Conflicting targets can make business functions work against each other
Each function can meet the goal it was given while making it harder for the company to deliver what it promised customers.
When different parts of a company are given targets that conflict, people can make reasonable decisions for their own teams and still create a problem for the business. The disagreement may look personal, but the company may have set it up.
Suppose dependable delivery is a company priority. Purchasing is asked to lower unit costs and agrees to longer supplier lead times. The inventory team is asked to hold less stock and reduces its buffer. Both teams meet their targets. Then demand changes, and the company struggles to deliver orders when it said it would.
There may be good reasons for each choice. Lower costs matter. So does the money tied up in inventory. The question is whether anyone decided how much flexibility the company needed to keep its delivery promise. If that decision was never made, the two functions are left to argue over a trade-off that belongs to the business.
Before asking the teams to cooperate, check their goals.
When I hear that two functions are not working well together, I want to know what each was asked to achieve. What numbers are their leaders expected to report? What decisions do those numbers encourage? And who is responsible for the result that depends on both teams?
Steven Kerr described a related problem in his 1975 paper, On the Folly of Rewarding A, While Hoping for B (Academy of Management Journal, doi:10.5465/255378): organizations can reward one behavior while hoping for another. Pay can reinforce a conflict, but the problem can begin before compensation enters the picture. Targets, budgets, and operating rules may have been set separately, with no one checking how they work together.
A single disagreement does not prove the goals are wrong. Some trade-offs are real and need a decision from someone responsible for the overall result. If a case is unclear, compare several decisions. Do the same two functions keep reaching the same impasse? Does each defend a target the company has told it to meet? What happens to customers and to the overall result?
Decide which goal takes priority.
In the delivery example, a leader needs to decide what level of service the company is promising and what it is willing to spend to provide it. Purchasing and inventory can then work from the same decision. A request to collaborate more will not tell them which goal takes priority when supply is tight.
A first move: Look at one decision the teams could not settle.
Choose a recent decision that required two functions to agree. Write down the target each was working toward and the customer or business result affected by the decision. Bring the people responsible for those targets together with the leader accountable for the overall result.
Agree on how to handle the next case. Then look at whether the targets or budgets need to change, or whether it needs to be clearer who can make the decision so the same conflict does not return.
When strategy changes, someone should check the goals given to each function. Otherwise a team can keep meeting a target that made sense last year while the company is trying to do something different now.