The legendary General Manager was a lone ranger who “owned” a whole business within a corporation and made key strategic decisions across functions. This full range of operating experience prepared traditional GMs for the roles of future division presidents and CEOs. Over the years, market competition has increased, margins have thinned and customers are demanding complete solutions rather than discreet products, and shareholders demand lower costs. These dynamics have driven companies away from the traditional autonomous business unit structure. Functional structures with shared Operations, Sales, Marketing and R&D for multiple product or service lines are now the logical choice for businesses seeking efficiency and a customer orientation. But this type of structure is often accompanied by complaints about “lack of accountability,” uncoordinated decision-making, and “functional silos.” To solve these problems, leading organizations are creating a new type of GM role.

Enter the “Matrix GM.” Compared to the traditional GM, the Matrix GM breaks down functional and organizational silos that inhibit an organization’s effectiveness. The Matrix GM is often a product line manager or other functional leader asked to lead a business by exerting influence across other functions without having direct reporting relationships.

A matrix structure cuts across traditional structures by including people from the functional organizations on teams organized by product, geography or business unit. The Matrix GM (MGM) leads the business teams that cross functional boundaries. The MGM ensures that key decisions are made from a business unit perspective, while the functional organizations ensure efficiency and a single face to the customer. For example, the marketing organization develops and executes a coordinated strategy that integrates all relevant products or business units. Without an MGM, key decisions that cross-functional boundaries often must be escalated to the COO, if they are made at all. Businesses in high-tech, financial services, health care, energy and other industries have created MGM roles and concluded that they are critical to making the functional matrix organization work. But senior leaders must pay careful attention over a period of time and on a number of fronts if a product manager or region manager is to become effective in the role of Matrix GM:

1. Defining and Communicating the Role: Problems arise when MGMs don’t really understand how their new role differs from their old functional role. If the distinction is unclear, people will naturally gravitate back to their prior role or the most comfortable role in their new environment. Often, the best product expert or country leader is asked to become an MGM, but is forced to learn the tasks and accountabilities of that role by trial and error. Worse yet, the people in the functional organizations are never told what the MGM is intended to do. As a result, the person taking on the MGM role may be viewed as power-hungry rather than fulfilling a function that was assigned. To make MGMs effective, the organization must conduct a role clarification, definition and communication process led by senior executives and involving leaders from all the functions. A key part of the role definition process is clarifying the “decision rights,” or who-can-decide-what. The designers of the MGM role and structure must identify all major decisions in the management process and determine which parties provide input, consult, recommend, decide and approve at each decision point. Working at this level of granularity ensures that the role has been scenario-tested before implementation. Another key aspect of role definition is determining how to measure MGMs’ success. Typically, MGMs will be measured and held accountable for things they don’t fully control, which sets them up for failure.

2. Clarifying the Critical Competencies: The MGM role is based on a different model than the legendary GM who sat atop a pyramid with direct control over a whole business. A Matrix GM must have different competencies than a product or market expert. Success profiling is the first step in competency development. Studying individuals who are successful in the MGM role can reveal how they do what they do, and how their knowledge, skills and behaviors can be translated to the optimal profile. Matrix GM competencies need to be defined for each specific company, but will typically include influence skills, product or market expertise, customer and partner orientation, competitive knowledge, process skills, organizational savvy and leadership skills. Clarifying the critical competencies helps MGMs understand how to be successful in the role.

3. Developing MGMs: Few companies find many readymade, fully proficient Matrix General Managers within their organization. Neither a business unit structure nor a functional structure prepares people well to be MGMs, so it is important to develop those individuals already serving in the role as well as those in the pipeline. Development comes from two main sources: “awareness” activities and “experience” activities. Awareness activities, such as training, coaching and feedback, increase an individual’s understanding of the critical competencies required and their own relative skill levels. Some groups have used learning maps to help product managers and others learn how the whole business works and how they can influence it. Some companies have found it helpful to conduct periodic “GM forums” where people in the role get together to learn how to be more successful. “Experience” activities are special projects or new job assignments that expose people to tasks they would not experience in their normal role or career path, such as giving a product manager an opportunity to work in Sales or Operations. In particular, those in the feeder pool should have the opportunity for cross functional experiences before they move into an MGM role.

4. Refining the Operating Model: In many companies, the overall operating model is set up to optimize functional efficiency. Unfortunately, this makes the MGM job more difficult even for the most skilled manager. For MGMs to be effective, it is important to assess the operating model—schedules of meetings, decision-making methods, access to information, systems and processes, measurements, rewards, communications—and determine what changes can help MGMs and cross-functional business managers be more effective while still realizing the benefits of a functional organization. Some organizations never conduct this assessment, and frustration builds until the organization reorganizes into business units. This leads to redundancies, increased costs, customer complaints about complex interfaces—and the cycle repeats itself. Refining the operating model so MGMs can be effective is certainly a more efficient approach than totally restructuring the organization.

Longing for the good old days of full business unit autonomy is a waste of time. Creating boundary-spanning roles in which product managers and region managers act more like General Managers is key to making today’s matrix organizations work. Matrix General Managers can provide companies with a competitive edge if they understand the role and its critical competencies, develop in their jobs, and are free from the barriers of the traditional operating model.