Friday, February 17, 2012

MIHM Jürgen, CUI Zhijian
Decision Making in Multifunctional Teams: The Strategic Impact of a Forgotten Dimension
INSEAD Working Paper 2012/24/TOM

Should BMW and Toyota organize their multifunctional teams in the same way? Traditional researchers of such teams would likely give a positive response because their focus on information processing leads them to conclude that the structure providing the best information flow is universally desirable. The research of this paper implies a more nuanced answer. In practice, many design decisions in new product development (NPD) projects are not objective and must remain judgment calls. Because different functions have a different outlook on the product, team members may have varying views on how to answer them. Traditional research has neglected how teams resolve this conflict. Through a series of game theoretic models we systematically study decision making in multifunctional teams at the design-manufacturing interface. We find that improving the availability of information is, indeed, always desirable; but information flow must not be the sole design criterion. The structure of the team’s decision-making processes influences and even dictates how teams employ their decision-making discretion. Thus, the kind of products the organization is able to deliver to the marketplace depends on the micro structure of the NPD decision-making process. Since product positioning is for many companies one of the most important strategy decisions, appropriately structuring the decision-making process should be a strategic priority.We offer a framework for designing a situationally appropriate team decision-making process.