Companies wanting to respond more quickly to changes in the business environment could feasibly try to implement a matrix structure, which might help the company to achieve a higher degree of readiness and market adaptation. The matrix structure, if implemented effectively, may increase the ability to react to new customer demands, and may potentially decrease lead-times of new products. A matrix structure is most feasible for companies operating in fast paced and dynamic environments, and may not at all be suited for companies supplying standard products that satisfy well-defined and stable customer needs.
The matrix structure is an organizational design that groups employees by both function and product. The organizational structure is very flat, and the structure of the matrix is differentiated into whatever functions are needed to accomplish certain goals. Each functional worker usually reports to the functional heads, but do not normally work directly under their supervision. Instead, the worker is controlled by the membership of a certain project, and each functional worker usually works under the supervision of a project manager. This way, each worker has two superiors, who will jointly ensure the progress of the project. The functional head may be more interested in developing the most exiting products or technologies, whereas the project manager may be more concerned with keeping deadlines and controlling product costs.
When work is accomplished, the project team may get dissolved, and workers from different functional areas may get reassigned to other projects and tasks.
Strengths of a matrix structure:
The cross functional teams of a matrix structure reduce the functional barriers between departments, and increase the integration of functions.
Matrix structures open up for communication, and may provide an opportunity for team members to learn from each other - thus distributing valuable knowledge laterally within the organization.
The matrix structure makes it possible to assign specialized resources to projects when needed.
Weaknesses of a Matrix Structure:
A matrix structure lacks the effectiveness of bureaucracy, and will potentially not work if the organization does not need to react swiftly to changes
The flat hierarchy may be the cause of conflict, and different stakeholders may pursue entirely different goals.
The great focus on integration between functional areas requires a great amount of lateral communication, and it may require great resources to get information distributed efficiently between team members.
As said before, the use of a matrix structure seems more feasible for organizations operating in business environments characterized by change, dynamism and uncertainty. This could e.g. be organizations operating in high-tech industries such as computing or telecommunication.