The rise of the horizontal functions

One of the key reasons that organizations introduce a matrix organization structure is to cut across the traditional “vertical” silos of function and geography. Leading organizations have realised that work doesn’t fit into these neat functional and geographic silos any more. Global customers want a common point of contact, supply chains cut across the traditional functions.

Many have introduced a matrix, with dual reporting lines, to reflect this internal and external complexity. Some others have gone further by creating “horizontal functions” but are organized entirely horizontally, without necessarily a second functional reporting line.

This is most evident in global accounts organizations where companies set up a global account manager to manage the relationship with a particular global customer. In some organizations, these global account organizations are independent of the country sales organizations, though often they share some resource.

In the supply chain, the logic of following the information and product from start to finish of the supply chain is so compelling that the supply chain becomes the strongest driver of activity and the function can be related to an enabling role in professional development.

The traditional functions, however, continue to have a strong hold. Most people see their careers as functional:, it’s only when people see themselves as a “supply chain professional” rather than a procurement or distribution professional that the real power will be aligned with the horizontal function.

But is this a desirable outcome? There is no doubt that the majority of value is increasingly delivered by horizontal processes that cut across the business, serving customers. However, if we take that logic to its logical conclusion, then we may just create horizontal silos that don’t talk to each other.

The advantage of the matrix is that it institutionalizes the need to balance the business and the function, the global and the local, common business processes and local flexibility. We need to maintain the roles of the functions and geography to play their part in building a healthy business that is able to deliver both priorities, otherwise we risk being back where we began: with a silo mentality that is just horizontal instead of vertical.