ADHOCRACY: A CLOSER

LOOK
 Adhocracy

Not a structure, but a group of specialists

meeting and coordinating a new task.

Can be members of an existing organization

and external consultants.
 Matrix Structure
• The search for better and faster ways to
• develop products and meet customer needs
• led to the matrix structure.

• A matrix structure groups people and

• resources in two ways simultaneously:
• -by function and
• -by product
 Matrix structure

Function 2
Function 1

Function 3
Object 1

Object 2

Object 3
 CEO
Matrix Structure

Vice President Vice President Vice President Vice President Vice President
Engineering Sales and Finance Research and Purchasing
Marketing Development

Product A
Manager

Product B Product Team

Manager

Product C
Manager

Product D
Manager

Two-boss employee
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 Matrix Structure
• The matrix is a structural design that assigns specialists from specific
functional departments to work on one or more interdisciplinary teams, which
are led by project leaders.
• a) The matrix combines two forms of departmentalization--functional and
product.
• 2. The matrix evolved in the 1960s, initially among aerospace firms, as a
way for organizations to gain flexibility while still maintaining bureaucracy's
economies of specialization.
• 3. In the late 1980s, many multinationals went to a modified matrix--
having country managers report to both a regional boss and a product-group
executive.
• 4. Today, you'll find the matrix still used in the aerospace industry and in
many advertising agencies, research and development laboratories,
construction companies, hospitals, government agencies, universities,
management consulting firms, and entertainment companies.
• 5. The strength of functional departmentalization lies in putting like
specialists together.
• a) Minimizes the number of specialists necessary, while it allows the
pooling and sharing of specialized resources across products.
• 6. Major disadvantage is the difficulty of coordinating the tasks of diverse
functional specialists so that their activities are completed on time and within
budget.
 Matrix Structure
• 7. Product departmentalization, on the other hand, has exactly the opposite
benefits and disadvantages.
• a) It facilitates coordination among specialties to achieve on-time
completion and meet budget targets.
• b) It provides clear responsibility for all activities related to a product, but
with duplication of activities and costs.
• 8. The matrix breaks the unity-of-command concept. Employees in the
matrix have two bosses--their functional department managers and their
product managers. Therefore, the matrix has a dual chain of command.
• The strength of the matrix lies in its ability to facilitate coordination when the
organization has multiple complex and interdependent activities.
• 11. Another advantage: it facilitates the efficient allocation of specialists.
The matrix achieves the advantages of economies of scale by providing the
organization with both the best resources and an effective way of ensuring
their efficient deployment.
• 12. The major disadvantages of the matrix lie in the confusion it creates, its
propensity to foster power struggles, and the stress it places on individuals.
• 13. Overall, the matrix has met with mixed success.
 The adhocracy
• Characteristics
– prime coordinating mechanism: mutual adjustment
– key part: support staff (together with the operating core
in the operating adhocracy)
– main design parameters: liaison devices, organic
structure, selective decentralisation, horizontal job
specialisation, training, functional and market grouping
concurrently
– situational factors: complex, dynamic (sometimes
disparate) environment; young (especially operating
adhocracy); sophisticated and often automated technical
system (in the administrative adhocracy); fashionable
 Design
• Focus on innovation, cannot rely on standardisation
• Goes away from the principle of unity of command
• Gives power to experts, but cannot rely on their
standardised skills to achieve coordination
• Mutual adjustment in and between project teams
– project coordinators, meetings, etc
• Matrix structure common
– experts formally in functional units
– project teams based on (market) needs
 The operating adhocracy
• Solves problems on behalf of
its clients
– think-tanks
– applied R&D institutes
– creative advertising companies
– manufacturer of prototypes
– experimenting theatre company
• May easily turn into a professional bureaucracy if more
focused and with standardised methods
 The administrative adhocracy
• Solves problems, runs projects, on behalf of itself
• Typically a company where the operating core is truncated
– done in a separate organisation
– contracted out (outsourcing)
– by full automation (c.f. discussion of machine bureaucracy)

• Tricky issue of combining efficient production with high degree

of innovation
– machine bureaucracy with a venture team is not an adhocracy
 Administration and support
• A lot of coordination needed
• Managers participate in project teams
• Ensuring proper management and anchoring
of projects often demanding
• Need to monitor and redirect projects
• Distinction between line and staff becomes
unclear
 Strategy in adhocracies
• Hard to split strategy formulation and
strategy implementation
• Strategy tends to evolve
– formed implicitly by decisions made
– strategy formation, emergent strategy,
strategising
 Conditions
• Dynamic and complex environment
• Interdependencies that need to be handled
• Frequent product changes
• Often young (esp. operating adhocracies)
• Sophisticated and sometimes automated technical
system
• An element of fashion
– all the right words: dynamic, expertise, projects, etc.
 Some issues
• Ambiguities
– Unclear, multiple and changing lines of
authority
• The most politicised configuration
• Not very efficient
• Danger of inappropriate transition
Network structure

A network structure is a cluster of different

organizations whose actions are
coordinated by contracts and agreements
rather than through a formal hierarchy.

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Network structures often
result from outsourcing.

Outsourcing is the process of moving

activities that were previously performed
inside the organization to the outside
(where they are done by other companies).

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