knowledge is not always in the bene®t of the team, unless carefully dealt with as reported by Proehl (1996). Proehl indicates

is essential that team members are empowered and `` Itoffered the chance for self-management. ''

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that cross-functional teams face challenges that intact work teams do not. This is largely because the projects are not directly related to the members' immediate work, and members have many competing responsibilities and varying degrees of immediate management support for participating in organizational initiatives. Shum (1997), on the other hand, acknowledges that knowledge work is increasingly interdisciplinary. The different backgrounds, assumptions and agendas that members bring to a team can be extremely creative, but the inevitable con¯ict, debate, negotiation and compromise involved in reaching such creative solutions must also be acknowledged. This process can then be turned to the team's advantage. Getting people together alone is insuf®cient. It is essential that the team members are empowered and offered the chance for self-management. Empowerment for team members happens when the team is offered enough information in a cooperative climate to investigate a problem, derive inference, ®nd a solution, determine the risks, and plan for its full implementation, with no fear of failing or making mistakes. When honest mistakes are made they should be added to the lessons learned repository, not only to be avoided in the future, but also to be a theme for creative insights. This particular kind of error or failure should be rewarded rather than being punished or used as a justi®cation for risk-aversion behavior. In addition, the recent shift of the economy towards intangibility (knowledge assets) curtails command and control behavior and boosts cross-functionality in an attempt to exploit the intellectual capital for a differential competitive advantage in the market place. It is worth mentioning that freedom of thinking and learning are not the utopian answer for success, but are the shortest ways to innovation, which has never been a product of a command and control style of management. In some organizations cross-functionality may need a collective paradigm shift to transform the mental model of the functional tabula rasa and the silo thinking. This entails an expansive effort of cross-training, workforce development, vigorous feedback loops and serious dialogue. Many cross-functionality constraints are caused by the organizational structure. For example in vertically structured organizations, the cross-functional resistance in most cases is typically connected to middle managers not willing to share their power. Furthermore, the diverse nature of broad CFT may create a communication challenge due to dissimilar languages or background of the members or as a result of territorial hostility. This in turn may generate a knowledge gap that needs adaptation time before the team starts to integrate. These issues should be resolved or at least seriously discussed at higher levels before the ®rst CFT meeting is launched.

Transforming cross-functional teams into communities of practice CFTs are typically created for a speci®c assignment with a particular goal and timeframe. The general practice is to disband the CFT after the assignment is completed or the problem is solved. For modern agile organizations, the CFT approach is only an ephemeral phase that begets wider collaborative settings of informal knowledge networks i.e. communities of practice (CoP). In CoP settings members learn from each other based on mutual interests without any enforcement from management. CoPs are informal and unlimited by time or membership. Freedom of thinking and the interest to leverage knowledge are the driving forces for shared vision. Hence, their contribution to the organizational knowledge is indispensable. In addition, when rolling out many CFTs at the same or different times, members must be allowed to move from one team to another. This membership dynamic is found to be very effective in transferring knowledge and organizational experience from one team to another. It also makes it easier for linking these teams or their previous members to form communities. In explaining the concept of constellations of communities, i.e. how communities of practice in organizations relate to one another, Ward (2000) observes that these communities are voluntary. With the right kind of leadership, over time they form a complex, informal network of relationships, knowledge sharing, learning, and conversations that can be woven together into a powerful strategic fabric.

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CFT involves collaboration of people from various functions, divisions, and entities that result in a blend of individual backgrounds, behavioral patterns, awareness and tacit knowledge. Over time, this integration will strategically push the organization into the direction of holistic system thinking in which people envision the whole interacting system rather than focusing on isolated elements that form it. However, during any endeavor involving interdisciplinary and cross-functional challenges, leadership must cautiously deal with sub-optimization rippling effects, especially when the team pursues the merger of multiple processes. Sub-optimization occurs due to incomplete knowledge and con¯icting goals that lead to solving the process problem on one side of the equation, which results in complicating the upstream or downstream components of the same process. An actual example of this occurred when a CFT consisting of a Web development team, and marketing and system administration groups, reached an agreement to design a Web site that required intensive image retrieval at the user's end. After the content was reviewed by quality control, it was found that the content did not re¯ect what was stated in the speci®cations (developed by the R&D group), which violated the company's credo and ethics code. However, after intense revision and editing of almost all the objects on the site, the R&D group passed the project to the network and security groups who claimed that the company's network speed and bandwidth could not make such content available anyway. In addition, the security group pointed out that the connectivity required of all the servers in the project could not be achieved without signi®cant risk of a security breach.

