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Perspectives

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Repowering the Matrix

Matrix organizations can help companies outperform their competitors. But they are often
hard to run, and attempts to fix them frequently fail. At the root of these problems
which relate less to the structure of the matrix
itself and more to the way the parts work
togetheris how we think about power.
Here is what happens: One dimension of the
matrix (projects, functions, geographic units,
or customer segments, for example) has too
much or too little power, so we reallocate it. Or
we change the coordination mechanisms (such
as dual reporting lines, hierarchical links with
informal overlays, or solid versus dotted lines).
People caught in the middle of these matrices
wind up getting lost, and performance drops.
For example, many organizations initially fail
to give enough power to project managers.
Eventually they recognize their error, so they
empower these managers by giving them
authority, in whole or in part, to evaluate team
members and determine promotions, raises,
and other rewards. But their new power comes
at the expense of line managers, who now control only a part, or none, of the teams rewards.
Because the power of line managers is only a
fraction of what it was, they now achieve only a
fraction of what they used to accomplish in
mobilizing the team toward line objectives

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(innovation and deploying new standards, for

instance). The company wins on one front (the
short-term horizon of ongoing projects), only
to lose on another (the longer term).
In this scenario, the shifting of power is a zerosum game. But that dynamic intrinsically contradicts the intent of matrix design: channeling
the behavior of employees along multiple
dimensions that reflect different performance
requirements. To achieve that end, each dimension needs powerin the form of motivating
elements, constraints, or other types of influenceto make people do what they would not
do spontaneously. When we add new dimensions to the structure, we need more overall
power. The inability to move from a zero-sum
game to a positive-sum game by increasing the
pool of power is at the heart of malfunctioning
matrix organizations.
The Origin of Power
Where does power come from? Power is based
on the ability of one party to influence those
things (the stakes) that matter to other parties
to a degree that causes those other parties to
eventually do something they would not have
done without the first partys actual or implied
intervention. Despite popular belief, power is
not particularly related to an imbalance of information available to the parties. Instead, the
asymmetry relates to the terms of exchange in a
relationship: the reciprocal possibilities of
action. The imbalancethus the power

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comes from the fact that A can make a greater

difference regarding stakes that matter to B
than the reverse. On another issue or as stakes
change, though, B may have power over A.
Power is not an attribute of people. Rather, it
stems from a relationship tied to a situation.
To increase the total amount of power available
in an organization, management must introduce at least one new stake that matters to people and to the company. Those who can influence that stake will get the power they need,
without taking power away from others. In one
case, the added stake was competence development, which became a new condition for promotion. Until then, promotions were based
mainly on employees contributions to projects. Line managers became responsible for
assessing engineers on a variety of competence
criteria, thus gaining more power, while project
managers retained their power to assess and
reward teams on their project performance.
Empowering one dimension without diminishing others empowers the organization as a
whole. Think of it as increasing the number of
cards in a game: you then increase the possibility of openings, of exchanges. Each dimension can now have the critical mass of cards
needed to risk playing in an open way: to take
initiatives with others, to accept transparency
about performance, or to question ones own
choices to benefit the common good. In other
words, each dimension can actively participate

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in the cooperative mix that is the lifeblood of

matrix organizations.
Misconceptions About the Matrix
What often gets in the way of making the
matrix work is a series of misconceptions.
Misconception 1: The matrix must be balanced so that each dimension has the same
weight. Strict equality is not the key. What is
important is to avoid a concentration of power
that causes dominated dimensions to withdraw
from the cooperative effort as they realize that
they always lose out in the tradeoffs inherent to
the interdependencies of a matrix. The issue is
not one of balance but of enriching the game, of
adding stakes (the cards in the cooperation
game) to increase the possibilities of exchange.
Misconception 2: The matrix approach doesnt
work, because people can be held accountable
only for results that depend on factors under
their sole authority (such as teams and equipment). The problem with this principle, as well
as with its complement about the importance
of a single boss, is that it is less and less applicable, given the interdependencies that most
organizations must now master in order to be
competitive. If it were applied to distribution,
the only result for which supermarket managers could be held accountable would be the
cleanliness of their stores. Everything else,
from the product mix to the IT-supported
checkout process, depends substantially on

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others. The single boss and accountability

equates authority principles make sense only
when power is a zero-sum game. They do not
apply when increasing the total amount of
power allows each dimension to obtain from
the others the cooperation it needs.
Misconception 3: The matrix needs guardians
to serve as arbitrators among its dimensions.
This approach results in overescalationworse
yet, an overescalation that delivers a weak
punch. Real power, the kind needed to make
other parties accept tradeoffs, is not an attribute
one automatically inherits from a title or formal
position in the hierarchy. Power is intransitive:
just because A, the guardian, controls something important for B, and B for C, it does not
necessarily follow that A controls something
important for C. Which is why guardians are
never found high enough, unless they are
CEOs, who then become mired in making operational tradeoffs. The better practice is to avoid
needing guardians as a compensatory mechanism by instead creating the conditions for
cooperation among dimensions.
Misconception 4: What matters most is the clarity of rules and structure. The clarification of
decision rights is indeed crucial for matrix
organizations. Problems arise, however, when a
company relies mainly on the formalization of
rules and boxes to make the matrix work. That
effort always results in anemic leadership. The
reason is simple: power invariably requires

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some room to maneuver, some area for discretion. When there is a rule for everything, one
depends on the rule, not on ones management. Then the only people who can make a
differencewho have real powerare those
who can change the rules. These are players at
the top of an organization or collective bodies
(unions, for instance) that are far from operations. An overreliance on formalization always
results in a dependency that takes the form of
an inverted hierarchy. Managers depend on
teams to achieve their objectives, but teams do
not depend on their managers. The consequences are counterproductive whenever field
management is supposed to play a real role.
As companies become increasingly multidimensional or even networklike, issues about
power become even more pervasive, subtle,
and critical than in the basic hardwired form of
traditional vertical-and-horizontal matrices.
Understanding and managing power are now
at the heart of sound organization design.
Yves Morieux
Yves Morieux is a senior vice president and director in
the Paris office of The Boston Consulting Group.
You may contact the author by e-mail at:
morieux.yves@bcg.com
To receive future publications in electronic form about this
topic or others, please visit our subscription Web site at
www.bcg.com/subscribe.
The Boston Consulting Group, Inc. 2006. All rights reserved.

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