Monday, 15 March 2010

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 together - is 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 end 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 team's rewards. Because the power of line managers is only a fraction if what it was, they now achieve only a fraction of what they used to accomplish in mobilising the team toward line objectives (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 zero-sum game. But that dynamic of intrinsically contradicts the intent of matrix design: channeling the behaviour of employees along multiple dimensions that reflect different performance requirements. To achieve that end, each dimension needs power - in the form of motivating elements, constraints, or other types of influence - to 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 party's 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 imbalance - thus the power - issues from A's potential to make a greater difference regarding stakes that matter to B than the reverse. On another issue or as stakes change, 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 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 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 one's own choices to benefit the common good. In other words, each dimension can actively participate 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 trade offs 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 doesn't 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 is is less and less applicable, given that 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 accountable would be the cleanliness of their shops. Everything else, from the product mix to the IT-supported checkout process, depends substantially on 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 over escalation- worse yet, an over escalation that delivers a weak punch. Real power, the kind needed to make other parties accept trade offs, is not an attribute one automatically inherits from a title or from a 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 trade offs. 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 some room to maneuver, some area for discretion. When there is a rule for everything, one depends on the rule, not on one's management. Then the only people who can make a difference - who have real power - are 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 over reliance 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 network like, 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.


Anonymous said...

Preeti Ramdasi says...

Complexity at hand
The underlying reason for declining performance of employees in matrix organisations is explored.
The need to increase the overall power within dimensions (in terms of the ability to influence stakes) of an organisation to drive performance has been highlighted.
Preliminary questions concerning matrix organisations
- Is it that the concept of matrix organisations per se can be fruitful however its working challenges need to be worked upon? (as has been pointed out in the blog).
- Would it therefore be right to say that they are difficult to run because of coordination and cooperation issues within different dimensions of the matrix?
If we juxtapose this with the first blog, cooperation is successful, I quote, “only with those players which can act on a problem critical for others, i.e. which control a pertinent uncertainty (thanks to their competencies, information, possible initiative taking, etc.). Does the link between cooperation/ coordination and power emerge from there? In a sense, we are talking about cooperation that is contingent on power and its use. Therefore, if one player is not in a position to exert power, individuals will be less willing to cooperate with him?
- Further, besides power, there could also be other causes for difficulty in working of different parts of a matrix organisation: competition amongst teams and individuals in a team (boils down to power); lack of communication, lack of good leadership who oversees all dimensions and brings them together; lack of clear instructions from leader, instructions not being well implemented- lack of competence and capability and capacity. Is it not possible that it’s not necessarily because they are not able to influence each other.
Notes and comments on the blog
- O being with, what does it mean to say that one dimension has more power than another? Does it mean that that department (say sales for instance) has more ability to exert influence on others than vice-versa? Does that also translate into more power for the team players? I would think it does, however, in such a case, won’t other team players be less willing to cooperate with this team? Also, in my opinion there is a thin line in exercising power for the team and at individual levels and hence there could be an abuse of power there (to achieve individual vested interests). This is more so, when the same individual could be working on different projects.
- If we accept, the problem is to do with power: do the employees actually realise the value of this power and the consequence of having more or less of it, vis-a-vis other teams/players? Are they equipped and competent to use it? Do they know the scope, limitations and responsibilities that come with it? Can two projects with the same employee be conflicting? What happens then?
- Is it the management that first allocates and then reallocates the power? If yes, is the management also not a part of the matrix? Are their vested interests not involved then? Should not power be distributed in a balance way in the beginning itself? What is therefore the role of the individuals concerned, and of the organisation in defining this matrix?
...continued in the next comment...

Anonymous said...

Preeti Ramdasi says...

- Taking lead from the first point, what “kind of power” are we talking about? Is it only the ability to influence others and have more authority/control over someone else? Power could also mean the ability to bring about change, something that comes to an individual because of more capability and experience, the ability to take more independent decisions for the team and/or department; the freedom to use different mechanisms to mobilise the team etc.
With respect to the example of the line and project manager for instance, is ‘rewards’ the only way to influence the team? To then draw from the compensation blog here, perhaps today employees are not that driven by fears of job loss, evaluations etc, since there is such competition that they quit organisation if they don’t feel sufficiently engaged and rewarded and be welcomed in another organisation. How therefore can we reconcile this?
Further, some of the other ingredients of “power” have been discussed in the blog: I quote, “in the form of motivating elements, constraints, or other types of influence - to make people do what they would not do spontaneously.” Does this mean power is not something vested in an individual alone, but it is a concept or a notion? Thereby, other examples of power (something that can influence employees) could include: mobilisation by motivation; goals and aspirations of the organisation etc. For example, in a company, the pay for the employees could perhaps be lesser than what they can get in the market, however, they may choose to continue working in the factory since the management is sincere and good or since they expect better returns since investments are in the pipelines to expand the company.
Further, does this also anticipate that people will not spontaneously do the job they are assigned to do, without external pressures? That would imply a certain level of disengagement already, no?
- In response to, I quote, “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.” - would not the new responsibility (dimension) that gets added, itself ideally work as a power/tool to drive people towards performing it well? The fact that you have been bestowed with responsibility as an employee should also give the individual a sense of greater power? Indeed, this responsibility needs to rewarded and acknowledged by the management. Although, the fact that the certain individual is vested with this new responsibility itself is an acknowledgement from the organisation that his/her work is good and therefore can undertake greater responsibility.
- Finally, what is the influence of these constant changes in power on the team and on individual employees? Will it not have any adverse effect on them? This is more so, since individuals in one team may also be working together on another project. How does power in one dimension, reconcile with that in another? Does it really cross each other out? Even if it does, is it a healthy way (barter of power across projects) of conducting business? Would it not give rise to more competition rather than cooperation? Could the power game therefore not potentially negate the ultimate goal of an organisation since this internal competition may hamper growth?

