Matrix Organization in Practice
Procter & Gamble introduced the matrix-system in 2006. The company believed by this system 300 brands, 160 countries markets and production sites in 80 countries will be managed in optimal manner – the longer decision processes Procter & Gamble is taking into account.
Hewlett Packard dropped the matrix organization in 2006 after working with it for a couple of years. HP returned back to the product-oriented organization with the divisions Personal Systems, Printers and Technology, each with three regional branches worldwide.
In 2015 Hewlett Packard was separated into two distinct companies:
– one unit, HP Inc., will take the personal computer and printer operations: that’s mass production.
– the other part, Hewlett-Packard Enterprises, is operating the technology services – software, big data, server, cloud computing, information security, consulting, education: that are more or less individual products.
Over time it became obvious that the range of these products was too large for being efficiently operated in one company. The division of labor, the production processes, for these product types is just too different. These considerations were supported by the fact that both businesses have two distinct customer bases. The separation will create a closer relationship to the customers combined with faster reaction time to market/customer needs. This will be accompanied however automatically to a certain degree with less economies of scale.
A split had been already planned some years ago but again abandoned. In time however it became more and more clear that the two types of products were too far apart for efficient management – research and development, production processes and customer relations were too different. Two separate, independent companies are more adequate.
From the viewpoint of organizational theory – excluding financial considerations – this seemed to be a reasonable solution.
ABB (Swiss Technology Company)
The former CEO of the Swiss company ABB, Percy Barnevik, introduced the matrix organization. In the long run however it proved to be much too complex. Finally ABB almost faced shutdown and the successor Jürgen Dormann abandonned it as soon as he took over.
P. S. These considerations are based on public information in the media. They are to illustrate theoretical findings. If the used assumptions prove to be different, different conclusions might possibly to be taken. – Comments welcome, see impressum.