Cross-functionality in learning organizations The Merriam-Webster dictionary de®nes learning as ``gaining knowledge or understanding of or skill in by study, instruction, or experience''. Senge (1990) points out that the learning organization is where people continually expand their capacity to create results they truly desire, where new and expansive patterns of thinking are nurtured, where collective aspiration is set free, and where people are continually learning how to learn together. Learning in organizations takes place when the experiential awareness traverses across departmental boundaries and results in leveraging the strategically valuable knowledge to improve goods and services. Francis and Mazany (1996) concluded that to become a learning organization, an organization must develop a wide range of knowledge, skills and characteristics. However, the beginning step is to develop the necessary structures to assist those within the organization, as well as the organization itself, to learn and to change. A dynamic strategic planning process, an empowered team-oriented environment and a continuous improvement culture when combined with proactive visionary leadership and a commitment to experiential learning, are fundamental structures on which to build a learning organization. In reference to the importance of teams in such learning process, Spender (1996) found that learning at the collective level is the outcome of the interplay between the conscious and automatic types of knowledge, and between the individual and collective types of knowledge as they interact through the social processes of the collective, such as teamwork. Organizational learning necessitates the challenge of assembling the organization collective mental model to change the way people usually do business. However, this collective mental model will be effective only if the transformation comes as a result of evolutionary or revolutionary change. Nevertheless, change always comes with risk, which can only be mitigated by knowledge. Therefore, employees at all levels of the organization must coalesce their intellectual capabilities to develop the collective competence needed for learning to happen faster than the change. This requires a certain level of dynamism within the organization where there are minimal obstacles for feedback and knowledge ¯ow. It has been reported by many investigators (Fowler, 1998; Rayner et al., 2002; Senge, 1990) that these feedback loops have signi®cantly contributed to learning and knowledge sharing processes. Since learning is a social process, developing a cross-teaching and cross-learning strategy may be the fastest method for creating this common mental model. As Senge (1990) reported, teams are the fundamental learning units. Team learning starts with dialogue, which is the ability

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uniqueness of tacit knowledge prompts the `` The formation of cross-functional teams and communities of practice for its externalization. '' of team members to suspend assumptions and judgment and enter into a free ¯owing dialogue in which different ideas can be explored together. This means that it is essential to develop an understanding of the practices that encourage as well as hamper such a dialogue. Nonaka and Takeuchi (1995) emphasize the need for proximity and ongoing relationships of project participants as they share tacit knowledge through both dialogue and activity. In addition, team learning builds up the essential skills for members to focus on a shared vision of organization strategy more than their individual mindset. Hence, many knowledge-generating organizations developed such learning teams because it was the only means to sustaining competitive advantage. For instance, General Electric established a learning team referred to as `Àction Learning'', in which chosen top executives engaged in non-traditional executive education. Similarly, Ernst & Young established what is called ``Learning Environment to Accelerate Performance'' (LEAP) to address the learning and knowledge of the employees. Learning cannot be described as an independent variable, because it is a result of many intermingling socially constructed realities. Therefore, understanding the social nature of learning is crucial to capitalize on knowledge so as to improve quality of products and to excel in services. This is by and large reachable through cross-functional teams and learning communities. It is believed that most of knowledge necessary for improving effectiveness, ef®ciency and innovation of a ®rm is embedded in people's heads, i.e. tacit knowledge. This type of knowledge is unconscious, experiential, personal, subjective and unique for each person as his/ her ®ngerprints. The intelligence of a team comes as a direct result of its socially constructed and interacted plural tacit knowledge. Haldin-Herrgard (2000) concluded that tacit knowledge cannot be given in lectures and it cannot be found in databases, textbooks, manuals or Internal newsletters for diffusion. It has to be internalized in the human body and soul. Different methods like apprenticeship, direct interaction, networking and action learning that include face-to-face social interaction and practical experiences are more suitable for supporting the sharing of tacit knowledge. The complexity lies in how organizations transfer, externalize and codify this knowledge and share it. The uniqueness of tacit knowledge prompts the formation of cross-functional teams and communities of practice for its externalization. This is because people with disparate skills, backgrounds, behavioral patterns, perceptions and diverse learning styles, when linked in learning-rich context, can unconsciously tap, nurture and share strategically indispensable knowledge. But the harnessing of such a socially constructed cognition and cooperative thinking climate does not come for free and is not a guaranteed outcome in all environments. Although there is no speci®c recipe for success, the crux of the issue is how the middle managers manipulate their organization's culture to achieve the delicate balance between the existing components. Otherwise the gathering of people alone is not enough for learning and in some cases, with enough resistance from team members, it may inhibit the learning process.

