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The Matrix is Here to Stay
Peter Drucker argued that "the best structure will not guarantee results and performance. But the wrong structure is a guarantee of nonperformance." Drucker stated that organization structure should only be as complex as it needs to be. But as early as the mid-1970s he argued in support of the matrix: "It will present greater difficulties than either work-focused or result-focused design. But there are organizational problems where the very complexity of relationships makes [a matrix] the only appropriate design principle" (Drucker, 1973).
Organization structures have become as complex as the business challenges they face. Matrix structures are designed to balance competing, but equally important, priorities and decision rights across global, local and functional units. Despite a great deal of frustration over its failures, the matrix is here to stay. In fact, increasingly complex matrix structures will continue to flourish.
Heywood, et al. (2007), offered a persuasive case that companies are likely to generate more value by reducing the negative effects of complexity through clear operating-model choices and clear roles and decision rights than by attempting to simplify organization structures and business models. Cisco's "distributed- innovation" networks and boards deliver 70 percent of the company's innovations today, according to CEO John Chambers (McGirt, 2009). Chambers' drive to shape a culture of enterprisewide collaboration began with a massive restructuring shortly after the tech bust of 2001. His objective is to maximize innovation through simultaneous empowerment and integration.
Cisco is already teaching AT&T, GE, Procter & Gamble and others how to bring Web 2.0 to life in their businesses through creative combinations of organization and technology. Cisco is convinced that real innovation is possible only when diverse functions, P&L units and market leaders collaborate together and with customers. Chambers wants to do it in a manner that reduces dependency on him and other top executives to manage the work.
In nearly all multi-nationals, the drive to innovate must be balanced with pressure to reduce costs and to leverage corporate resources fully. (Drucker also argued that organization structures needed to separate the work of operating management-managing things we know-from the work of innovation.) Few may achieve the level of flexibility of culture and structure that Chambers envisions. But all global, multi-business companies...