Matrix organisation: definition, example, successful application

Technically speaking, a matrix organisation is a multi-line system with the aim of increasing the responsiveness and performance of an organisation in complex and dynamic environments.

Multi-line organisations are characterised by interdependencies. In its simplest form, a matrix has two dimensions. However, more complex structures can grow to three or more dimensions. The most common dimensions are business units/products, functions and countries/regions. These can be combined with each other in different ways. What all matrix organisations have in common is that reporting lines are broken up and employees no longer have just one manager, but at least two.

In practice, hardly any two matrix organisations are alike. Or, to put it in the words of management professors Ford and Randolph: a matrix organisation is often what a company defines as a matrix.

Meeting complexity with complexity - Organisations have been confronted with internationalisation, technological change and the rapid transformation of customer needs since the 1950s at the latest. As a direct consequence, it has become increasingly important for the success of an organisation to dovetail product-, target group- and function-specific knowledge in an equally effective and balanced way (i.e. without prioritising one dimension at the expense of other important dimensions).

According to consultant and coach Jürgen Peterke (2022), the matrix organisation emerged in the aviation industry in response to these challenges. This experienced its renaissance in the second half of the 1980s. Drivers included the desire to enable flatter hierarchies and to be able to map project business well. Within a few years, it was established by companies such as Citibank, Texas Instruments and Xerox, which wanted to benefit from the key advantages promised by this form of organisation:

• Crossfunctional co-operation
  Matrix organisational structures break through the traditional organisational boundaries. There is no longer a one-dimensional view of the world, but always at least two, which are also dependent on each other. On this basis, the cross-functional and, at best, non-hierarchical co-operation between teams, which is indispensable for mastering complex tasks, can flourish on this basis. One-sidedness gives way to interdisciplinary thinking, teams become more agile and silos break down.

• Synergy and economies of scale
  There is hardly any other organisational form in which synergies and economies of scale can be leveraged more than in a matrix structure. In matrix organisations, projects, products or countries can jointly access important resources of a company, e.g. know-how, services and systems.

• Expertise
  Matrix organisations benefit from a special expertise dynamic due to the convergence of their axes. This allows team and product/project management to concentrate on their respective core areas. At the same time, valuable interface expertise is created, which contributes to a broader holistic perspective within the company and thus reduces blind spots. The dual management function also relieves the burden on company management.

• Speed
  The interface managers act as links and enable short communication and coordination channels between the axes of the matrix. Employees have fixed and permanent contact persons who can facilitate coordination and approvals. Professional challenges in particular can often be solved much more quickly and efficiently within a matrix organisation, especially if problems can be dealt with where they occur.

The value proposition of matrix organisations starts where many organisations reach their limits due to their size and complexity. We have seen that matrix organisations are based on the premise that making complexity transparent is the first step towards mastering complexity in the end.

How can matrix organisations - which can be found in many places today - become (even) more successful? What does it take for them to realise their positive potential? How can they contribute to ensuring that companies fulfil the two major requirements needed for sustainable existence? Market and employee success? We are convinced that four requirements are of particular importance:

Aligning the matrix organisation with overarching goals

Attractive, overarching goals are particularly important in matrix organisations. They provide orientation and help to deal productively with the conflicts depicted in the matrix (for example between the global product view and the different regional requirements). The stronger this common basis is, the easier it will be to succeed. This is a particularly challenging task in large organisations. This is because individual actions usually have an unmeasurable influence on overarching targets. Of course, everyone involved must also take responsibility for their own tasks - but embedded in a shared view of the organisation's goals. This requires a common understanding of the overarching organisational goals - in the sense of a shared vision, a clear purpose and a mobilising strategy. The clearer all this is, the less it will be possible to withdraw into one's own silo.

(Pragmatic) clarity of roles and responsibilities

A clear and shared understanding of roles and responsibilities within the organisation is another prerequisite. Interfaces must be clearly defined, mutual expectations clarified and common rules of the game agreed. The convergence of those involved in the coordination process is at least as valuable as the transparency created by the result. In addition to clear structuring and moderation, an external view can help, especially at the beginning. But be careful: in the end, a common understanding of "who does what" and practised procedures for clarifying possible ambiguities are more important than a technocratic, detailed definition of roles. Even in medium-sized organisations, this quickly leads to unwieldy and unhelpful documentation of rules and cases. It is better to practise cooperation, reflect on it at regular intervals and make adjustments where necessary. In this sense too, matrix organisations in particular must become learning organisations in order to be successful.

Clear leadership in the team

The decision in favour of a matrix organisation is always also a decision in favour of a very specific management system. Managers suddenly share responsibility with other superiors and are dependent on continuous coordination processes (e.g. for the capacity management of employees who work in several teams). This also fundamentally changes the demands placed on managers. From being authorised to issue instructions and make decisions, they are becoming coordinators, information providers and mediators. They are increasingly required to think strategically and organisationally across departments. In this way, they can orientate their teams towards their overarching contribution and optimally manage the capacity of employees. Successful matrix managers therefore act as flexible team players. Through targeted training and development programmes, they should learn the tools of the trade, such as transparent matrix communication practices, addressing conflicting goals and agile collaboration techniques. They are able to establish clear rules and escalation mechanisms when working with other managers. With a good dose of trust, empathy and communication, they are able to manage their employees professionally, even without being their disciplinary superiors.However, managers must above all make decisions and take responsibility in the matrix. The necessary speed and productivity can only be achieved in the matrix if a governance and management culture can be created that allows for decentralised decision-making.

Transparency and communication in the matrix organisation

Open, trusting communication is an important basis for successful matrix organisations. Especially when conflicts of objectives arise, these must be addressed in a meaningful way, as otherwise unproductive solutions and frustration can arise. In order to cope with the requirements and complexities of the matrix, it is also particularly important that the technical and disciplinary managers coordinate regularly. This does not always require meetings. In our experience, active strategic dialogues in which managers regularly discuss future-oriented goals and define the requirements for success are much more important.

Successful transformation into a matrix organisation requires far more than a new organisational chart. A completely new way of working together, a changed form of leadership and corporate culture as well as relearning restructured processes and systems are required. The introduction of a matrix organisation is anything but trivial. At best, it should be accompanied by experienced organisational experts, as management organisations would be overwhelmed by this task. However, it is necessary to involve all stakeholders in the development and implementation of the transformation process in a participatory manner. This is the only way to ensure acceptance and identification with the new structures right from the start. An iterative and dynamic approach across various phases is generally recommended:

Wir hoffen, unser Artikel konnte Ihnen interessante Impulse für Ihre Herausforderungen geben. Gerne unterstützen wir auch Sie dabei, leistungsfähige Matrixorganisationen zu entwerfen und erfolgreich umzusetzen – oder die Leistungsfähigkeit ihrer Matrixorganisation zu verbessern. Kontaktieren Sie dafür gern unsere Experten Philip Semelmayer oder Dr. Axel Sauder. Wir freuen uns, gemeinsam mit Ihnen eine Lösung für Ihre speziellen Anliegen zu entwickeln.