Why Matrix? Improved access to resources

Improved access to shared resources, skills and technologies across the organization

The new organization will use a matrix structure to separate daily contract performance from the management of its technology capabilities. “This matrix structure will make it easier for us to apply our technology capabilities across our programs, enabling us to deliver the solutions that have worked for individual customers across our entire customer portfolio.”

Larry Besterman, President & CEO, TWD

In traditional vertical organizations, it is too easy for critical resources, skills and technologies to be locked up in the vertical silos by people focusing on their own area of operations and control. This can lead to duplication of effort and additional cost.

A good example is IT (information technology) where siloed organizations often have dozens – or even hundreds – of different IT systems that are incompatible and cannot be consolidated. Each of them consumes development and maintenance resource and, as an organization becomes more integrated, the lack of a common information flow and set of numbers becomes a critical weakness.

Many organizations claim cost savings due to more effective resource sharing and individuals taking broader, organization-wide resource decisions after introducing a matrix. Because of this, it is common to see a move to shared service centers in areas such as IT and HR as part of a matrix implementation.

In the late 1980s, we operated with a functional organizational model. We found that as we grew beyond a certain size and complexity it was difficult to focus on different opportunities that have different characteristics. Each business unit has outperformed its original growth goals. At the same time, we could see that these business units were also creating a level of inefficiency in terms of extra sales, services and management overhead.
So we’ve created an organizational realignment that focuses our strategy and solution planning work around five market sectors whilst retaining the vast majority of our sales, services, R&D and marketing resources in a more efficient functional model.
We’re trying to solve different problems and we’re offering different value propositions, so we need to deeply understand each opportunity individually, yet it many cases, they can share the same technology. The solutions need to work together and they can be sold to the same customers. So for maximum efficiency, we’d like to share technology, as well as sales and services resources across all five market sectors. This is essentially a type of matrix organization model that’s fairly typical of larger, more complex offer companies.

James E. Heppelmann,  President, Parametric Technology, 2012 

In the past we had regional P&Ls in our regions and sectors and it worked well. However, as we’ve grown into new geographies and with new products, it became clear that our structure had to evolve toward a more global matrix to better leverage our resources, transfer best practices and access common processes. 

FMCG CEO, Company announcement, 2011

Sharing scarce resources in a more transparent way is a very compelling reason to introduce a matrix.

What’s been your experience of this? We’d love to hear.