Member Xiaodong Yang Speaks: Build Vertical and Horizontal Channels

The Challenge:

The case at hand was brought by the CEO of a company that was flush with financing and experiencing explosive growth. He was looking for strategies to maintain efficiency and productivity, as well as positive company culture.

If you were in this situation, what would you do?

If I were in your chair, I’d implement a matrix system so that vertical structure is complemented by a horizontal project management department.

You are sitting pretty. Not only is your revenue charging towards the stars, but you also have strong financial backing. However, as many CEOs have painfully learned, even a mountain of cash will not ward off eventual demise if inefficiency and culture decay begin to creep in. If I were in your exciting position, I’d install a matrix structure to give you more visibility into the company. The current vertical structure is useful because everyone receives precisely honed marching orders. However, the drawback is that feedback has trouble getting back to your office. Middle managers are prone to reporting up good news and squelching bad news as it may reflect poorly on them. Without robust feedback from all levels, how can a CEO assess whether productivity is maximized? Or whether company culture is on point?

To overcome this communication gap, consider establishing a project management department that reports directly to you. This team integrates horizontally at all levels and can open a feedback channel to the CEO at any time to identify productivity bottlenecks or issues with company culture. Expect resistance from current managers who fear loss of control. At the same time, make sure you maintain a proper power check on project managers, so they do not run amuck. In my experience, I have seen fast growing companies greatly benefit from this matrix approach of integrated checks and balances. I'd give it a shot.