INSIGHT

Swallow the blue pill

Embrace the matrix

Valued at £134bn, the Walt Disney Company’s magic has grown steadily more powerful since it was established 93 years ago in October 1923. Today, it’s a global phenomenon with some 387 Disney stores, 14 owned or licensed theme parks and more cinema hits than Tinkerbell can shake her wand at.

Yet there’s nothing hocus pocus about Disney’s survival and continuous reinvention. It might be a nonagenarian, but its practises are decidedly millennial. Indeed Disney is one of an increasing number of firms to use a matrix structure, which might be one of the hallmarks of disruption.

So what does “matrix structure” actually mean? Traditionally firms have operated in a hierarchy, often with a be-suited, bespectacled founder or CEO at the top, with a set pecking order and clearly defined employee roles. A popular sketch doing the rounds on the internet presents a tongue-in-cheek take on how the hierarchy operates in reality, with four directors of Strategery (sic), Ambiguity, Shiny New Things and Overpromise reporting up lines to three Vice Presidents of Hype, Disruption and Buzzwords. In other words, a well-meaning, rigid recipe for disaster.

A matrix structure turns such an approach on its head.

Staff are organised in a grid, reporting across lines rather than simply upwards, often resulting in less rigid departments and working practices.

 
 

Associate Professor of Management Practice at Oxford University’s Said Business School, Jonathan Trevor, reckons there are several advantages. He says: “You can better resolve conflicts, optimise spend on infrastructure by removing duplication and offer customers a one stop shop for all their needs.”

And critically: “Connecting across the business means there is also greater innovation.”

Greater than the sum

Professor Trevor holds up Disney as just one example of the transformative power of entering the matrix. He says: “Disney have worked hard to integrate their portfolio to offer customers a superior experience. They have merchandising, media and theme park arms, which support each other. Disney knows the whole, when connected, is far greater than the sum of its parts.”

Another case in point, perhaps more extreme, is the Chinese company BYD - an acronym for Build Your Dreams - which had three separate subsidiaries specialising in automobiles, mobile phones and solar panels. By combining the expertise, tech and management of each, BYD created an opportunity to grow fast and large in a new and dynamic market, namely hybrid and electric cars.

Answering customer demand

As disruption now dictates the relentless pace of business, Professor Trevor warns many firms will see matrix organisation forced upon them. Effectively it will become a case of ‘Do or Die’.

He says: “For many it isn’t choice, but rather what customers are demanding. They want the efficiencies, innovations and synergies of the matrix structured business. Otherwise they’ll go elsewhere.”

Swedish music company Spotify (valued at £5.9bn) has, since inception, supported matrix structures, organising its workforce in Squads, Tribes, Chapters and Guilds to promote collaboration and flexibility, with none of the stasis associated with a hierarchy.

Here in the UK, forex startup TransferWise has also joined the matrix revolution. Their approach is so different to the norm that the recruitment procedure targets candidates who show the ability to thrive in an autonomous team environment.

VP Growth at TransferWise, Nilan Peiris, says: “Not everyone will ‘get’ the culture. Some people find the prospect of not being told what to do a little daunting – most people get through it, but occasionally there are people that don’t thrive. It’s hard to predict based on background or seniority – that means a decent percentage of why we hire a person will be based on their personality. Everyone needs to be pulling in the same direction – working in small teams rolling up to a global vision. It works best when teams have a well-defined focus and clear outcomes to strive for. Decisions get made, problems get solved, things move forward.”

Success story

Autonomous teams are now a crucial part of the TransferWise success story, which has seen its value hit £750m. The firm credits this unique structure for fuelling and sustaining its stratospheric growth.

Nilan says: “It’s a structure that enables speed and in disruptive business, speed is what sets you apart from the competitors. We’re able to grow fast, safe in the knowledge that decisions are staying with the people best equipped to make them. The approach has worked incredibly well. Customers are now transferring £800m a month through TransferWise – collectively saving £1m a day compared to if they had used their bank.”

Matrix organisation isn’t just beneficial to the bottom line. Employees have much to gain from a structure that generally promotes flexibility, remote working and positive colleague interaction.

Nilan says: “Our people feel empowered and accountable. Everyone at TransferWise has the opportunity to truly make an impact.”

Millennial insights

Rachel Booker is People Director at Virgin Media Business and accountable for driving the employee agenda. She personally benefits from the flexibility of the company’s structure and progressive culture.

She says: “We have always worked more horizontally than vertically so it doesn’t matter where you are in the hierarchy. I’m not based in our headquarters in Hook, Hampshire, so I appreciate the positive approach to working remotely and make full use of everything from Instant Messenger to WebEx and TelePresence to do so. Adapting to and adopting different ways of working and communicating are essential to stay ahead.”

Our graduate recruits have been particularly enthusiastic about the company’s horizontal structure, which encourages them to “reverse mentor” the Senior Leadership Team (SLT) and provides exposure across the firm as a whole.

Rachel says: “Graduates are given access to the SLT right from the start. Reverse mentoring opens everyone’s eyes, giving the older staff an insight into how a millennial thinks about products and work practices. They represent how our customers will be thinking in a few years’ time. It’s proved so successful we have massively increased the graduate programme, so from an initial intake of two we now have about 21.”

Whether you’ve been around for over ninety years like Disney, or for just a few like Spotify, matrix organisation is a key part of the disruptive toolkit and capable of transforming business in new and exciting ways. If you’d like our support on your journey to the brave new world of disruption, get in touch.

Look out for the second part in the series, Intrapreneurism, coming soon.

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