Many organizations have fallen into the trap of having functional groups like finance, manufacturing, human relations and purchasing being able to veto a proposal to change a product. This is referred to as a matrix organization. The problem with such an organization is that nobody is really in charge.
A powerful example of this occurred at Ford, and was uncovered by Alan Mulally just after he became CEO in 2006. When he asked the product manager in charge of the new Ford Fusion about it’s very disappointing sales, he learned that competitors like the Hyundai Sonata had as standard equipment navigation systems, side airbags, and a satellite radio, and the Fusion didn’t. When Mulally asked why, he was told by the product manager that they didn’t put them in because Finance would not agree. Finance wanted to keep the cost down.
As you would imagine, Mulally quickly dismantled matrix management at Ford.
Here are some practical suggestions for avoiding the ravages of matrix management:
1.) One Decision-Maker – A leader needs to be able to lead; he or she can’t be saddled with a bunch of people who have to agree before a decision is made.
2.) The Smart Leader Seeks Out Opinions from Relevant Parties – Using the Ford example from above, a product manager needs to know what functional groups like Finance and others think, and they need to think through those opinions. Only after taking all input seriously, they need to make a decision they believe is right.
3.) When Not Taking Advice, Make It Clear Why Not – Most advice that functional groups provide will be quite helpful, and you will likely want to reflect some or all of it. When you don’t, you should make it clear to all relevant parties your rationale. This is important learning for the functional groups.
Just remember, when pursuing change and innovation, the very notion will threaten many people, and if they have veto power, they will use it to cling to the status quo!