The matrix organizational design derives its name from resembling a table with elements included in both rows and columns. This type of organizational structure results in solid line and dotted line reporting relationships on organizational charts. The design was developed by the US National Aeronautics and Space Administration (NASA) for seeking better solutions in managing supplier relationships and providing managers with more decision-making authority. Organizations seek the same advantages from this organizational design today.
It makes sense that more matrix reporting structures exist in business today. With the goal of decentralization of resources to optimize productivity in mind, modern technology and access to global resources make this design more attractive to implement.
As Jay R. Galbraith points out in “The Future of Organizational Design” in the Journal of Organizational Design, technology is a big contributing factor for organizations to move to the matrix design. He points out, “These new digital devices can eliminate expensive supply chains, maximize customization, and minimize economies of scale.”
Almost every large organization has a matrix reporting relationship in some shape or form. Some reports state between 90-95% of Fortune 500 companies utilize this structure either by teams or projects. It may not be a question of which organization is making it work the best, but a question of which leaders are managing it most effectively within the organizations.
What are their secrets? The key elements of making the matrix work are broken down here into the three C’s.