This basically refers to the practice of assembling project teams using members of the organization from different functions. Typically, this would involve selecting a number of specialists under a generalist project manager.

The role of project manager can be particularly demanding when using cross-functional project teams. Apart from being an expert at project management, the project manager must also have enough general knowledge to understand what his specialists know and how it can be used. The project manager must also be skilled at conflict resolution, which is more likely to happen within a diverse group.

As with all projects but perhaps more so for cross-functional project teams, proper planning is required, which involves clear definitions of the roles and responsibilities of the project team, as well as a timeline and cost estimation (Zoerman 2008).

Cross-functional project teams have several key benefits related not only to knowledge management (KM) but also to innovation. These are:

• Creation of new knowledge: Project teams have often been considered to be a particularly important source of new knowledge, particularly when they are given a certain degree of freedom and autonomy (Zoerman 2008, Nonaka & Takeuchi 1995, Peters 1988). Ideally, the project team should be self-organizing and be able to make its own project decisions. Using cross-functional project teams allows for the integration of a wider knowledge base into the project.
• Knowledge sharingacross organizational boundaries: The team members work together during the project, enabling the transfer of all types of knowledge. In the absence of this kind of arrangement, often only explicit knowledge could be transferred, since these specialists would typically not socialize professionally.
• Support of the creation of informal knowledge networks: As we have previously determined, particularly in the section on communities of practice, informal networks are a crucial part of organizational learning. Cross-function project teams bring people together from different parts of the organization, encouraging future collaboration and the expansion of personal informal networks.

Upon completion of a given project (whether carried out by a cross-functional team or otherwise), after-action reviews are used to enhance knowledge sharing and retention.