Virtual cross-functionality Face-to-face contact is rarely questioned as a powerful mechanism for communication in general and as knowledge sharing vehicle in particular. Face-to-face (non-virtual) representation brings with it a rich anthology of empathetic communication actions and human behavioral patterns such as body language, brainstorming chemistry, human consciousness and social synergy. These intrinsic elements contribute to the contextual value of knowledge and reinforce the robustness of trust between communicators. However, due to physical, temporal and departmental constraints face-to-face convention and physical self-managed teaming are not always feasible.

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Stough et al. (2000) state that although the telecommunication system cannot be a substitute for face-to-face communication, it would facilitate the development of commitments among virtual team members. Therefore, augmentation of cross-functional activities with technological solutions is imperative for the success of cross-functionality initiative. As a result, many collaborative network structures such as on-line communities, virtual cross-functional teams (VCFT) and virtual knowledge repositories have been launched. VCFT is a group of multi-disciplinary people with shared vision and purpose who use technology across time, space and organizational boundaries to solve a shared problem or to reach a quick decision. Virtually distributed collaborative work has lately emerged to connect geographically dispersed teams members, promote boundary-less organizations and save time by streamlining the process through automation and work¯ow. Stough et al. (2000) observe that virtual teams, for example, present a new way of organizing global workforces to harness an information age opportunity for mobilizing hidden manpower through the use of the computer-mediated communication technologies, which overcome the barriers created by geographical distance and time. Holton (2001) reports that identifying and applying appropriate team building strategies for a virtual environment will not only enhance organizational effectiveness but will also positively impact the quality of working life for virtual team members. Analogously, selecting the appropriate technology for the virtual team communication is vital. There is a wide range of technologies in the intranet, extranet, or Internet that embrace VCFT intermediation and facilitate the collective knowing. These teamware products can be characterized as synchronous technologies such as video-conferencing, voice-conferencing, telephone, smartboards, chat rooms etc., or asynchronous tools such as e-mail, instant messaging, on-line discussion forums and push technology. In addition, there are other collaborative tools that help virtual teams decision making process such as dataware houses and data mining tools and decision support systems (DSS). Grif®th and Neale (1999) examined the role of virtual teams in the development of transactive memory and team performance within the organization. The authors found that a common organizational response to this problem is to design cross-functional teams ± and with the increased capabilities provided by technology to facilitate communication across geographic and temporal distances ± team memberships can be composed of individuals representing differing organizational functions, perceptions, and expertise to insure diversity in knowledge and perspectives. Following the same judgment, Jin (1999) states that virtual integration gathers people from different ®elds and technological backgrounds and organizes teams according to speci®c goals and systems to create superior environments for interdisciplinary research and integration of knowledge and intellect. Bal and Gundry (1999) report that virtual teaming is the most appropriate framework and mechanism in which to examine how concurrent engineering relationships can be created across a distributed supply chain, with members separated geographically. This relationship may extend from facilitating the process to binding human as observed by Shani et al. (2000) who reports that the development of groupware re¯ects a change in emphasis from using the computer to support record keeping and managerial decision-making toward using the computer to facilitate human interaction and team performance. Bal and Gundry (1999) state that virtual teaming is the most appropriate framework and mechanism in which to examine how such relationships can be created across a distributed supply chain, with members separated geographically. In principle, virtual teaming could allow joint commitment, feelings of mutuality, trust and creativity, and rapid decision making to operate within a supply chain. Recently, these tools have been used in forming virtual communities and virtual spaces and structures that are mainly employed to share knowledge and ideas. In their discussion of the conditions of knowledge management in virtual organizations, Lemken et al. (2000) notes that ¯uid virtual organizations sustain a knowledge management capability to

