There are many organizational shapes, forms and sizes. Some CEO’s spent a lot of time with their management teams thinking through how to organize their company. They painstakingly take into account what products or services they sell, what their production processes are, what their business model is, etc. They choose an organizational model that theoretically fits best. Other CEO’s go with their gut feel to design their organization. Some let their organization grow organically to see what works best at any given time.
Does it really matter what you choose as your type and form of organization? Yes, of course. Is there a perfect model? No.
What most don’t realize, is that the type and form of organization you choose, determines the type of problems the organization has. Did you choose your company to be run per country or region? Then people go for the optimal result in their country or region, and there is little cooperation between the same disciplines across countries or regions. Do you choose to run your company per discipline worldwide? Then you strengthen your disciplines and potentially build a strong brand name worldwide, at the same time introducing a lot of travel and little transparency in cost and profit on country level.
The point is, there is no perfect organizational model. You WILL have to accept the downsides your choice has. Embrace them! Don’t confuse the organization by trying to have the best of both worlds.
Be consistent, be clear.
You choose a certain type of organization, because it fits your organization best. And yes, that has downsides and negative consequences. However, they are unavoidable in order to have the benefits of the model. In psychology, it is well-known that people rather forego on a potential win, then accept a loss. So as soon as people notice their organizational choice has a downside, they devise ways to limit the downside to a minimum. But in that case, you are weakening the potential win you want your organizational structure to provide. When you decide to introduce any kind of matrix organization, you inevitably forego on the win, in order to minimize the loss.
Please, don’t think you can have the best of both worlds. As soon as you start to compromise and introduce patches to decrease the downsides of your choice, you confuse the organization, increase bureaucracy, increase cost and give conflicting messages to your employees on what the priorities are. Power fights break out because both regions and disciplines start to increase their influence where possible, claiming responsibility of the grey areas you introduced. Time is spent on coordination, on determining who gets the credit for results, on finding out who informally is the decision maker (instead of the formal appointed boss), on having to talk to several bosses before a decision can be taken. With a matrix, you introduce time-consuming and resource-wasting politics and complexity into your organization.
Choose what organizational structure fits best, whether it is regional or discipline driven. Embrace the imperfections that come with it, and don’t try to patch them by devising a compromise matrix structure. Those imperfections are proof you dare to choose firmly and deliberately.