Anonymous said...

Preeti Ramdasi says...

The Origin of Power
- The definition/scope of power could be broader as has been discussed earlier, to include motivations. Here it is being confined to authority/influence stakes of another individual.
- What is the source of power? In misconception three: it is mentioned that “real power, the kind needed to make other parties accept trade offs, is not an attribute one automatically inherits from a title or from a position in the hierarchy.”
Is it inherent? Is it conferred: to do with the post that individual holds or the responsibility he/she has in the organisation? As mentioned in the blog, having more information does not imply excess power nor is it an attribute of people. Does it come from how much you influence an outcome in one dimension compared to others? If it is so, what do we mean by “ability to influence”? Will they come from the competence in that field; or would it come from how many people you supervise and influence; or how close you are to your boss or how much you get paid?
Further, the blog says it emanates from relationships tied to situations. If so, by that logic, power could constantly shift hands between the same two people depending on situations they are in or the project they work on? But would that still be a case if the two individuals don’t have the same standing in the organisation?
- To quote, “that causes those other parties to eventually do something they would not have done without the first party's actual or implied intervention ”- in the context of work within the dimensions, does this again anticipate that in the absence of such power (understood as influence/authority only), the individuals/team would not perform what they are supposed to perform? True, that in most cases, there is a need of a stick such as superior authority to make sure that employees perform their duties, but can we therefore generalise it and say that all individuals, especially at the management level, are reluctant to perform their duties without someone to coerce them into doing it?
- Again, if we start alluring people by stakes, they are bound to be interested by individual stakes rather than stakes vis-a-vis the organisation. Therefore, even if they are performing (albeit under influence), they may be achieving the goal of getting work done, but is this a sustainable way to conduct business and will it work long term since seldom will the individual have stake and interest of company in mind since he/she is simply being driven by fear of losing his/her own stake at the cost of the senior individual.
- On increasing power: power implies ability to influence others where they have a stake: therefore to increase power, there is a need to increase stakes (that matter to people and the company), in the dimensions
The issue is again, what are the stakes? Individuals stakes in terms of promotion, incentives, a pending leave sanction or is it stakes within the company or of the team: to finish the project or face a cut in budget for the team next year etc? Can the two not potentially conflict?
Also, this game of stakes could give rise to a power politics game since each one will try to show his/her extent of influence. In the process, they will not cooperate with each other, which is what is needed for the success of the company and it will divert attention away from core requirements and issues of the company. Power here is relative and in relation to others. So even if one gets power because if can influence the stake in one way, another will get it since it can influence it in another way. Will they cooperate after that?? In this sense, doesn’t the matrix go against the concept of work by “cooperation”

Anonymous said...

Preeti Ramdasi says...

Misconceptions about the Matrix
- Is it really possible that some dimensions don’t have more power compared to others, just depending on the nature of the work of the organisation? If it is a manufacturing unit, while marketing and sales are important, for instance, the technical department would have a big responsibility to first create quality products?
- While strict equality is not needed, perhaps it would make things simpler, if there was clear cut distribution of power (even if imbalanced), so as to avoid problems in the future and also resources and loss of talent.
- The blog assumes that individuals/teams will continue to cooperate (and even more actually) even with the stake and power game. Does this premise hold? To me, its a barter system, not cooperation. Even if it does, will it not be only with the intention of getting something in return. If this is the case, will it work in the long run and what is its impact on the overall interest of the company? By pitting one against the other, in my opinion, you are not putting their performances to test nor are you encouraging them to perform their best. You are only encouraging them to safeguard their interests and increase their influence over others. Hence, it may even affect the overall productivity of the organisation. Perhaps it is more practical to encourage everyone to cooperate at the same time having a incentive mechanism only vis-a-vis the company, not vis-a-vis other teams and employees.
- On conception 4, agreed that you don’t need stringent rules and regulations, but perhaps there is a need to have a broad framework and philosophy which guides and dictates the way individuals will interact with one another and in relation to the organisation. It would also help to have some guiding principles, so that individuals are constantly reminded of what their final aim is and channel their capabilities and performances in that direction. Further, is it not contradictory, that you introduce new power such as promotions to give managers more power but then say there is no need for rules and basis to use this power? Even if a team has room for manoeuvre and could come up with innovative ideas to increase productivity, knowing that their stake is at stake, will they actually take these ideas to a logical conclusion?
Further, the team does not depend on the manager for getting work done true, however they do depend on the manager to get their promotion and for their personal needs. Even if the power being spoken of here is strictly in the way of ability to influence stakes, the power a manger has over a worker, simply from being higher in hierarchy, cannot be ignored. Plus, even in terms of influencing stakes, can a worker really have more power than a manager?
- Finally, to quote, “Understanding and managing power are now at the heart of sound organization design”, this is also relevant in a more global context, where you have individuals from different regions and backgrounds working together and have different notions of relationships and of the concept of power. What may be acceptable in France for instance, could be considered a taboo in India and vice versa.