Digital transformations: is there a glitch in the matrix?

Are you running (or about to run) a digital transformation in a company that has a matrix organisational structure? You might want to think again.

Complex organisational structures can greatly impact the delivery of digital transformation projects

Matrix management has been around since the 1970s and has become something of an organisational orthodoxy.

You’d be crazy to challenge it, wouldn’t you?

Oh well, here we go, challenge accepted!

How have we got here?

Matrix structures grew out of a need for companies to be more flexible in the face of the complex issues presented by globalisation.

The deep organisational hierarchies of the past were unable to meet these new challenges as they slowed communication, and the structures themselves seemed to grow an infinite and impenetrable jungle of bureaucracy and red tape.

For many businesses, it made perfect sense to adopt a matrix business structure that, in many instances, led to a more efficient use of resources, improved flexibility and thinned out the jungle of officialdom.

Companies eagerly embraced the new approach, and so it has been for the last 50 or so years.

But the world moves on and we seem to have reached a place where we have replaced one set of issues with, bizarrely, the same set of issues.

The more things change, the more they stay the same

Businesses have grown, with some adopting a global operating model, but the matrix structure remains constant in most organisations no matter where you are in the world.

Replacing slow communication with a flood of communication from all directions

One of the very problems that the matrix structure was supposed to solve is still widespread today, but in a slightly different form.

We’ve replaced the slow communication of the deep hierarchy with a frequent deluge of communication, exacerbated by a complex matrix model that requires an extensive communication structure to support it.

We now find ourselves in a position where, it seems, everyone gets every communication whether it’s relevant to them or not. The servicing of this communication becomes a job in its own right, which consumes significant amounts of time and effort that would be better spent on delivery.

Different structure, same end result – delivery is slowed down.

In this instance, however, the impact on delivery is not caused by the slow communication of a hierarchical model, but by the sheer volume of communication that is distributed to an ever-widening audience across innumerable different channels.

More communication is not better communication, and impacting the pace of change execution in a digital transformation programme is the last thing you want.

Replacing bureaucracy with conflict and inefficiency

As businesses develop, the matrix structure is adopted as a cookie-cutter template, often resulting in situations where the lines of responsibility become blurred and conflicting reporting lines and priorities arise.

Understandably, this leads to situations where accountability and delivery are compromised by confusion over who is answerable for which deliveries, and inter-managerial disagreement ensues.

Different structure, same end result – inefficiency.

We’ve now replaced the inefficiency of an overly bureaucratic structure with the inefficiencies of inter-management conflict and cascading confusion.

With the increasing pace of change, organisations need to seek out and reduce inefficiencies as much as possible. Small margins in efficiencies make a big difference between competing organisations.

Replacing silos with silos

Silos are a natural product of a hierarchical structure with teams set up to focus on their specific functions, but this does not mean that silos don’t, or can’t, exist in matrix organisations.

In a matrix model, competition between managers coupled with a complex reporting structure can lead to situations where informal (or in some cases formal) silos are created.

Different structure, same end result – reduced collaboration and flexibility.

The need for greater flexibility, one of the key benefits of a matrix structure, is compromised by the creation of silos with the resulting negative impact on cross-functional collaboration and flexibility.

Transformation initiatives, by their very nature, require a huge amount of cross-functional/departmental collaboration, and anything that gets in the way of that is sowing the seeds of failure.

Different approaches

There are, of course, many different approaches that have been taken to resolve glitches in the matrix structure.

Totally flat structures

Some businesses have adopted completely horizontal models, and while these support faster decision making and promote greater employee autonomy, they are not the silver bullet that some organisations might hope for.

Similar to matrix management, a totally flat structure can result in confusion about the chain of command, and it can be difficult for employees to see career advancement opportunities.

Though a flat model can work well in smaller organisations, they do run into difficulty when it comes to scaling-up, with more load being applied to fewer managers and a heightened risk of informal hierarchies emerging, which may result in power struggles.

A totally flat structure can (and often does) work best in situations where the entire organisation, and every employee within it, is driven by a common sense of purpose.

Fortunately, in a digital transformation context, if the strategy and direction has been clearly communicated by a senior executive (the CEO preferably) and it’s rooted in the core business values, then the organisation should have that common sense of purpose.

In this instance, a flat structure might be right for your transformation, if you can successfully address the issues highlighted above.

A hybrid approach

There are many benefits of adopting a hybrid approach. That is, a very small leadership hierarchy at the top (possibly only two levels) and a flat structure underneath this.

This type of organisational structure eliminates any confusion surrounding the chain of command and reduces issues surrounding scalability while still promoting fast communication and decision making.

The benefits of a flat structure are also retained, facilitating improved communication, more innovation and creativity and increased empowerment.

A hybrid structure would seem to be a good approach for most digital transformation initiatives and would work in many different contexts. However, care must still be taken when adopting this approach at large scale.

Closing thoughts

Matrix organisational structures have been around for a long time and have been effective in the relatively stable global environment that we’ve had up to now.

However, with seemingly ever-present volatility, market and organisational disruption, economic uncertainty and the juggernaut of transformational change heading towards us, should we be looking for new ways to arrange ourselves?

Possibly.

Are the current organisational structures still fit for purpose, and do they cater for an increasingly unclear and complex external environment?

They will work to an extent, but we are in a situation where small margins matter, and removing delivery delays and inefficiencies should be an active and constant process in any transformation initiative.

In an increasingly volatile world, one thing is certain: we won’t be going back to the deep hierarchical structures of the past any time soon.

About the author

Brian Harkin is the CTO of Kynec and a visiting lecturer at Bayes Business School (City, University of London).

He is passionate about the intersection of people, technology, and innovation and has developed the Galapagos Framework to help leaders and organisations transform the way they direct digital change.

All opinions are his own and he welcomes debate and comment!

Follow Brian on Twitter @DigitalXformBH and LinkedIn.