Greg Kesler and Amy Kates
Jossey-Bass, 2011

Learn to love complexity

For years, leaders have tried to create smooth‐running organizations where complexity, tension, conflict and overlapping lines of authority are at a minimum. Organizational simplicity is great when the business is simple – when there are only a few products, serving a few markets (in one or two countries). Leaders execute business plans, the corporate functions support them directly, and together they are a tightly‐knit team. Lines of authority are clear and there is little need for “dual‐reporting” lines, typical of a matrix organization.

But in a complex, multi‐divisional company, managing brands across several products and geographies things get more complicated. Learn to love it. The world is a more complex place today, and harmony is often the wrong goal. When there is no tension among businesses and functions and geographies there’s a good chance value is being left on the table somewhere.

Nike’s money‐making matrix

Take Nike, marketing a core brand across a number of consumer categories with hundreds of footwear and apparel products all over the world. The voice of the global soccer consumer has made its way into Nike’s day‐to‐day decision making, and with record‐shattering results. But the seasonal story line for the swoosh has to deliver for basketball, running, fitness and other consumer categories too, so the global soccer team has to line up behind a bigger marketing story. That’s only the beginning of the creative conflict. South Africa wants to go one way on footwear design profiles while The Netherlands, Brazil and Korea may argue for something else.

Simply put: to ignore any of these competing voices diminishes the potential of Nike’s powerful blend of brand, design and market reach. Nike executives simply cannot afford to keep things simple – to make the wrong compromises. Nike’s executive team is very intuitive about how to make money by working the complexity and the tension across the matrix in their organization. They do it a lot better than most.

Confronting the confederates

Even the traditional holding companies – like Tyco – are now adding complexity to their organizations. It’s no longer enough for the separate businesses to act autonomously to make sales calls to the same corporate customers, or to set up their own infrastructure in China and India. They have to be willing to give in to some dual reporting back to the center to leverage those assets for the greater good. That means a matrix and it means tension. Much of the payoff in these historically fractured organization models is in reduced costs, but it doesn’t end there.

The solution

Senior leadership must learn to lead a more diverse, sometimes dissonant orchestra. A clear approach to operating governance is the key to making the tension in the matrix work for customers, shareholders and the assorted teams inside the business. Look to two places for the solution: smart “organization design” and the right leader behaviors and skills.

Download entire pdf to continue reading this article.