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Matrix Organisation: An Organisational structure that destroys your company

by Luís Gonçalves
matrix organisation Organisational Structure

The organisational structure is extremely important for the success of any business. In this blog post, I will explore how an organisational structure built in the style of a matrix organisation can harm your company. Before I continue, I want to clarify that there are some businesses that can apply this organisational structure with success—Spotify, for example.


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Matrix Organisation

Spotify’s document about tribes and guilds became extremely popular (you can download it here) in the Agile community. If you take a look into their organisational structure, you will see they are using a matrix organisation, but in my opinion, this is not the best approach.

I still believe they were not able to get rid of it because of political and human reasons, but that is another story, one not directly relevant to this post.

Before I continue, I would like to explain what a matrix organisation is, just to make sure that you fully understand what I want to say.

In simple terms, a matrix organisation is an organisation where vertical projects are staffed with several individuals from different parts of the company belonging to several different departments. This approach is extremely common nowadays when companies start to implement Agile.

Agile asks for cross-functional teams, and therefore companies start to build teams around different people with different skills within the organisation. At first glance, this seems like an appealing concept, but as I will explain later on, the promised effect does not work out as intended. Below you can find a picture that represents an organisational structure based on the matrix organisation:


Over the years, I have worked with many companies where the matrix organisation is present; based on my experience, I will outline the following problems common to it:

Extremely Political Environment

It is not uncommon for organisations with this kind of setup to suffer from political issues. The team in this situation is a bunch of individuals from different parts of the organisation that are brought together to deliver something.

My experience tells me the problem is not with team members but with line managers. If everything is going well, line managers tend to say the success is a result of their team members

If something really bad happens, line managers tend to say the problems is due to the other departments. They enter into “save my ass” mode, trying to cover their ass instead of helping the organisation to find the problem.

Blame Culture

I believe this is partly the result of the previous problem. When something goes wrong, people within different departments try to save their asses and blame everyone other than themselves. Unfortunately, I see this happen too often.

Horizontal Line interference

Over the span of my career, I’ve seen this happen in almost every company where I worked: Moving towards Agile is something difficult for most of the middle managers. There are clear roles for Product Owners, Scrum Masters, and Team Members, but nothing for Agile Managers.

In a previous blog post, I tried to explain the role of an Agile Manager —but still, I believe this is something quite challenging to navigate for many managers.

Managers try to do their best to help people, but in my humble opinion, most of the time their actions in these situations cause more harm than good. They try to give “one on one” help to people regarding career development, they try to establish team events, and they try to do many other things, but in reality, all these activities remove people’s focus from their product team.

Another typical example is the practice of having all these line managers in all kinds of meetings, for example, dailies, planning, reviews, etc., etc. Because they want to see what their guys are doing, they go to these meetings, but unfortunately, most of them cannot keep their mouths shut, and therefore they end up sabotaging the discussion and making all these meetings quite inefficient.

Decisions take a lot of time to be made

Of course, in theory, the team should own all their decisions, but with so many chefs in the kitchen, I can guarantee that any decision that ought to take just a few minutes will take weeks of negotiation with this kind of organisation structure—Not productive at all.

Individual Goals mess

People that follow my work know how I love personal goals, especially the ones attached to individual performance. In this organisational structure, I believe we have the right setup to launch the company into chaos and drain people´s individual motivation.

Let me explain: Having several horizontal line managers implies (in most organisations) that each different person will have a different goal or goals defined by his/her manager.

Now, if you imagine that in a team of 7, everyone has two goals, for example, this means that we have a total of 14 individual goals that have nothing to do with the team goal, which is the most important one.

Of course, you can say the team as a whole will have their goal, and all the individual goals will end up aligned with the team goal, but do you believe that with so many different managers, different people, and different goals, people will be aligned with the team goals?

Good luck on that ;). If you want to know more about how individual goals destroy companies, take a look at my previous blog posts on the subject:

Interference with new hirings

Several years ago I had the opportunity to be part of a sad story. At that time I was Scrum Master, and the team was recruiting a developer; of course, we all looked for senior developers. We had several interviews with several candidates, but only one guy seemed to be a perfect fit for our team. We all agreed he was our man.

We communicated with everyone and said he should be hired.

A couple of days later, the head of software development informed us that HE had chosen another guy. So basically, a guy who was not part of our team, which would not work on a daily basis with the new developer, who did not have a clue about what we needed, decided the future of the whole team.

Later on, we found out that he was simply trying to achieve his personal yearly goal (saving money for the department).

