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. 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. As a result, neither staff (planning) nor line (division management) could be held clearly responsible for medium- or longer-term performance. In the mid-1960s, however, longer-range, more elaborate capital-investment projects called for a partial recentralization of corporate decision making. For most the move proved successful strategies became more coherent and divisional managers could be held broadly accountable for their operations. 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. The postwar boom and subsequent economic growth led to mushrooming product lines and organizational complexity. Up through the early 1950s, most companies were functionally organized. Much the same story has been enacted in many large corporations in the past few years. He could no longer pin responsibility for results on anyone, and nobody but him seemed to be worrying about the big picture. In short, the CEO had never been so frustrated, so aware of managing a bureaucracy. 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. Buck-passing had become a fine art the product managers blamed the production people, and vice versa. 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. Gamesmanship and political jockeying were widespread. Top managers were spending more time than ever before in meetings or in airplanes taking them to and from meetings. Too often, what tardily emerged from the decision process was a lowest-common-denominator political compromise. Major issues were taking longer to resolve, and the CEO was constantly called in to referee disputes between product-line, geographic, and functional chiefs. Three years later, however, the company was losing momentum faster than before. The ideal solution, he decided, after much thought. Everyone would have to talk to everyone else. 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. 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. We’ve got to have a uniform worldwide product image, and that means. “I’m sick and tired of that ‘every country is different’ routine. “But you can’t close the Livorno plant! The moment you do that, they’ll hit us with special tax regulations.” “Our historical cost advantage is lost the only way we can stay in the ball game is to optimize our production facilities worldwide.”
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