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establish an organizational memory that is ¯exible and adaptive to changing requirements. This is best achieved by a strong organizational culture that emphasizes knowledge sharing by the use of various communication channels. Cross-functionality and virtual teaming may not be organized by the interest, common goal and agreed framework rather than by guidance from the organization. This phenomenon is obvious in the case of on-line communities which is described by Cothrel and Williams (1999) that the term `òn-line community'' (OLC), coined in the early days of computer networking, is now being applied to groups of employees with common professional goals and interests who seek to add value by extending themselves virtually. The dependency of teaming on the technology may weaken the contextual nature of knowledge, but it is the preeminent option on hand for cross-functionality members when the physical presence is not realistic and lack of proximity is the problem. In addition, one of the most critical team building strategies is to sustain an environment of trust because team members function outside the typical departmental policy vis-aÁ-vis con®dentiality and knowledge assurance. Holton (2001) summarizes the factors contributing to virtual team development as positive team climate, opportunity for regular team communications, action learning and personal growth of team members through structured team building interventions to create shared understanding and mutual trust. Rockett et al. (1998) mentions that team-building factors that might be implied in a local arrangement have to be made explicit in the virtual setting, as opportunities did not exist for clarifying intentions outside of the meeting place. This unique knowledge-sharing requirement is illustrated by Holton (2001) who states that virtual teams require a solid foundation of mutual trust and collaboration, if they are to function effectively. The intricacy of building a virtual team is fundamentally different from building a physical team. Rockett et al. (1998) stated that building a team in a virtual setting was found to be more dif®cult than in a face-to-face environment, but not impossible. Team-building factors that might be implied in a local arrangement, had to be made explicit in the virtual setting, as opportunities did not exist for clarifying intentions outside of the meeting place. But one major factor that complicates the virtual cross-functionality and always overlooked is trust, which is an element that goes hand-to-hand with the continuous improvement of the team performance. As stated by Bal and Teo (2001), trust building is an ongoing process and it affects performance of teams. It must not be neglected when providing team building training for virtual teams.

Example: achieving cross-functionality within ERP systems Looking at industrial practice during the past decade nothing appears to have had such a great impact on organizational innovation as the growing market of application software packages such as enterprise resource planning (ERP) systems. The aim of the application of information technology (IT) is the profound improvement of the economic ef®ciency and effectiveness of all business processes (Scherer, 2000). ERP systems such as SAP, Oracle Business Suites, PeopleSoft, Baan and J.D. Edwards were originally designed to increase organization internal ef®ciency by streamlining the day-to-day business process. The fundamental scheme behind ERP system was to improve performance through simulating the interfunctional dynamics of an organization and by virtually breaking the departmental territories and glues the functional solutions. The virtual cross-functionality within ERP systems is enforced through work¯ow and automation of the business process. For example the purchase order ripple through different supply chain modules owned by different departments and groups such as account receivables, general ledger, invoicing, inventory and shipping. Figure 1 illustrates the analogy between ERP system (mirrored part) and CFTs (front part). Business intelligence tools, on the top of the ®gure, correspond to community of practice in real world, which emerges as a result of CFTs conglomeration. So the business community already worked cross-functionally, but ERP systems amplify information transparency and speed the decision process. Similarly, cross-functionality is not a new concept, but its implementation is revolutionized to tackle new problems such as aligning IT with the business process, which is bedrock for

