In a world of matrix organizations

I sat through an invigorating case discussion in the Marketing Strategy class last semester (Dec 2009) about marketing organization structure. The case was about GE Plastics set in 1985 (wow, thats a long time ago, I was only 2). So, I started thinking, how do can compare functional vs product based vs matrix marketing organizations? Which one of these structures is the best? Like all two-word MBA answers, the answer is “It depends”. Most or (all) the ‘stuff’ I will talk about was learned in the above mentioned Marketing Strategy class last semester by our beloved Welshman at Kelley, Prof. Neil Morgan.

Where as functional roles such as technical marketing, channel marketing, branding, marketing communication, product development/management can make use of functional experts in each ‘silo’, the overall redundancy across various product groups can prove to be very inefficient. In the case of product based marketing organization, each product group will typically have complete P&L responsibility and an incentive to efficiently bring the product to market going through all the necessary steps. The trouble is that there will be tremendous overlap of personnel with expertise in certain aspects of their products, but not necessarily a functional area.

The solution to this problem; the best of both worlds by creating a matrix organization. This structure is predominant in growing medium-sized and larger corporations. In an ideal world, we all can well imagine that there is huge upside of having a various product managers work with project managers, and all of them working with engineering and R&D team on various tasks. One can argue, there is visibility and ‘availability’ of expertise. The potential problem is spreading yourself too thin on a zillion task forces and projects for ‘advice’. At the end of the day, you start and finish the day without touching your office, because your only commitments were meetings. The grid-structure has the potential of multiple command structures with limited accountability. This 2005 article highlights some interesting “challenges and strategies of matrix organizations”. Our class discussion was specific to the  marketing organization, but it can be generalized for a company.

Yours truly, UQ