An article on Bloomberg recently discussed challenges facing General Motors’ CEO, Dan Akerson, in introducing a new global organization. The article is a case study on the challenges of finding the right form of matrix structure.
The challenges the article identifies include:
- Finding the right balance between the geographical organization – in this case GM Brazil and South American region, and an emphasis on global brands and global functions.
- Finding the balance between accountability and flexibility.
- Akerson has apparently expressed frustration that ‘the company is splintered fiefdoms’.
- The need for more transparent information across the organization.
- The desire to break a culture of slow-moving consensus, and speed up decision-making.
General Motors already reflects the need to consider geography, functions and brand on it’s board with regional Vice Presidents for Europe, North America, and South America regions, global functions such as a CIO, accounting, finance, legal, and product development, and one global brand head for Cadillac, so it’s likely they have already have some form of matrix. The debate seems rather to be: what should be the balance of power between these elements?
This is an enduring challenge in global organizations. Geography is not going to go away. Local regulatory, competition and cultural issues mean we need to keep focus on geographic operations. At the same time, horizontal workflows, such as product and global functions become increasingly important to a successful global company. This is not a problem to be solved once and for all. We can’t ignore either. Instead we need to find a dynamic balance, and to be clear where it adds value to be local and where it adds value to be global. The solution we come up with today may well be the wrong one tomorrow. A structure that emphasises only one at the expense of the other is unlikely to succeed, so some form of ‘balanced matrix’ organization is likely to be the solution.
Akerson’s reported frustration with the traditional silos usually indicates an ingrained geographic ‘vertical’ structure that is not delivering synergies across the organization. This is one of the most common reasons for shifting the balance of power more towards the ‘horizontal’ business functions or product groups (in this case, brands).
It looks as though General Motors has already set up more transparent information flows across the organization. This usually only helps illustrate the scale of the issue, and the opportunities – if we can share resources, best practices and learning across the network.
The article focuses on organizational structure, but it’s likely that the structure is already in place to balance this. The problem is the behaviours within the structure. Many organizations try to solve these problems through structural change, when actually the secret of success is in behaviours and management style.
If we look at finding a balance between accountability and flexibility, of course, companies want both but they don’t always sit easily together.
Accountability has unfortunately become something which is quite backward looking and negative: we want to know who to blame when things go wrong. In the search for accountability, we tend to look for individuals and for linear solutions to problems. In extremely complex products, such as in the automotive industry, these clear accountabilities can be hard to achieve, except at the very senior level, and can lead to micromanagement. In a matrix, accountabilities are, inevitably, shared. If we could identify single accountabilities why would we need multiple reporting?
The search for flexibility tends to erode clarity: when we have multiple reporting lines and different streams of goals that compete for our time and attention, then things do become less clear. We don’t get more flexibility by adding more structure and more reporting lines. We get it from empowering the people in the middle of the organization (where the reporting lines intersect), to manage trade-offs and dilemmas without constant escalation for decisions.
The matrix can lead to an increase in consensus seeking and delay in decision-making. The matrix is designed to make us more connected, and potentially more people are involved in decisions. But at the same time we need to be effective, and it is critical in a matrix to clearly define decision rights so that the right people – and only the right people – are involved in decisions. The process for doing this is not complex, but the mindset change is significant. It’s easy to fall back on another meeting, another team and more involvement, but it is essential to create clearer decision flows and to empower people to make decisions and support them in the face of the consequences.
I would encourage General Motors to put more thinking into the behaviours, skills and culture around these topics than they do to the structure. When we face these kinds of problems it can be tempting to reorganise again. Structure does give individual some clues about where to pay attention, but, without the right behaviours and skills, people will tend to revert to their old way of working within the new structure. If we don’t build a matrix mindset and skill set required to succeed in this complex environment, we will tend to see the problems of silo thinking, inflexibility and slow decision-making reoccur – whatever the structure.
– read the original article: GM Considers Brazil Options With Akerson’s Global Reorganization. Tim Higgins, Bloomberg, January 26, 2013
– find out more: about Matrix structures.