International Journal of Economics
and
Management Sciences
Vol. 2, No. 12, 2013, pp. 52-56
MANAGEMENT
JOURNALS
managementjournals.org
Does matrix management replace organisational hierarchy in cross-functional brand teams?
A case study from the bio-pharmaceutical industry
Andrea Michael Meyer, PhD
Corresponding Author: Independent researcher/industry expert
Albulastrasse 60, 8048 Zurich, Switzerland
E-mail: a.m.meyer@gmx.ch
ABSTRACT
The purpose of this investigation was to address the question if matrix management replaces organisational
hierarchy in bio-pharmaceutical brand teams. Towards this aim two role model brand teams of a leading biopharmaceutical company with a strong portfolio in neurology were analysed by interviewing the core team
members. Among the key positive effects were a reduction in functional silo thinking, increased trust and
understanding for the work of the other departments and increased strategic alignment. Among the challenges
observed were that negotiating team commitment and buy in rather than directing subordinates may be more
time consuming and implementing decisions of the matrix team led to conflicts in the hierarchical setting of the
surrounding organisation. Nonetheless, the advantages appeared to outweigh the disadvantages especially over
time when the team has worked together for a longer period of time. Importantly it was founds that, leading a
‘balanced matrix team’ can be challenging and may require team leaders with a very specific skill set including
interpersonal and political savvy to operate successfully in this specific environment.
Keywords: Matrix management, brand team, pharmaceutical industry, brand management, organisational
hierarchy
1. INTRODUCTION
Starting in the early 1960s matrix management was reported to be widely used in many North American
organisations. Among them: Caterpillar Tractor, General Telephone and Electronics, Hughes Aircraft, ITT, 3M,
Monsanto Chemical and Texas Instruments (Perham, 1970). Over time the matrix has spread to the rest of the
world (Maccoby, 1991). Since organisational matrix structures are characterised by an overlap of classical
organisational hierarchy and horizontal functional authority, this organisational configuration may come with
significant challenges besides possible advantages (McKenna & Beech, 2008). In the following chapter
literature about matrix management is reviewed to lay a foundation to discuss the question: Does matrix
management replace organisational hierarchy?
2. LITERATURE REVIEW
Early accounts from the 1960s viewed matrix structures predominantly in a positive light (Perham, 1970). Only
in the 1980s first criticism surfaced. An example was Texas Instruments who attributed economic decline to
matrix management and therefore ceased its application in new product development (Business Week, 1982). In
the book ‚In Search of Excellence’ by Peters and Waterman (1982), the authors state that the tendency to
impossible organisational configurations disallowing for efficient work processes “reaches its ultimate
expression in the formal matrix organization structure [which] regularly degenerates into anarchy and rapidly
becomes bureaucratic and non-creative” (Peters & Waterman, 1982, p. 49). Pertaining to the question, if matrix
management means the end of hierarchy in an organisation, it is interesting to visit the five different project
management structures described by Larson & Gobeli (1987). Each of them is characterised by different extents
of the contribution of organisational hierarchy and lateral authority (Larson & Gobeli, 1987):
 Functional organisation (highly hierarchical, modest lateral authority): The classical, hierarchical
organisational configuration where upper level management is in charge of the overall project and
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functional management oversee and coordinate the delivery of project milestones in their respective
functional department.
Functional matrix (lowly hierarchical, high lateral authority): A person is assigned the task to plan and
coordinate the project across the different functions. This person has only limited authority. Functional
managers are in charge for their respective project segment.
Balanced matrix (modestly hierarchical, modest lateral authority): One person is in charge of
overseeing the project. This person has equal authority as the functional management involved in the
project. They negotiate and approve technical and operational decisions together.
Project matrix (hierarchical, low lateral authority): One manager is assigned the responsibility for the
project and the functional managers are advising the respective project manager and provide temporally
functional resources such as personnel and equipment.
Project team (highly hierarchical, no lateral authority): One manager is fully in charge of managing the
project. Fulltime assigned personnel and resources originating from different functional areas are
combined under his authority.
Each of the different configurations were reported to be attributed with a specific set of advantages and
disadvantages. Among the reported advantages of the three matrix team setups compared to the classical
functional organisation and the project team, are ‘efficient use of resources’, ‘project integration’, ‘information
flow’, ’flexibility’ and ‘improved motivation and commitment’ (Larson & Gobeli, 1987). Whereas Larson and
Gobeli (1987) described the following disadvantages: ‘power struggles’, ‘heightened conflict’ due to struggle
for resources, ‘slow reaction time’ due to shared decision making, ‘excessive overhead’ due to double
management (team leader and line manager) and ‘experienced stress’ due to dual reporting (Larson & Gobeli,
1987). Interestingly these aspects appear to be direct or indirect consequences of different hierarchical/lateral
configurations as they vary by setup. The authors report that most of the disadvantages are associated with the
‘balanced matrix’ as uncertainties about hierarchy and lateral authority is highest (Larson & Gobeli, 1987). E.g.
increase of ‘experienced stress’ may be due to the lack of a clear hierarchy and subsequent necessity for team
members to report on the one hand side to the matrix team leader and in parallel to the functional line manager.