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Figure 1 Logical representation of organization functional departments, cross-functional teams (CFT), and the community of practice (front drawing) in relation to the simulation of ERP II modules (shadow) of the functional departments connected through module interface (MI) and business intelligence tools that binds all modules (dotted lines)

successful ERP systems implementation. It is natural for IT department in any organization to work cross-disciplinary because the team-based approach is part of its core work where system analysts, designers, network managers, system administrators, developers, quality assurance and security groups collaborate to deploy a system in various functional areas. While the business process in ERP systems is cross-functional in its nature. For instance, a purchase order, which is saved in the system, will propagate through to most of the internal and external modules that extend from the shop ¯oor to the supplier. The role of IT is to put this business process into work not only within the company barriers, but also to establish interconnectivity and interoperability with other trade partners. Amidst these perplexing challenges, agile companies need to work more cross-functionally and cross-company by augmenting the business non-linear network-value and not only business chain-value, within and beyond the company. In fact, the recent move towards the new generation of ERP II systems shows the importance of building virtual partnership that extends beyond the enterprise. Mohamed (2002) reported that with an ERP II implementation, the company is morphed into a social community that coalesces, synthesizes, and diffuses domestic and exotic knowledge. Domestic knowledge exists within the organization and circulates among its employees, while exotic knowledge is external to the organization, and is mainly contributed by customers through their interaction via customer relationship management (CRM) system. In ERP II, the company's supply chain management (SCM) process is also integrated with the supplier's supply chain system, thus ERP II is not limited to planning, materials, manufacturing, and product distribution, but extends to retailer shelves and direct customer feedback. These two ``bolt on'' tools i.e. CRM and SCM provide full information about customers and the business process that serves them. This augmentation of the internal virtual space is critical for the exchange of the know-how and the information transparency of the whole value network. In ERP II companies can timely tap on the knowledge of the entire business value networks. For

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example using inventory management (VIM) the supplier connects to a factory ERP system, queries the database to determine how many parts are still in the stock and creates replenishment requisition accordingly. On the other hand, a customer can log into the system and issue orders for products and track the shipment. This boundary spanning not only completes the cycle and connects trading parties to transfer knowledge and speeds the process, but also allows for better forecasting of customer requirements. The new ERP II is designed as KM tool that goes beyond the organization's internal knowledge to include the supplier, the manufacturer, the customer, and many other business partners. This new cross-functional alignment between traders collapses the distance and time factors that directly affect ef®ciency, pro®tability and innovation. On the other hand, the standardization of the process is one of the main objectives for implementation of ERP system in many companies; however, standardization and innovation are not typical bedfellows. Following strict rules, policies, standardization is deemed innovation prohibitive practices. Nevertheless, in the case of ERP there are business intelligence tools at the backend. These tools break the standardization code and perform analytical inference for the available data and information that lead to customer oriented actions. Companies that have implemented successful ERP systems discovered that these systems liberated them from their legacy functional compartmentalization. But, to institute an effective communication conduit for a fully integrated business process companies need to open their doors not only for learningthrough-partnership, but also learning-through-coopetition and turn this learning joint ventures into reality.

