As markets become more global, organizations face the daunting task of coordinating goals, actions and resources in order to function as one company. The mantra, “think global, act local,” challenges organizations to be more centralized-to leverage size and scale-while simultaneously being more decentralized and able to react to local demands and markets. The need to operate globally but act locally has spawned a flurry of organizational restructurings. The structure of choice among CEOs is the matrix.
The matrix is a grid-like organizational structure that allows a company to address multiple business dimensions using various command structures. The matrix is a far superior organizational structure, particularly when compared to a simple hierarchical structure. However, the matrix is also plagued by weaknesses. It is complex and unpredictable. It violates all of the principles of authority and thereby tends to breed ambiguity and conflict. The matrix also requires more managerial and administrative support at a time when companies are cutting back on these skills. Rarely, in fact, is a solution so flawed. How is it, then, that organizational structures are preferred over more simple organizational structures? Because, when the matrix is properly implemented it is a powerful tool that helps reduce complexity. The secret to success is to build on its strengths while managing its weaknesses.