Designing matrix organizations that actually work : how IBM, Procter & Gamble, and others design for success

274 Pages·2009·1.07 MB·English

by  Jay R Galbraith

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

ffffiirrss..iinndddd ii 88//2266//0088 22::3311::3355 PPMM
The Jossey-Bass
Business & Management Series

ffffiirrss..iinndddd iiiiii 88//2266//0088 22::3311::3366 PPMM
Designing Matrix
Organizations That
Actually Work
How IBM, Procter & Gamble, and
Others Design for Success
Jay R. Galbraith

ffffiirrss..iinndddd ii 88//2266//0088 22::3311::3355 PPMM
Copyright © 2009 by Jay R. Galbraith
Published by Jossey-Bass
A Wiley Imprint
989 Market Street, San Francisco, CA 94103-1741—www.josseybass.com
No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any
form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise,
except as permitted under Section 107 or 108 of the 1976 United States Copyright Act,
without either the prior written permission of the publisher, or authorization through payment
of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive,
Danvers, MA 01923, 978-750-8400, fax [phone], or on the Web at www.copyright.com.
Requests to the publisher for permission should be addressed to the Permissions Department,
John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, 201-748-6011,
fax [phone], or online at www.wiley.com/go/permissions.
Screen Beans art is copyrighted by A Bit Better Corporation and used here with permission. Screen
Beans is a registered trademark of A Bit Better Corporation.
Readers should be aware that Internet Web sites offered as citations and/or sources for further
information may have changed or disappeared between the time this was written and when it is read.
Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best
efforts in preparing this book, they make no representations or warranties with respect to the
accuracy or completeness of the contents of this book and specifi cally disclaim any implied
warranties of merchantability or fi tness for a particular purpose. No warranty may be created
or extended by sales representatives or written sales materials. The advice and strategies
contained herein may not be suitable for your situation. You should consult with a professional
where appropriate. Neither the publisher nor author shall be liable for any loss of profi t or any
other commercial damages, including but not limited to special, incidental, consequential,
or other damages.
Jossey-Bass books and products are available through most bookstores. To contact Jossey-Bass
directly call our Customer Care Department within the U.S. at 800-956-7739, outside the
U.S. at 317-572-3986, or fax [phone].
Jossey-Bass also publishes its books in a variety of electronic formats. Some content that appears
in print may not be available in electronic books.

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
ffffiirrss..iinndddd iiii 88//2266//0088 22::3311::3366 PPMM
The Jossey-Bass
Business & Management Series

ffffiirrss..iinndddd iiiiii 88//2266//0088 22::3311::3366 PPMM
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.

ffffiirrss..iinndddd iivv 88//2266//0088 22::3311::3366 PPMM
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
vv
ffttoocc..iinndddd vv 88//2266//0088 22::3322::0011 PPMM
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
ffttoocc..iinndddd vvii 88//2266//0088 22::3322::0022 PPMM
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
ffttoocc..iinndddd vviiii 88//2266//0088 22::3322::0022 PPMM
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
viii
ffllaasstt..iinndddd vviiiiii 88//2266//0088 22::3322::1199 PPMM