Further examples such as ‘power struggle’ and ‘heightened conflict’ possibly also result from the unclear
hierarchical situation.
Lorenz (1994) stated that ‘the matrix organisation used by multinational companies in the 1960s and 1970s,
especially by US companies, was, with a few notable exceptions, plagued by internal conflict, inefficiency,
expense and delay, as divisional, geographic management debated and fought with each other. In many cases
disputes were only resolved laboriously by powerful coordinators acting as matrix police’ (Lorenz, 1994, p.
13).
Interestingly, among the six generic organisational structures published by Mintzberg (1984) the adhocracy has
the highest resemblance to the matrix team. In an adhocracy, as described by Mintzberg, highly skilled
employees participate in project groups with a high degree of market orientation. Adhocracy is, according to the
author, a structure that might be applied to drive innovation and that is working in a highly competitive and
dynamic market (Mintzberg, 1983). In line with this concept, also other authors found that matrix structures may
be beneficial especially in organisations relying heavily on research and new product development (Keller,
2001).
4. CASE STUDY – the “cross functional brand team” approach
The brand teams analysed were part of a major bio-pharmaceutical company with a strong portfolio in
neurological diseases. The company has grown over the last three decades from a university research spin-off
company into a multinational corporation with more than 6000 employees and revenues exceeding six billion
US dollars per year.
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3. METHODS
In total six core brand team members of two brand teams (three each) were qualitatively interviewed
individually. Interviewees and the respective company chose to remain anonymous due to the highly
competitive industrial environment. Informed consent was granted. Interviews had been performed qualitatively
and results summarised. The interviews were scheduled for one hour each and performed in July and August
2012. The interviewee’s female to male ratio in one team was one to two and in the other team two to one.
Median age of the interviewees was 35. The participants of each core team consisted of one medical, one
marketing and one sales manager.
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4.1 Overview of the case – What happened?
Within the Swiss affiliate a transition from a functional organisation towards a matrix structure was undertaken
in 2011. Matrix teams were formed around existing brands and called cross-functional brand teams. The core
teams were alimented from the respective product responsible from marketing, sales and medico-scientific staff.
The extended brand team consisted of variable members of other departments such as finance, legal, logistics or
members of the upper management team depending on the topics at hands and the decisions to be made. Oneday brand team meetings were scheduled on a monthly basis. A standard agenda was formalised. In the
morning, after readdressing open agenda points from the last meeting, each core team member gave an update of
the current projects and also the market developments such as sales figures or e.g. market research insights were
reviewed and discussed. In the afternoon new projects and other subjects were addressed and decided upon. All
steps were taken to protocol. The brand manager of the respective product was in charge of leading the meeting
according to the agenda, to ensure fruitful discussions, oversee progress over all brand relevant projects and to
guarantee strategic alignment across the functions by indirect leadership and negotiated consent.
4.2 Hierarchy born challenges and advantages in the investigated matrix teams
Interviewing the members of the two core brand teams revealed several challenges but also beneficial impacts of
the matrix configuration on the teams.
4.2.1 Challenges and issues
Over time several issues related to hierarchy hampering the efficiency of the cross-functional brand teams
surfaced: Decisions made by the brand team were neglected or countered by sometimes only one single member
of the upper management. This led to frustration and exasperation in the team as many hours were invested in
negotiating and agreeing upon projects. Having very flat hierarchies and a democratic setting in the team led to
conflicts while implementing the team decisions in the hierarchical setting of the surrounding organisation. Only
after full commitment of the chief executive and subsequently of the senior management team to the brand team
approach it was possible to overcome theses hurdles. In this case hierarchical power was necessary to secure the
purpose of a cross-functional lateral authority, expertise and consent driven structure within the hierarchical
organisation.
Also the task of the brand manager to lead the cross-functional brand team was especially initially hampered by
the fact that team members often had the same or even higher hierarchical ranks in the organisation than the
brand manager in charge. The lack of hierarchical power of the brand team leader instilled the necessity to
negotiate commitment rather than directing subordinates which may be, according to the participants, a time
consuming process.
Ensuring follow-up and project progress tracking was also found to be challenging as often functional mangers
even though after agreeing in the team to undertake a project or project related tasks decided on their own not to
follow it up or to postpone it due to challenges such as lack of resources or a functional superior not supporting
the project. This led to missed timelines and amputated projects.
