How to Align Innovation Objectives in Matrixed Organizations
A matrixed organizational structure comes with numerous potential benefits. Having both horizontal and vertical lines of reporting makes it less likely that silos will develop between different branches of an organization. It also gives staff a chance to apply their skills in a variety of roles, and it encourages best practices to cross organizational boundaries.
But the matrixed structure also comes with its share of risk. Specifically, innovation activity can become sporadic and uncontrolled; funding and roadmap clarity can get muddled; and official decision points/makers might not always be obvious.
A group of chief strategy officers (CSOs) from the Outthinker Strategy Network (OSN) gathered to discuss common challenges and best practices for working in matrixed organizations along with opportunities for making the most of innovation activities within those organizations.
3 Recommendations for Successful Innovation Within Matrixed Organizations
1. Clarify priorities, budgeting, decision-making criteria, and authority
A common challenge raised by the OSN members was a lack of clarity in several key areas. Because of multiple lines of reporting, matrixed organizations can suffer from clashing priorities, unclear budgeting, and potentially multiple decision-makers.
Thus, the first step for any matrixed organization should be to centralize and clarify each of these points. Leaders must institute systems for identifying innovation priorities for the whole business. One CSO recounted a process wherein the leadership team laid out macro trends, identified customer need states, and found white spaces where innovation would satisfy an unmet need, then used these white spaces as a framework for innovation priorities.
Leaders must institute systems for identifying innovation priorities for the whole business.
Multiple CSOs suggested having a centralized budget for innovation-oriented projects and establishing clear business criteria and decision-making authority for disbursing portions of the budget. One CSO said that the IT team sat at the center of this resource disbursal process, hearing business cases and authorizing the use of certain software and/or development equipment.
2. Institute process checks to keep pilot activity meaningful
Pilot activity in different sectors of an organization can be a double-edged sword: Local innovation may benefit a particular line of business, but if it results in process/practice disparities between different lines of business, it can hinder overall business effectiveness.
To prevent oppositional pilot activity, one CSO recommended process checks to ensure that pilot activity is directed and meaningful. Again, a centralized process for budget and sign-off authority was relevant here: Requiring different business units to follow a centralized set of procedures ensures that disparate pilot activity is convergent (i.e., it uses a common set of practices and tools) not divergent.
Conduct process checks to ensure that pilot activity is directed and meaningful.
3. Develop systems for sourcing innovation ideas
One CSO shared that their company used a software vendor to introduce a “digital suggestion box,” where anyone from any realm of the company could submit innovation-oriented ideas. The suggestion box would include a prompt around a particular area of innovation that was important to the entire company.
One CSO shared that their company used a digital suggestion box, where anyone from any realm of the company could submit innovation-oriented ideas.
The digital suggestion box, they said, killed two birds with one stone: It aligned people from different parts of the business around common innovation objectives, and it spurred higher employee engagement.
A matrixed organization needs a centralized body to determine innovation objectives (both through internal analysis and external innovation sourcing), disseminate them throughout the organization, and officiate the distribution of resources. Centralization, along with agreement on priorities, budget, and how decisions will be made, can ensure that a matrixed organization avoids confusion and functions with clarity.