As a company strategy becomes more dynamic and ambitious, leaders will often shift to a matrixed organization model to help the business excel at doing more than one thing simultaneously. The matrix is designed to bring forth the voices that need to influence key enterprise trade-off decisions (e.g., long term vs short term investments, M&A activity, enterprise vs operating unit accountability).
These many voices create predictable tension that is often mistaken as something harmful. When a large automotive company shifted its organization model from a product center-of-gravity to a customer-centric model, its leaders initially believed the matrixed tensions were unnecessary complexity and associated tension with “failure.” However, tension, when acknowledged as natural and addressed, can be a source of significant value because it can lead to better decisions as more perspectives are considered.
Extracting the benefits of healthy tension requires a thoughtful approach for managing the convergence of dimensions in a matrix. These intersections not only hold the greatest value for customers and shareholders1, but they also require coordination, consideration, and clear interaction models to unlock trapped value.
Netflix CEO, Reed Hastings, instituted a practice of “farming for dissent.” This practice of open-source candor where ideas live on Google Docs for anyone to comment helps surface the best ideas from anywhere in the company, refine average ideas into better ones, and mitigate company risk.
Alternatively, the large automotive company previously referenced needed a different construct. To effectively balance investments between fixed (reusable hardware and software) and variable (degree of customization) assets required a clear interaction model for key processes and strategic decisions that outlined roles, governance forums, operating cadences, and decision rights.
While Netflix relies heavily on leadership behavioral expectations, the automotive company relies on documented protocols owned and overseen by a person or committee. We typically find that both are needed—formal interaction models along with new behavioral expectations and patterns.
What is most important is thoughtful, intentional, and consistent management routines that make new leadership behaviors and outcomes possible. For many companies, that means leaders will need to work in new ways, spending more time together learning about each other’s objectives and concerns and working through trade-offs. And it will mean getting comfortable with influence derived from sources other than positional power, such as a decision right that is tipped one way or another for key operating issues or budget control that is granted to a new unit/function2. And as market conditions, companies, and products and services evolve, so too should the organization and interaction models.
Embracing the tensions, creating the mechanisms to surface and resolve them, and practicing new behaviors can not only foster innovation, it can help attract and retain talent by building a culture that welcomes diverse perspectives and rewards ideas. Conversely, in the absence of healthy and managed tension, the complexity of the matrix can devolve into frustration for customers and frontline employees.
Tension is inherent in complex organizations. Leaders should learn to embrace tension and associate tension with opportunity. Healthy tension thrives at the convergence of dimensions within a matrix—it is where differentiating company value can be created or lost. While it can be tempting to shy away from the difficult conversations, it is the responsibility of leadership to embrace the challenge and design the appropriate interaction models as well as role model how to turn healthy tension into better decisions.
1 Networked, Scaled, and Agile. Amy Kates, Greg Kesler, Michele DiMartino.
2 Bridging Organization Design and Performance. Amy Kates, Greg Kesler.