Chapter 12
Managing New Product Development Teams
SYNOPSIS OF CHAPTER
By using teams to solve new product development issues, organizations benefit from the
experience and knowledge base of several individuals. Team size, composition, structure,
leadership and administration are all factors that will impact the success of a new product
development team. The optimal team size will bring enough experience to the table, but not be
so big as to push administrative costs and communication problems out of control. Teams
composed of individuals from different functional expertise will benefit by a broader range of
expertise and viewpoints. Having team members who are diverse in other ways (e.g.
organizational tenure, age, cultural background, gender or demographics) will also add value to
the team because of the experience and knowledge they add. The risk, however, is that diversity
will increase coordination and communication costs. This effect can be mitigated by long-term
contact among team members and by providing incentives to work cooperatively.
Team structure can also impact team success. Factors such as co-location, permanence, and the
type of leader (level of authority, experience, managerial skills should be matched to the type of
project being undertaken. Additionally, the use a project charter and contract book are useful
tools in keeping all team members focused on the projects goals and help each team member to
feel a sense of ownership in the project.
When a project requires the unique skills of individuals who are geographically dispersed and
unable to be reassigned, firms might use virtual teams (teams that meet via information
technology rather than through face-to-face contact). While information technologies have made
this a more feasible method of working, the virtual team requires special attention to the issues
concerning team member participation, cooperation and trust.
TEACHING OBJECTIVES
1. Develop an understanding of how team composition (e.g., size, diversity) impacts its
potential for problem solving as well as its coordination and communication costs.
2. Provide students with insight into the different ways that teams can be structured, how
structure influences performance of the team, and how team structure can be matched to
project type. the factors that impact team success including size, diversity, structure and
leadership.
3. Discuss the role of team leadership and administration in ensuring the team has access to
the resources it needs and that team members feel committed to team goals.
LECTURE OUTLINE
I. Overview
a. By creating cross-functional new product development teams, firms hope to facilitate
coordination and cooperation among divisions. A number of factors will impact the
team’s performance, including size, composition, structure, administration and
leadership.
II. Constructing New Product Development Teams
a. Team size affects a team’s ability to draw upon the efforts and expertise of multiple
individuals and the costs associated with coordinating team members. Teams can often
outperform individuals suggesting a direct relationship between team size and potential
for success. However, large teams have drawbacks including:
i. Greater administrative costs and more frequent communication problems.
ii. Difficulty developing a shared sense of identity among team members.
iii. Greater potential for social loafing (i.e. the likelihood of individuals thinking they
will not receive full credit, or blame, for individual contribution to team effort and
thus not contributing their full effort).
b. Team composition can also affect the knowledge of the team, its access to resources,
and its coordination costs.
i. The advantages of cross-functional teams include
1. The development of a broader knowledge base.
2. The “cross-fertilization of ideas”.
3. The opportunity to draw on a wider mix of information sources.
4. Coordination among multiple functional areas of the firm.
ii. The disadvantages of cross-functional teams include the following:
1. Increases in coordination and communication costs.
2. Difficulty in building a cohesive team with diverse members because the
preference of most individuals is to interact with people they perceive as
similar (i.e. homophily).
iii. Long-term contact, however, can improve communication and cohesion for
heterogeneous teams with the end result being a team with more information.
c. Other types of diversity that can benefit team performance include:
i. Different tenures (i.e. time with firm) provide expanded access to contacts inside
and outside the firm.
ii. Cultural diversity often results in improved problem solving by incorporating
multiple viewpoints.
iii. Demographic diversity provide access to different viewpoints and external
resources, and may engender greater innovation and improved overall performance.
d. Personalities of individual team members will also impact team success. The most
beneficial traits include high extroversion, high agreeableness, and low neuroticism.
