Designing Matrix Organizations That Actually Work

274 Pages·2011·1.07 MB·English

Designing Matrix
Organizations That
Actually Work
How IBM, Procter & Gamble, and
Others Design for Success
Jay R. Galbraith

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The Jossey-Bass
Business & Management Series

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Designing Matrix
Organizations That
Actually Work
How IBM, Procter & Gamble, and
Others Design for Success
Jay R. Galbraith

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Copyright © 2009 by Jay R. Galbraith
Published by Jossey-Bass
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Library of Congress Cataloging-in-Publication Data
Galbraith, Jay R.
Designing matrix organizations that actually work : how IBM, Procter & Gamble, and
others design for success/Jay R. Galbraith.
p. cm.—(The Jossey-Bass business & management series)
Includes bibliographical references and index.
ISBN 978-0-470-31631-3 (cloth)
1. Matrix organization. 2. Corporate culture. I. Title.
HD58.5.G35 2009
658.4'02—dc22
2008021043

Printed in the United States of America
first edition
HB Printing 10 9 8 7 6 5 4 3 2 1
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The Jossey-Bass
Business & Management Series

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This book is dedicated to my wife, Sasha.
It is her willingness and ability to read and improve
my writing that helps me immeasurably. Dedicating the book
to her is my way of showing my heartfelt appreciation.

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Contents
Preface viii
Introduction: Matrix Organizations: What Are They?
Where Did They Come From? 1
What Is a Matrix? 3
What Are the Origins of the Matrix? 7
What Happened? 10
The Star Model 12
Implications of the Star Model 17
Part One: Simple Matrix Organizations 21
1. Simple Matrix Structures 25
Two-Dimensional Structures 25
Pharmaceutical R&D Lab Example 35
Summary 40
2. The Two-Hat Model 41
What Is the Two-Hat Model? 41
Examples of Two-Hat Structures 44
Summary 50
3. The Baton Pass Model 51
The Consumer Goods Model 51
The Pharmaceutical Model 54
Summary 63
4. The Matrix Within a Matrix 65
Design Challenges of the Matrix Within a Matrix 65
Matrix Within a Matrix at the Corporate Level 69
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vi CONTENTS
Mars Pet Food Example 70
Summary 73
5. Balancing Power and Defi ning Roles 75
Designing Power Bases 75
Roles and Responsibilities 82
Summary 85
Part Two: Complex Matrix Structures 87
6. The Three-Dimensional Matrix 91
International Strategy 91
The Geography-Dominant Matrix 98
The Balanced Matrix 102
The Business-Dominant Matrix 106
Differentiated Structures 107
Other Three-Dimensional Models 109
Summary 112
7. More Complex Matrix Structures 115
Global Account Teams 115
The Front-Back Hybrid Model 116
Summary 126
8. The IBM Structure 129
The IBM Front-Back Hybrid 129
More Complexity? 136
Summary 137

Part Three: Completing the Star Model 139
9. Communication in the Matrix 143
Informal Communication 144
Formal Communication 145
Summary 150
10. Planning and Coordination Processes 153
Goal Alignment, Dispute Resolution, and
Coordination Mechanisms 153
Summary 160
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CONTENTS vii
11. Planning Processes in the Complex Matrix 161
What About Complex Matrix Designs? 161
Get the System in a Room 172
Online Processes 175
Summary 178
12. Human Resources Policies 179
Human Capital 180
Social Capital 196
Summary 199
13. Leadership in a Matrix Organization 201
Seeing That Confl icts Are Resolved 202
Managing the Top Team 208
Balancing Power 210
Summary 213
14. Implementing a Matrix 215
Using the Star Model 215
Building Capabilities 218
Summary 229
15. A Synopsis of Matrix Capabilities 231
Epilogue: Personal Stories: The Uses and
Abuses of the Matrix 235
Early Phase: “What Is a Matrix, Anyway?” 235
Matrix Takes Off and Becomes Trendy 239

The Phase of Decline 243
The Stealth Matrix Phase 245
Today: Matrix Out of the Closet 247
References 249
About the Author 251
Index 253
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Preface
On several occasions throughout my career, I have considered
writing a book on matrix organizations. Each time I decided
not to use “ matrix ” in the title and wrote about organization
design or global organization instead. In the 1970s, matrix was
too trendy. I thought that once the backlash set in, the book
would stop selling. Unfortunately, I was correct. By the 1980s, it
was a common belief that matrix structures do not work. Under
these conditions, no one would buy the book to begin with. But
throughout the 1980s and 1990s, companies continued to intro-
duce matrix or matrix - like structures. To avoid questions from
their bosses, the adopters used other names, such as “ multidi-
mensional structures ” or even the old “ line and staff ” nomen-
clature. I remember a project that I had at Kodak. McKinsey
recommended a new strategy and a “ shared resource ” structure.
It was a matrix structure with a new label. My learning from
these clients was that matrix is an appropriate organization for
many business situ ations. And when experienced managers
face these business situations, they adopt a matrix organization,
whatever it is called, to perform the business activities.
M atching a matrix organization to the appropriate situation
was part of the challenge; getting it to work was a bigger one.
Most managers drew the organization charts, debated where the
dotted and solid lines would go, and then announced the new
matrix structure to their organization. And in most cases, the
structure did not work. (In this book, we will see why.) At one
point I was counting the successes and failures. As I remember
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