The essence of knowledge management in cross-functional teams Looking into organization models today, one can easily ®nd that many projects span the departmental boundaries and are cross-functional in nature. This becomes more obvious when the organization is faced with inter-organizational sub-optimization problems or there is a need to change for developing an innovative product that ful®lls certain customer requirements. To facilitate enterprise-wide cross functionality, CFTs must become integral part of the organizational ``structure'' and the building blocks for the continuous improvement efforts. For these teams to be successful members must bene®t from the participatory behavior and crossfunctional knowledge sharing. Due to the widespread participation in decision-making, it is essential that all members have the required information at hand so as to understand the operational, tactical and strategic directions of the organization. The ideal environment for a KM initiative is a cohesive organization with reasonable learning culture and communication process that transcends departmental boundaries and traverse enterprise-wide. This kind of environment is not always reachable and not easy to create. It is needless to say that CFTs, with collaborative and cooperative activities, acts as a different level of communication process for knowledge sharing. If the idea is hoarded then it remains in captive. However, if the idea is shared with many CFT members then it multiplies because not only each will have the idea, but also many members may develop creative insight into it. In addition, these insights might be different due to the fact that each receiver has his/her own mental model and add a different tacit dimension. In fact, the most powerful rationale behind the need for cross-functionality is the transfer of tacit knowledge because it is dif®cult to codify. Figure 2 depicts knowledge transformation phases and the cognosphere ownership, where knowledge transforms as it transfers through its life cycle between individuals and communities. The progression from data to information to knowledge results from adding context and value to the process. For instance, the social security number of students in a university roster are just data that can be used for different purposes. If the university administration associated these social security numbers with names and grades and then compare these grades with other competing universities then that will result in information. Furthermore, if the university used the resultant information to reward the top 10 percent for their exceptional performance, then that is knowledge. This is because data morphed into decision-making means or turned into actionable information. Data is the germ-cell for knowledge as individual is the microcosm for

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Figure 2 Knowledge transformation phases in relation to their corresponding dominant owners

communities. Data can be classi®ed, as structured or un-structured, but all instinctively exist in an isolated non-contextual discrete format. Therefore, the best usage of data can only come from individuals who own or create that data. But, the likelihood of a group having the same interpretation of particular set of data is minimal, unless a predetermined quantitative model or metadata solution governs the interpretation. In data warehousing this is eminent problem where data may be syntactically and semantically invalid unless the owner adds value by carrying out data cleansing or interpretation. On the other hand, the existence of unstructured data is always debatable, because unstructured data linguistically does not make any sense. If it does then it is quali®ed to be information. Information is data with context structured into momentous patterns. For instance, the discovery of patterns in a data marts or data warehouse results in information. However, using intellectual insights to draw actionable decisions from these patterns is knowledge. When voluminous data undergoes a complete process of transformation, analysis and interpretation, it shrinks into information. Hence, information has context and a wider cognosphere and visualization scope such as the department or functional area, especially when its highly professional information. This information can be distributed and shared, but since there is no action, it will remain information. The ultimate bene®t of information occurs when transformed into business value through action. With regard to unstructured data, individuals discover knowledge and tacitly posses it. But, this is not totally true because knowledge is socially constructed process i.e. individuals discover knowledge through interaction within communities. Very minor breakthroughs in knowledge discovery exist from an individual alone such as inventions that results from an abrupt paradigm shift within the individual thinking. However, even in this case the driving force comes form the need of the community for that invention. Bhatt (2001) argued that conversion between information and knowledge is best accomplished through social actors, but social actors are slow in converting data to information.

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in general does not obey the law of `` Knowledge diminishing returns. '' Havens and Knapp (1999) concluded that knowledge, as an asset has become the most important new corporate and competitive resource. On average, 75 percent of a company's market value stems from intangible assets ± patents, copyrights, trade secrets, ®nancial records, strategies and relationships ± the know-how of the organization. While Seubert et al. (2001) reported that according to renewed economist John Kendrick, in 1929, the ratio of intangible business capital to tangible business capital was 30:70. In 1990, the ratio was 63:37. The intangible asset comprises the intellectual asset. The American Productivity and Quality Center (APQC) and many other investigators estimated that on average the tacit knowledge constitutes 80 percent of the whole knowledge available to organizations. This kind of knowledge is very dif®cult to extract through documentation. The most effective method for its elicitation is through face-to-face communication. In case this knowledge is hoarded until the source of knowledge leaves the organization then about 60 percent of the working knowledge walks out the door. Hence, hiring the ``best brains'' is not suf®cient for gaining the competitive advantage. In addition, hiring an employee should be thought about as ``leasing an intellectual asset'' that needs to be harnessed, capitalized and leveraged for the mutual bene®t of both the employee and the organization in the course of serious KM and cross-functionality initiatives.

