A matrix organization structure introduces, or at least recognizes, the real life complexity of the business environment. Geography, function, technology, business unit and technology (among others) are important.
However, a matrix organization structure also introduces a higher level of internal complexity and some additional people management challenges, so there must be significant advantages to a matrix organization structure that outweigh the matrix people management challenges.
Thousands of organizations, often prompted by the large strategy consultancies, have adopted the matrix organization structure to help deal with internal and external complexity.
At its simplest the matrix organization structure just reflects this external complexity in the internal structure. Companies realize that geography is important but so is function, and so is customer grouping, product and technology.
In a sense then, a matrix organization structure is recognition that we cannot choose which of these is more important, so we need a structure that allows them to be balanced and prioritized on a daily basis.
What this means is that, when we choose a matrix organization structure, we are deliberately trading some clarity in return for more flexibility.
The matrix organization structure itself, solves nothing, it is how people work together in the matrix organization that makes it succeed or fail – and often this is the neglected bit.
At a more detailed level the advantages that most organizations seek through using a matrix organization structure include:
Improved ability to access resources across the old functional and geographic silos.
Better coordination on shared technologies across the organization (such as IT)
Faster decentralized decisions
Improved access to a diverse range of skills and perspectives.
Improved global or regional projects
Broader and more multiskilled people development
Increased communication and coordination across the...