III. Boundary Spanning Activities in New Product Development Teams
a. The ability to manage relationships outside the team’s boundaries is another key to a
successful innovation team. Research has shown that these activities are most effective
when performed early in development process. Gatekeepers serve as important links to
these outside relationships. Three primary types of boundary spanning activity are:
i. Ambassador activities include representing the team to others and protecting the
team from external interference.
ii. Task coordination activities include coordinating and negotiating with other
groups.
iii. Scouting activities include scanning for ideas and information that might
enhance the team’s knowledge base.
IV. The Structure of New Product Development Teams
a. Teams may be classified into four types: functional, lightweight, heavyweight, and
autonomous.Show Figures 12.1 and 12.2
i. Functional teams are best suited to derivative projects impacting a single
function. Team members spend less than 10% of their time on teamwork, remain
in their functional department, and generally demonstrate minimal
commitment to the project. Generally, these are temporary teams that work
without a project manager or dedicated liaison personnel. These teams are
relatively easy to implement but usually suffer from a lack of cross-functional
coordination.
ii. Lightweight teams are also best suited to derivative projects but are unlike
functional teams because they have project managers (generally junior or
mid-level) and dedicated liaison personnel. These teams experience slightly
better team coordination and likelihood of success over functional teams.
iii. Heavyweight teams are best suited to platform projects. Members transfer
from functional departments to be co-located full-time with a project manager
(usually a senior manager with authority to command resources, and evaluate
and reward team members). The potential impact (e.g. promotions, raises, etc.)
of the project manager on members’ careers creates commitment to project.
iv. Autonomous teams are especially appropriate for breakthrough and major
platform projects because they are freed from the constraints of traditional
organizational procedures and these teams may evolve into new business units.
Transfer to the team is often permanent. Assignment of senior project manager
assures access to resources from various functional departments.
b. Potential for conflict between team and functional divisions grows with the autonomy
of team.
V. The Management of New Product Development Teams
a. Team effectiveness is a function of how well suited leadership and administrative
policies are to team’s structure and needs.
b. Team leadership needs vary with the type of team with autonomous teams having
greatest need for project manager with strong leadership and managerial skills. Because
of their direct relationship with team members, project managers can be more closely
related to team success than senior management or project champions.
c. Team administration should be designed to ensure that team members have a clear
focus and commitment to project (e.g. project charter or mission statement, contract
book or project plan, etc.). For example, by having team members sign a contract book
the project manager can build commitment to and ownership of the project outcome.
d. Managing virtual teams effectively leverages information technology to coordinate the
efforts of geographically distant members. In addition, team members must be
comfortable with the technologies needed for collaboration, have strong interpersonal
skills, be able to work independently, have a strong work ethic and have a preference
to work as part of a team.
i. Advantages include the opportunity to include individuals regardless of
physical location and the minimization of travel costs and disruption to
employees’ regular lives.
ii. Disadvantages center on the challenges of building an effective means of
communication, especially in the areas of trust development, conflict resolution
and the exchange of tacit knowledge.
VI. Virtual International R&D Teams
a. Gassman & von Zedwitz studied 37 technology-intensive multinationals and identified
the four team types listed below. They concluded that the more radical the innovation,
the greater the need for centralization in the team structure.
i. Decentralized self-coordinating teams are best suited to modular innovation
and are characterized by the lack of a central authority and team communication
via telephone, the internet, shared databases and groupware.
ii. System integrator as coordinator utilizes one individual or office assumes
responsibility for coordination, for building common understanding, and
providing a central focus for project.
iii. Core team as system architect is constructed of key decision makers from
decentralized R&D groups, a strong project manager, and possibly external
customers or consultants that provide structure and oversight throughout the
project. This type of team is best suited to the development of architectural
innovation.
iv. Centralized venture teams are constructed of R&D personnel and resources
brought to central location and are assigned a senior project manager. This
type of team maximizes integration, coordination and effective resource
allocation but is the most expensive type of team so it is usually used to develop
strategic innovations.
Show Figure 12.3