HBS General Motors essay
What are the challenges of managing a matrix organization like GM’s basketweave? How has GM chosen to address these challenges?
GM’s basketweave structure fits into a simultaneous organization structure perfectly. The purpose of implementing this matrix structure is to achieving both differentiation and integration within different regional segments and also within functional units. The new structure will help “to overhaul processes and reduce overlapping product lines, eliminating similar, often competing, models, and developing common systems for product development, design, and manufacture.1” The new management team expects basketweave structure will help them implementing their new strategy to cut cost and to improve GM’s management efficiency and productivity.
Just as GM’s CEO Wagoner said “A matrix is a horrible way to run a business: it’s just better than anything else.” The basketweave structure also faces a lot of challenges. First, on the organization structure level, the matrix structure is much more complicated to allow people who work in this structure coordinate with each other. The chain of command is not clearly defined as in a simpler structure. Staff in each of the regions has to report to both the leader of their own function and also to the region president. This violates the well known management principle of unity of command. Who controls work assignment, evaluation, compensation, budgeting and financial reporting accountabilities? How to promote organizational communication and alignment? Any conflicts on above issues will severely affect the functionality of the whole organization.
The next challenge following an unclear chain of command is the ambiguousness of responsibilities. How to balance the local interest and centralized coordination to ensure economies of scope and scale? If anything goes bad, who should take the responsibilities, the regional president or the global function leader? The results of a bad decision from North
GM’s basketweave structure fits into a simultaneous organization structure perfectly. The purpose of implementing this matrix structure is to achieving both differentiation and integration within different regional segments and also within functional units. The new structure will help “to overhaul processes and reduce overlapping product lines, eliminating similar, often competing, models, and developing common systems for product development, design, and manufacture.1” The new management team expects basketweave structure will help them implementing their new strategy to cut cost and to improve GM’s management efficiency and productivity.
Just as GM’s CEO Wagoner said “A matrix is a horrible way to run a business: it’s just better than anything else.” The basketweave structure also faces a lot of challenges. First, on the organization structure level, the matrix structure is much more complicated to allow people who work in this structure coordinate with each other. The chain of command is not clearly defined as in a simpler structure. Staff in each of the regions has to report to both the leader of their own function and also to the region president. This violates the well known management principle of unity of command. Who controls work assignment, evaluation, compensation, budgeting and financial reporting accountabilities? How to promote organizational communication and alignment? Any conflicts on above issues will severely affect the functionality of the whole organization.
The next challenge following an unclear chain of command is the ambiguousness of responsibilities. How to balance the local interest and centralized coordination to ensure economies of scope and scale? If anything goes bad, who should take the responsibilities, the regional president or the global function leader? The results of a bad decision from North