Not long ago, a global consumer products firm based in Europe found itself hobbled by its traditional organizational culture. It had fiercely independent product development and marketing divisions, and equally siloed business units, whose members hardly talked to one another. Even small management decisions languished while awaiting sign-off from the top four executives, who were the only people with accountability for the whole enterprise. The company’s top management recognized that something had to change.
So they reorganized the enterprise into a matrix structure. In formal terms, a matrix is an organizational design in which employees have multiple reporting relationships; one person may be accountable to two or more functions or businesses. The typical goal of this design is to ensure cooperation among business and market leaders, by dispersing accountability. At this consumer products firm, the leaders hoped their matrix would help them get products out to market with agility, finesse, and speed.
Doug Conant tells us how he successfully introduced a matrix at Campbell Soup Company in this exclusive interview with Booz & Company partner Jon Katzenbach.
To their credit, the people of the firm took the reorganization seriously. The CEO pulled together representatives from every part of the company to redesign the process and flow of work. They crafted a highly articulated formal structure, assigning equal responsibility for P&L to the business units and the marketing staff, and integrating all the roles across functions. The designers of the matrix worked thoughtfully and diligently to redefine decision rights, to place strong talent in high-priority roles, and to set up new financial systems that made the data on business results highly transparent throughout the company. They put everyone into new, cross-disciplinary management teams—in which one individual would report to two or three teams—and charged the teams with developing local strategies that would reflect the global strategy set by business units.
The firm then brought its top 500 executives together for the rollout. After an energetically facilitated retreat, participants signed a formal agreement to collaborate, and capped it off with handshakes all around. A memo that clarified responsibilities and roles was disseminated to people at every level, and people dubbed “tie breakers” were assigned to mediate potential conflicts.
Expectations that the company would operate with enhanced alignment ran high. Yet it didn’t take long for most of the new matrix structures to fizzle. To be sure, it was already a challenging year. The global economic recession hit the company hard, triggering unexpected cutbacks. But tensions rose even in the more successful parts of the enterprise. Business unit managers, accustomed to having sole responsibility for finance, grew frustrated at the need to act in concert with marketers. They felt it bogged them down in negotiations and reduced their efficiency. Marketing leaders, for their part, sometimes overstepped their roles. At other times, they hung back and deferred to the business leaders, even when they had something valuable to say. “Tie breakers” found themselves in heavy demand, mediating even small-bore disagreements. People spent a great deal of time clarifying who “owned” which decisions. Pre-matrix problems continued to surface: Regions squabbled over shared services, and supply chain partners remained hard to reach. As people became disillusioned, an unspoken consensus emerged that the matrix itself had become the problem.
Don’t Blame Your Matrix
We’ve seen similar scenarios play out in many other organizations. First, they adopt a matrix structure, believing this realignment will solve problems caused by hierarchical rigidity and internal silos. They often spend significant effort and resources on getting the formal elements of the matrix right, paying particular attention to defining roles, rules, measures, policies, and procedures.