Designing Matrix Organizations That Actually Work: How IBM, Proctor & Gamble and Others Design for Success (Jossey-Bass Business & Management) [Hardcover]

This is a book that goes back to the basics and tells it as it is. We've all worked under matrix under some guise: cross-functional teams, multi-product organisation, networked organisation, multi-product organisation, spaghetti organisation . . . whatever you want to call it. It's still matrix. Let's call a spade a spade; that's what Dr. Galbraith does. He does not pretend that matrix is there to solve all strategic problems; it's there to execute the strategies that are handed down. DEC made a strategic misstep, but it is unfair to blame that on their choice of matrix as an organisational structure.

Never have I seen a more comprehensive and honest analysis of the history of matrix and explanation of the multiple forms thereof. Dr. Galbraith's books are required reading in many MBA programs, and this is another example of why that is; it conveys the deep theoretical knowledge of the subject while giving practical, case-based examples that illustrate the benefits of the subject matter.

Finally, a book that peers inside the "black box" of the matrix organization and examines it from every possible angle. Dr Jay Galbraith, one of the most prolific writers on organization design of our time, provides us with a comprehensive, practical and easy to understand explanation of the matrix in all its forms. Even if you have read all of his other books, or know nothing about organization design, this one is a must-have, because it is a kind of foundation book that helps us further understand his other writings.

The implementation of the matrix has long frustrated leaders, employees and organization designers because of its infamous "two-boss" requirement, which has bogged down decision-making and work flow. With Galbraith's objective and research-based style, there is no defending of the matrix, nor bias against the matrix. There is simply a deep and practical examination of how it works in real life and what it takes to make it work.

The author starts with "Matrix 101 by helping to define it. The Matrix "arises" from business strategies that "require (a company) to be simultaneously excellent" in two or three, sometimes four "conflicting things." Examples are global and local (e.g. function X geography) or function, geography, and brand. The matrix design enables businesses to compete on an "and-and" basis rather than an "either-or" basis. He helps us see how the competitiveness of our virtual, global markets requires this simultaneous excellence in multiple areas, while enabling customers to choose and even design what they buy.

Galbraith discusses the matrix as requiring attention to "balance of power" if it is to be successful. In order to be competitive innovators of new leading products, for example, the power of the "R&D" and "marketing" functions of the matrix must be balanced so that the best ideas and design of both are brought to market This makes sense.

Galbraith describes several variations on the matrix, depending on the strategic and practical needs of a business: simple matrix, the "two hatted" matrix, the "baton-pass" matrix, complex matrix forms such as three and four dimensional matrix. These are not theoretical constructs made up by the author, these are actual forms that exist in our aerospace, pharmaceutical and manufacturing industries. His descriptions help us see the logic of these forms and how they evolved in specific industries as these industries grew (notable is his treatment of pharmaceutical R&D).

Time and again the author grounds us in the relationship between the organization and its environment - market, regulatory and cultural. This "dance" requires businesses to mirror the complexity of their markets. They also need to be flexible and continually evolve in order to compete. According to this book, the matrix is here to stay, and all large global organizations use them in some way. By telling the story of long-lived businesses like IBM, ABB, Walmart, Nestle, Proctor & Gamble, that have continued to succeed (as markets allow) he helps us "get" that a successful matrix organization is not static, that it morphs over time.

How can we make matrix organizations work? The answer lies in the systemic approach to organization design that looks beyond structure to the tight interdependency of all major components of organizational life: strategy, structure, processes, rewards, and, of course, people. Galbraith's version of the organizational system is represented by his own "Star Model," now used by hundreds of organization designers around the globe

Galbraith illustrates the importance of each of these components to the success of the matrix with detailed examples for communication, planning and coordination, talent management and reward systems. He warns us that matrix leaders need a special (conflicting!) skill set, and devotes a chapter to the design and implementation of the top leadership teams of matrix organizations. Look for Chapter 15, which lists the design capabilities that matrix organizations need to succeed, incorporating all five components of the Star Model. This list is immensely helpful to the organization designer. After reading this book, I had hoped I would find working with the matrix a little less challenging. No such luck. But at least now I Know what I am dealing with.

Designing Matrix Organizations That Actually Work is probably Galbraith's most personally written book in both tone and content. It is written much the way the way the author speaks, and includes his personal perspectives on "spin" about the matrix, as well as the uses and abuses of the matrix by organizational consultants. Jay Galbraith's insistence on balanced scholarship provides us with an unvarnished and highly practical examination of the matrix and gives the reader a chance to judge for oneself.

There a strong defensive tone that permeates the book. The author acknowledges that matrix management was once popular and then fell under a cloud. The most notable cause he attributes to the best selling In Search of Excellence: Lessons from America's Best-Run Companies (Collins Business Essentials) by Peters and Waterman in the 80s. It claimed that various companies had done well by not using matrix management, and that other companies who had stumbled were using it.

In response, the author cites companies like Boeing, Intel, DEC [Digital Equipment Corporation] and Kodak that do use matrix management.

There probably are cases where the matrix approach can be useful. As in doing personnel evaluations, where it reduces the subjectivity in a given manager's assessment of a subordinate, by pooling together the opinions of several managers.

But the book is weakly argued. The biggest drawback to matrix management is the sheer slowness of the decision loop, especially when dealing with large scale strategic issues. The book pays little attention to addressing this, even if the author disagrees with the claim.

For instance, since 1988, Kodak's workforce has plunged over 90%, and the company has reeled from years of losses. Due to the rise of digital cameras, and the downfall of traditional film. But also exacerbated by wrong and slow decisions that worsened the decline. Surely Kodak is not a successful company, in the book's timeframe, which roughly spans the 80s to the present.

Another "successful" company mentioned was DEC. Some of you may not have even heard of it. Which is the point. Up till 1987, it was very successful indeed. It dominated the minicomputer field, and was considered a peer of HP. If you talked to any of their people, matrix management was cited by them as a strength. But then smaller companies, with much fewer resources, but far quicker to market, ate DEC's lunch. Notably Sun Microsystems. Essentially, workstations, which were dominated by Sun, replaced minicomputers. People like McNeely, Betholsheim and Joy at Sun focused on rapidly releasing the Sun 3s and Sun 4s. In contrast, DEC dithered using matrix, and was consistently late with the VaxStation and DecStation, which were their workstations. These were widely panned and fared poorly. Instead, DEC devoted far more resources to their main product line, the Vaxes.

Nor was this the only instance. DEC could have been Cisco. During the 80s, when Cisco was still small, DEC had a clear advantage in routers. Yet it squandered this in persistently going with its proprietary DECnet, while Cisco rode the rise of the Internet. Some of us who dealt with DEC at that time were told that its matrix management had the effect of starving resources for newer markets. By coincidence, DEC also peaked in 1987-8, the same time as Kodak.

The book is tone deaf. A reader who knows what happened to DEC and Kodak cannot be impressed by how the book simply ignores what happened to them, by labelling them as successful. More broadly, the book attributes some of those companies' success to the use of matrix. For the sake of argument, let's assume that matrix did indeed help them rise. But logically the question should then be asked, did matrix help them then fall? The book does not even try to address this question.