Our companies are full of such cases, demonstrating how the horizontal line manages without understanding their place in Agile Organisations, and how this can harm the company a great deal.

So what can be done? How can we assemble cross-functional teams that have everything needed to allow high performance?

Before I describe my approach, I want to warn you; this is quite a radical approach to traditional management. I know this cannot be implemented in most companies (or at least, those typical managers), but I truly believe in Peter Senge’s words:

“It´s not enough to change the structures if the mindset behind does not change“

I think this is one of most companies’ biggest problems: they keep trying to solve old problems with old ways of working. If you truly want to make a difference, you truly must change the way you think—to that end; I choose to present something more radical than the norm.

We want to create teams that:

  • Are small, directly communicating with each other
  • Where everyone takes responsibility for their work
  • Make decisions fast
  • Celebrate small successes
  • Are not political
  • Have end to end responsibility
  • Are focused on real, important things
  • Can release their products several times a day if necessary
  • Budget independent
  • Have all the necessary people to make the product live

If you think about all these characteristics, this is exactly what a Startup is. So, why not create small Startups within our companies? Before you say this idea is ridiculous, consider the fact that there are several companies all over the world already testing this concept.

So, how can we assemble this kind of setup? To achieve this kind of setup we should create cross-functional teams that are fully independent. Everyone reports to the same person (the Startup CEO), and this small team has all the necessary people and necessary skills to make the product live. Below you can find a picture illustrating this setup

Organisational Structure


Pros and Cons of this approach

Since I presented the positive aspects above, I will now focus on the negative points of this approach:

There is no space for middle management – If companies chose to implement this approach, middle managers would not have a role. Of course, they can do any other job that is necessary to release the product, but typically this will not be a manager role—it will be a specialist role, which means that middle managers must adapt to new jobs.

Communication with other Start-Ups – The ideal setup will be able to create fully independent products without requiring much communication with the rest of the organisation, but we still want to share best practices with the rest of the company. Here people must be careful not to get isolated from the other parts of the organisation. Typically a well-established Community of Practices will tackle this problem.

A lot of courage is needed – To implement this kind of approach, top management must have a lot of courage. This is a completely radical approach, and it requires a lot of courage to try something so new like this. Even if management can implement this, the company must have a great culture of learning from its mistakes, as this will be the only way to achieve success using this approach.

I believe if we have the courage and the vision to start building companies in this way, we will be able to create products faster and more successfully than ever.

Now I explained how we can assemble cross-functional teams without the overhead of having horizontal line managers interfering with the normal daily activities of the team.

The approach that I used is a bit radical, and not all companies can implement something similar to it.

But what can we do if we are not able to be so radical?

Now I will explain how we can keep the old cross-functional setup with a matrix organisation, creating the ability for the organisation to keep all middle management.

I want to be clear regarding how I feel about this approach, however; I believe this approach is not as optimal as the one suggested before, but I feel it is better than the normal traditional approach used for cross-functional teams inside of a matrix organisation.

Below you can find an example of a traditional cross-functional team with horizontal line managers:


So, what can we do to maximise this kind of setup and not suffer harm owing to the problems raised by my previous explanation? I believe the trick is to invest plenty of time into the coaching and training of middle management. In one of my previous blog posts, I explained what an Agile Manager does.

I explained that the Agile Manager is an Organisational Change Artist, Boundary Keeper, Value Maximiser, Lean Manager, Organisational Impediment Remover, and a Team Champion. Lyssa Adkins and Michael Spayd, in their article in Scrum Alliance: “The Manager’s Role in Agile” go deeper into this topic.

Organisations must involve and transform themselves; of course, this also applies to everyone within the company. The role of managers has changed, they cannot spend all day interfering with what´s going on within the team. They must spend most of their time analysing how the organisation is working and helping the organisation to grow and become leaner.

When the organisation chooses this approach, they must make sure that their managers will step away from controlling their people. They must understand their people belong to a product/project team and let them work with that team. Their people must feel part of the team, and that´s their highest priority. Individual goals should be abolished, and it should be established that only team goals matter.

When managers step away in this way, all the problems mentioned in my previous blog post: Political Environment, Blame Culture, Horizontal Line interference, Slow Decision Making, Individual Goals Mess, and New Hirings Interference will disappear, or at least that is the objective.

I still believe this is not the optimal solution, but I believe it can be a great intermediate approach for companies to reach the level of the “startup” set up that I presented here. Plus, having several managers caring about the organisation and helping the organisation to become leaner and faster is quite nice.

If you´d like to seek consultation on the best approach, strategy, or solution for your company, feel free to contact me using the Contact Form below.


