CHANGE & 6 Tests for If a Change Should be Implemented #TomPeters #MatrixOrganizations #McKinseyQuarterly

Commentary by Dr. Whitesel: “Management author Tom Peters points out that an infatuation with newness often gets organizations going in too many directions. While creatively diversifying (labeled a matrix organization) is important for organizational survival, Peters points to six criteria for evaluating if a change should be implemented. Here they are in paraphrased form, followed by highlights from Peter’s seminal article:

There are perhaps six critical tests of the possible (change) thrust:

  • Internal achievability. Can a ‘tradition-oriented’ organization begin to turn itself into a ‘innovation-orientated’ organization in a reasonable span of time, e.g. four to six years?
  • Political feasibility. Can the top team be persuaded to support the innovation thrust?
  • Soundness in competitive or regulatory terms. Is money spent on marketing (1. need-analysis, 2. program creation, 3. advertising, 4. evaluation) a sound investment, e.g. is there a growing or a shrinking market?
  • Freshness. Will it be perceived as a new direction?
  • Early wins. Will it be possible to show some results in the first few months, even though full-scale implementation may take years?
  • Excitement. Can most of the committed people in the organization eventually become enthusiastic about it?

For more insights check out this watershed article by Peters…

Beyond the matrix organization by Tom Peters, McKinsey Quarterly, 9/79
In this Quarterly archive article, Tom Peters examines the flaws of the matrix-organization design and explores several more effective approaches to implement no more than one or two essential corporate thrusts at a time.


“Our historical cost advantage is lost; the only way we can stay in the ball game is to optimize our production facilities worldwide.”

“But you can’t close the Livorno plant! The moment you do that, they’ll hit us with special tax regulations.”

“I’m sick and tired of that ‘every country is different’ routine. We’ve got to have a uniform worldwide product image, and that means . . .”

Insoluble conflict? The chief executive of a consumer-goods company decided a few years ago that he saw a way to resolve such differences between managers. He had just read about matrix organizations and concluded that a matrix structure would, in effect, leave managers no option but to interact effectively with each other—not only “vertically” with their line superiors and subordinates, but also “horizontally” with their peers along major financial, geographic, product and/or segment dimensions. Everyone would have to talk to everyone else. The ideal solution, he decided, after much thought. So he took the plunge.

Three years later, however, the company was losing momentum faster than before. Major issues were taking longer to resolve, and the CEO was constantly called in to referee disputes between product-line, geographic, and functional chiefs. Too often, what tardily emerged from the decision process was a lowest-common-denominator political compromise. Top managers were spending more time than ever before in meetings or in airplanes taking them to and from meetings. Gamesmanship and political jockeying were widespread. The volume of detailed analysis, by the CEO’s own careful assessment, had nearly doubled; much of it seemed to be aimed at “nailing” the other guy on trivial points. Buck-passing had become a fine art; the product managers blamed the production people, and vice versa. It was tougher than ever to get products to market; new product opportunities were slipping by time and again because engineering would never let go.

In short, the CEO had never been so frustrated, so aware of managing a bureaucracy. He could no longer pin responsibility for results on anyone, and nobody but him seemed to be worrying about the big picture.

The organizational evolution

Much the same story has been enacted in many large corporations in the past few years. Up through the early 1950s, most companies were functionally organized. The postwar boom and subsequent economic growth led to mushrooming product lines and organizational complexity. During the late 1950s and 1960s, many companies sought to regain control and achieve “product-line rationality” by shedding their traditional functional organizations for a divisional structure based on the model initiated by General Motors and DuPont in the 1920s. For most the move proved successful; strategies became more coherent and divisional managers could be held broadly accountable for their operations.

In the mid-1960s, however, longer-range, more elaborate capital-investment projects called for a partial recentralization of corporate decision making. As a result, neither staff (planning) nor line (division management) could be held clearly responsible for medium- or longer-term performance.

New threats to divisional autonomy had appeared in the 1970s, as requirements imposed by foreign governments hampered businessmen’s efforts to maintain the integrity of their product lines worldwide. At home, proliferating regulations from the Occupational Safety and Health Administration, the Department of Energy, the Environmental Protection Agency, and other governmental agencies demanded centralized corporate response. Problems arising from product-line growth and attendant shorter life cycles called for more attention by headquarters to various engineering and manufacturing issues.

Typically, business’s response went through three phases. In Phase 1, inspired perhaps by the spectacular success of project management in the Polaris missile program and the even greater triumph of NASA’s moon-shot project, companies first set up “project teams” as a means of securing a coordinated functional, geographic, and divisional response to various current threats. Teams and task forces multiplied, often doubling or tripling in number in the space of a few years. As the teams proliferated, the sense of urgency that had attended their creation began to evaporate, established channels of responsibility and authority began to be blocked or bypassed, and teams began to get in each other’s way. Clearly, something had to be done to regularize matters again.

In Phase 2, matrix was embraced by an influential minority of large and sophisticated companies as the only organizational answer. For some, however, the honeymoon promised by matrix never materialized, as the examples in the exhibit indicate. For others, the honeymoon was quickly succeeded by the disillusionment of Phase 3, the situation described at the beginning of this article. Some CEOs reacted to Phase 3 by calling in behavioral scientists. “Team building” and “conflict management” became the order of the day. But the objectives of these efforts were unclear, and the headaches only got worse. In other companies—mostly giant corporations boasting “advanced” matrix organizations—open conflict was replaced by a silent battle of memos and “economic models.” Organizational Maginot Lines were built. Bureaucracy burgeoned and corporate performance continued to deteriorate.

… The overdetermined matrix

The last point provides an important clue to alternative strategies. Although many forces have chipped away at decentralized product-group autonomy, the divisional structure in some form (GE’s new “sector” organization, for example) remains a reasonably effective vehicle for many organizations because of its underlying efficiencies of information flow…

An emerging consensus

A different and promising approach to what managers have customarily thought of as structural problems is beginning to emerge from current research into the dynamics of large organizations. There emerged a common theme from our interviews: “Stop worrying about permanent structures; concentrate on temporary systems to achieve a limited agenda.”

…There are perhaps six critical tests of the possible thrust:

  • Internal achievability. Can a “cost-oriented” company begin to turn itself into a “product-innovation” leader in three to five years?
  • Political feasibility. Can the top team be persuaded to support the thrust?
  • Soundness in competitive or regulatory terms. Is a marketing thrust a good choice for a high-cost producer in a shrinking market?
  • Freshness. Will it be perceived as a new direction?
  • Early wins. Will it be possible to show some results in the first few months, even though full-scale implementation may take years?
  • Excitement. Can most people from middle management on up eventually become enthusiastic about it?

Once the thrust has been selected, it must be identified and announced. Political scientist Edward Banfield describes one approach: picking out, at the appropriate moment, the best of what is going on in the institution and labeling it as the cornerstone of the chief executive’s program. This may sound like a cheap shot, but frequently the top team can give a theme life and credibility merely by touching on it. Pointing out and praising some aspect of an inconspicuous but significant program is frequently a wise opening move. A study of senior executives by John Kotter and Paul Lawrence unearthed a similar routine: Successful new executives spent a year or so sorting out programs, building constituencies, and seeding new actions; only at the end of that time did they act to “label” their own thrust. Less successful men latched on to the first program they ran into, publicly touted it as their bellwether, and then lost credibility if it failed.

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