The bottom line Teams in general are fundamental learning units, whereas the CFT is the nucleus for a healthy CoP with heterogeneous knowledge. The real differentiating factor for any organization conducive to cross-functionality is how knowledge can be leveraged to improve the process in question and to transform it into tangible value. This requires KM managers to get involved in teaming efforts and facilitating knowledge sharing from within the CFT and across the organization. The most mandating task for the KM practitioner is to convince the team and the management with the real return of investment (ROI) as a result of implementing KM principles. The intelligence of a team in solving multifaceted problems is entrenched in how the team amalgamates the collective tacit knowledge of its members. The role of the knowledge manager here is not only to organize what the organization knows, but also to achieve synergetic collaboration, i.e. the coalesce of intellectual capabilities results in more than the sum of what the organization possesses. The KM manager needs to consider the team heterogeneity as a source for synergetic collaboration and a basis for paradigm shifts because people with different backgrounds and diverse thinking can inject totally eccentric ideas into the process. Cross-functional teams are a welcome break from tradition, and have produced many positive bene®ts. Yet much room for improvement remains. For example, there is often an abundance of free-¯owing communication present within CFTs. However, communication back to the enterprise is usually limited and is comprised mostly of industrial-age reporting and documentation. Very little collective knowledge is captured and retained at an institutional level. When a CFT disbands, the collective wisdom and experience of that team rapidly dissipates. This is caused in part by the belief that CFTs have their strength in what each individual team member brings to the table. Over time, as trust builds up, synergies begin to emerge and the level of team performance increases. Once the team disbands and its members reassemble into new teams, the trust-building process must begin anew. The net result is that any performance increases tend to be delayed and localized. It's the responsibility of the KM manager to divert the CFT collective thinking from just carrying out normal tasks to focus on learning and knowledge sharing. The KM manager can use knowledge management principles to promote a ¯at organization and to avoid dealing with the organization as isolated functionalities. This might necessitates a change either in the

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community behavior or a reengineering in the business process to breakdown barriers of communication between different functional units. KM managers needs to communicate in all directions and to avoid egocentric manner that precludes empathetic communications. The CFT provides face-to-face platform to transfer tacit knowledge, which is most desirable method of sharing this kind of knowledge. But, the team can implement technology to share explicit knowledge and may be part of the tacit knowledge. Synchronous and asynchronous technology can be used across time and space for sharing knowledge, but it also helps in transcending departmental boundaries and jumping over the stumbling blocks of internal of®ce politics. The KM manager does not have to inject KM principles in the CFT intellectual paradigm. Following a learning model that ®ts the various arenas in the team environment might work better than a validated model that is a product of another KM initiative with completely different settings, dynamics and momentum. This is because the generalizable learning model should be a delicate balance between the CFT team members learning model. This will make it easier for members to learn and to assist others to learn and to leverage the team knowledge for the bene®t of the organization. Remaining competitive in today's market requires enterprise-wide performance improvement, and rapid response to change. The biggest challenge for managers using or contemplating the use of CFTs is to ensure that the collective experience of each CFT is captured, retained and reapplied across the entire enterprise. This in fact presents a double opportunity. Applying KM on a large scale has always proven dif®cult. Most KM successes have started at the project level, with incremental expansion to larger groups, divisions, and ultimately, the entire enterprise. Communication ¯ows need to be established and encouraged that run not only among the team members, but to and from each team member's functional organization. Over time, the practice of using CFTs to enhance organizational learning will increase the speed and performance of new CFTs. CFT members will not only draw from their own individual knowledge and experience, but from that of their functional group, and the enterprise as a whole. Performance in terms of ef®ciency, effectiveness and innovation will be enhanced for the individual, the CFT, the functional groups, and the entire enterprise. In summary, if your organization is not currently using CFTs, you should consider starting immediately. If you are using CFTs, consider using them as a catalyst to kick-start your enterprise into becoming a true knowledge-sharing organization.

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