We have developed a free assessment in the form of a Scorecard to help you establish which areas of business you need to focus on to achieve your particular Organisational Mastery.

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Luís Gonçalves

About Luís Gonçalves

Luis Gonçalves is an Entrepreneur, Author & International Keynote Speaker that works exclusively with Senior Executives of 7 to 8 figure businesses on the deployment of his game changing ‘Organisational Mastery’ Methodology.


Share your point of view

  1. Great article. It’s something I’ve experienced a lot too. So wasteful and ineffective.

    One team, one dream is what I’m getting my current client to align to. All ok for now but will be harder to fight the want for them to add middle management when we add more teams I think. Will continue to fight the good fight 😉

    1. Hi Sophie,

      Thanks for your reply 🙂 If there is a single thing that I learnt in my life is that middle management are the ones that you want to have on your side 😉 they are the ones that will allow you to succeed or to fail 🙂

      Another thing that I learnt, people do not have problems with change, they just want to see the benefits of the change, if you are able to show how they will benefit with the change they will follow you AND involve them… If you involve people they will help you 🙂

  2. Ikujiro Nonaka found that middle managers are vital for knowledge creation and storage in the organization. But most firms have too many layers, especially when you add in “Assistants” and “Team Leads” who really function as additional layers.

    And your right that matrix organizations are stupid and devolve into monkeys. Elliott Jaques had some interesting findings about this but most of my fellow software people mangle or purposely misrepresent them. He might be interesting to read.

  3. Hey Luis, Very interesting article. You say “I still believe they were not able to get rid of it because of political and human reasons”. What do you mean by this? Do you have any more information about these political and human reasons that Spotify have maintained their Matrix structure?

    1. It was an assumption 🙂 Maybe I am wrong :). I just believe they need to keep this matrix otherwise they would need to get rid of a lot of people… again must my assumption maybe I am wrong.

  4. Hello Luis,
    I liked your explanation and I’ve just had a similar conversation with a client of mine regarding their matrixed org. I wonder if you have any public examples of companies that have moved towards what you call the startup structure. I would like to do some more reading on companies that have succeeded with it.

  5. What if the product is too big, lets say i have a UI team with about 20DEV & 10QA? if i create head of product and a scrum team up to 10 people then i will must to create two similar teams which will have to heavily communicate & integrate… in other words how the “head of product” stracture can be scaled if the product teams are big…?

  6. i not sure i understand how the “head of product” structure can be scaled if the product is big [in terms of headcount] , this means i will have similar teams with similar capabilities or i will need to cut the product into small parts / component and each “head of product” is actually “head of component” within the big product…

  7. Luis,
    I think you need to complement this article with what problems a matrix can solve.

    (Acknowledging the dysfunctions presented in your anecdotes…)

    Org structure is a tool. The Matrix structure was observed and revealed as a source of innovation and excellence in the 1970s. At the time it was a secret weapon that some companies used to be more agile and faster to market than their competitors.

    Scrum itself is a representation of a matrix management structure.

    Do some research into how it emerged as a thing. I reckon you’ll find it very interesting and potentially useful in your career as a consultant.

  8. I don’t agree it. I belong to Architecture team. And there are lot of team works individually. but I found their code has lot of problem. whatever in design down to practice or the use of framework also found problem. During I try to discuss the issue with the team from their PM to developer. they do nothing and only give me the reason is not enough time to improve the code. Is that a real Agile team work as the result?

  9. Another example of a matrixed company is Toyota. A book I like is Designing Matrix Organisations that Actually Work by Jay Galbraith. The essence of matrix is to encourage necessary conflict. Organisations fail at it when they don’t understand, expect, and prepare for this.

  10. Luis:

    I can certainly see why the structure in the diagram doesn’t work. It seems to me that all of the horizontal groups should report, ultimately, to Solution Delivery organization, which might be structured to support common goals and eliminate conflict. Also, I notice you have a Scrum Master but no Project Manager. I know that the PM role is considered to be anathema by many Agileites but believe me, there is good reason to have someone with overall responsibility for delivering results managing projects, even Agile projects. It also helps if the PM has significant input into the performance reviews of the people who worked on the project for the time that they did.

    Bottom line is, consolidating the delivery team into a single unit can eliminate some of the organizational zero-sum-game mentality and thereby reduce friction among project teams.

  11. Nice article Luis. Note: your new org structure diagram is not appearing, and I cannot sign up as a beta reader – there’s a problem with the sign-up form..

  12. Great article. There is a missing image on the page: “Organizational Structure” – quite interested to see what it looks like. Can you please fix. Thank you!