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What would be the best practices for establishing an integrated product development team in a traditionally organized company?

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What would be the best practices for establishing an integrated product development team in a traditionally organized company?

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We are a small company (40 persons) with a traditional organization sales – IT – product etc… In order to ensure continued product innovation and feature delivery the idea of establishing an integrated product development team (IPDT) has come up. The idea sounds very interesting but many questions around how to implement it arises, how does it fit into the rest of the organisation? How should the team be led, traditional manager or team-leader, how do you avoid the two-bosses problem for team members who participate in the team as well as in a functional department etc.. Any comment, tips for further research reading etc welcome.

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