Jay Finegan

Four-Star Management

 

INC.: One of the fashionable new ideas is to delegate to an ad hoc team of people from different departments the responsibility for solving a problem or creating a new product line--all this as a way of getting around some of the problems you've pointed out with a highly centralized organization.

CREECH: Well, the problem with much of that matrix management is that it gives people responsibility without giving them real authority. And without the authority, most people won't really accept that sense of responsibility--and you really can't blame them.

INC.: Can you be more specific?

CREECH: Well, in most of these situations, you have a basic vertical-management structure that is common to most centralized organizations. You'll have, as an example, a chief engineer, and all the engineers in the company will work under him. And a vice-president for marketing with all the marketing people under him. Suddenly, there is a specific job to be done, a project, and some number of engineers and marketing specialists are assigned to that project, along with people from manufacturing and accounting and whatever. That's matrix management. But who is in charge? You can try to hold everybody on the team accountable, but that's not the way human behavior works. You have to hold a few key people accountable.

INC.: Presumably, you hold the project manager acccountable.

CREECH: Well, I have some experience with that. Some years ago, I commanded the Air Force's electronics-systems division in Boston, where we bought about $5 billion worth of electronics each year, ranging from the Airborne Warning and Control System aircraft--the AWAC--all the way down to telephones and switchboards. We had lots of projects with lots of corporations. And occasionally; a program would get in deep trouble, and we would send in a team to find out what was wrong. Nine times out of 10, we found that it was a highly centralized and highly matrixed organization in which there was no real sense of accountability or authority. I remember one case in which a major corporation had about 900 employees working on a major program, and there were exactly 9 people who reported to the project manager in a hire-and-fire context. All the rest were assigned to him in a matrix context, and they reported to their functional chieftains--the chief electrical engineer or the chief computer programmer and so forth. And the project manager ultimately wasn't in charge of any of them. And so what the project manager had to do was form a coalition. Coalitions sometimes work, but they're not long on accountability, because it's too easy in a coalition to point fingers at the other guy.

INC.: So what's the alternative?

CREECH: The answer is to keep an engineering department, for example, to handle some of the housekeeping chores, to worry about whether all the engineers in the organization have the know-how and the background the company needs. But once you form a mission or a task force, you've given the authority to the project manager to evaluate the performance of those engineers, distribute bonuses, assign workload, and even fire somebody.

INC.: There was a time, of course, when matrixing was a hot management idea, just as centralization was hot. Now, maybe decentralization is the buzzword. Isn't this just a case of the pendulum swinging back and forth? Wasn't centralization a good idea in its time?

CREECH: I don't think it was ever a terribly good idea, although in certain settings I'd agree that a certain amount of centralization is useful. It's just that it became almost a religion. It was overdone-and still is grossly overdone.

INC.: And you find that is true in entrepreneurial settings as well as in large corporations?

CREECH: Oh, I find it very common among founders or small groups of founders. They grow their companies to a certain size by operating as one-man bands, controlling authority and making all key decisions, but beyond that they begin to feel very uncomfortable. Founders feel as if they are losing control. And then one of two things happens. Either they consciously or unconsciously make decisions that stifle growth, or they try to use their old management techniques long after they have become ineffective, so the companies reach a point where they can't survive under that kind of stifling centralized management. In my judgment, you can't micromanage a company as small as 100 or 200 people. Long before that, you have to start giving some real authority to the people below you.

INC.: Would it be correct to say that if you don't start that early, you probably will never do it?

CREECH: I learned a long time ago that you have to not let the perfect be the enemy of the good. The fact is that it is never too late to change, because in any organization, there are lots of people just waiting for you to give them some responsibility, some sense of ownership, something they can take personal pride in. And it's amazing how, once you take those first steps, suddenly a thousand flowers bloom, and the organization takes off in ways that nobody could have predicted.

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