Matrix Management: A Structure for Running Those Companies That Have Both a Diversity of Products and a Diversity of Markets

From Tim Hindle, The Economist.

Matrix management is a structure for running those companies that have both a diversity of products and a diversity of markets. In a matrix structure, responsibility for the products goes up and down one dimension and responsibility for the markets goes up and down another. This leaves most managers with a dual reporting line: to the head of their product division on the one hand, and to the head of their geographical market on the other.

Despite the potential confusion that this duality creates, matrix management was enormously popular in the 1970s and 1980s. Leading the fashion was Philips, a Dutch multinational electronics company, which first set up a matrix structure after the second world war. It had national organisations (NOs) and product divisions (PDs), and for a while they operated successfully as a network. The network was held together by a number of coordinating committees, which resolved any conflict between the two.

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