The barriers between the functions were strongly reduced and the classical hierarchical functional silos
removed. This led to removal of pre-existing psychological hurdles to e.g. directly seek advice in another
department or to directly approach a management team member high up in the organisational hierarchy in order
to achieve project progress. Also communication in general between functions was markedly improved.
Interestingly, it was found that innovation was increased when facilitated in sessions during the team meetings.
It appeared to be of importance to define windows for creative sessions and windows for structured decisionmaking in the team agenda in order to efficiently manage the meetings and ensure maximal outcome. The
clearly structured agenda and agreeing upon common rules countered the perceived lack of hierarchy in the
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4.2.2 Opportunities and positive impact
On the other hand side also opportunities and beneficial effects related to the altered hierarchical setup of the
matrix structure of the cross-functional brand teams were observable: participants reported that after an initial
rough ramp up phase a better understanding among team members resulted in increased trust and higher
commitment to the common cause of serving patient needs and driving brand performance. In the same line of
argument it was reported that a more holistic view of the brand and the company was adopted and that the
importance of each department became clearer to all. Here less hierarchy led to more trust and higher
commitment as team members reportedly felt more valued in their work, as they were part of decisions and
asked for their input and contribution.
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team meetings. The flattened hierarchy facilitated innovation by enabling all team members to contribute
equally to a decision and help with their ideas.
5. CONCLUSION
In this chapter conclusions were drawn by comparing this specific case study with the concepts concerning
hierarchy in matrix settings in the published literature.
5.1 Comparing theory with practice
Revisiting the classification model by Larson & Gobeli (1987) the cross-functional brand team falls into the
category of a ‚balanced matrix’-team, as one person is responsible for the overall outcome and overseeing the
projects. In this case it is the team leader who has in the matrix team equal authority as the other functional
managers involved. The team members negotiate and approve technical and operational decisions together. The
functional hierarchy is less important than the lateral authority.
In line with the above authors it was found that a set of issues arose from the non-classical hierarchical setup in
the matrix team investigated: ‘struggle for resources’, ‘slow reaction time’ ‘experienced stress’, multiple
superiors to report to, ‘power struggle’ and ‘heightened conflict’. In contrast to the literature reviewed in the
previous chapter these issues were found to be of temporary nature and seemed to diminish as trust among team
members increased while the classical phases of team formation by Tuckman (1965) evolved: forming,
storming, norming and performing.
The positive effects observed in the cross-functional brand teams were in agreement with those reported in the
literature and summarised above: ‘efficient use of resources’, ‘project integration’, ‘information flow’,
’flexibility’ and ‘improved motivation and commitment’. In addition to the benefits summarised in the literature
chapter, also increased innovation and team coherence was observable as trust among the team members grew
and team members contributed more openly with their ideas.
Overall the members of the different teams formed around the three key brands agreed that in this specific case
the advantages of lowering classical hierarchy and trading it for lateral authority leading to a more undefined
and uncertain structure had a catalytic effect on this learning organisation and that advantages clearly
outweighed the disadvantages. Mainly by giving each team member the possibility to speak up and to influence
decision making by removing the more traditional functional hierarchy configuration.
5.2 Learning points summary
In conclusion, based on the literature findings and the observations made by analysing the present case study it
is evident, that matrix does not necessarily remove hierarchy in an absolute way. It is rather a rebalancing of
vertical formal functional hierarchy against lateral specialist authority. The lateral specialist authority could also
be viewed as a kind of (unconventional) hierarchy partially replacing classical formal hierarchy.
Strategic drill-down and alignment, which is a notion borrowed from a hierarchical view of an organisation,
appears to be paradoxically facilitated by a cross-functional matrix approach as the strategies are discussed in
the team and more easily implemented across the functions due to the team buy-in. On the other hand this
structure would also allow for bottom up strategizing depending on the organisational needs such as e.g. need
for high levels of innovation or a rapidly changing market.
Finally, the advantages appeared to outweigh the disadvantages especially over time when the team has worked
together for a while and trust has been established among team members. Nonetheless leading a ‘balanced
matrix team’ can be very challenging and may require team leaders with a very specific skill set including
interpersonal and political savvy to operate successfully in this specific environment.
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As a structure within an organisation the cross-functional brand team as an example of a matrix team may
heavily depend on the hierarchical setup of the organisation as only hierarchy may ensure its continued
existence and protection against forces within the organisation but outside of the team countering its authority
such as in the present example the CEO promoting the concept. Within the team hierarchical power is clearly
reduced but none the less still existing and must be taken into account by the team leader in order to negotiate
cross-functional decisions and buy-in.
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