Analyze Aquarius with respect to the five contextual variables. How would you describe the environment, goals, culture, size, and technology for Aquarius? ANSWER: Aquarius is a middle-sized firm operating in a relatively unstable environment, particularly because in the industry it was common to lose or gain clients quickly because of consumer behavior changes or product innovation, sometimes with no advance warning. The technology is predominantly nonroutine because of the emphasis on creativity and art.
The structure is functional with full-time integrators who provide horizontal linkage. The goals of the firm are to be creative and to satisfy customers. 2. Design a new organization structure that takes into consideration the contextual variables in the case and the information flows in Exhibit 3. 22. ANSWER: You may give students a hint of the general approaches that could be taken: One approach would be to treat account managers as project managers; another general approach would be to design a product structure with departments reporting to each account executive. Ask students to draw their specific alternatives on the board.
A hybrid form of structure would be one specific possibility, with account executives reporting to client group vicepresidents (comparable to the “product” form), and most functional departments such as research, media, merchandising, copy department and art department reporting to each of the account executives. The functional heads who would still report directly to the president would probably be legal counsel, finance, and personnel. The structure matches the uncertainty of the environment, and would enable the organization to allow for unit or customer-driven adaptation to changes.
There is high coordination across functions relative to any given customer’s account, necessary for the projects being designed. The emphasis is on client satisfaction with vertical and horizontal information flows possible by grouping together the individuals who communicate with one another. 3. Would a matrix structure be feasible for Aquarius? Why or why not? ANSWER: To determine whether a matrix structure is feasible now, or will be feasible in the future, students should examine the requirements for a matrix. Is there a dual domain competitive issue?
Perhaps, in this case. Service and creativity require technical competence within each function, and yet at the same time, effective coordination across functions. Is the environment uncertain? Overall, there is potential for rapid environmental change. The environment of an advertising agency is not as uncertain, and does not have as great a potential for instability as the environment of computer chip manufacturers, but nevertheless the environment is relatively uncertain. Customers change agencies frequently, and employees drift from agency to agency.
New developments and techniques occur in the industry’s technology. Is there a need to share resources across project or product lines? Yes, one of the problems of moving to a hybrid structure with account executives serving as the focus of line authority is the tremendous duplication of functional resources. Unless an agency is extremely large, it cannot afford to have separate teams of art, copy, merchandising, media, and research specialists for every account executive. This is an example of the need for shared resources that typifies a matrix structure.
Thus a matrix structure might be feasible for Aquarius Advertising. But in this situation, matrix is not the best form to recommend for immediate implementation. The matrix will be effective only when the experienced managers are willing to be complete team players and not overstep their authority–functional or product–in the complex violation of unity of command that occurs by design. The individuals involved in Aquarius now appear to lack the organizational savvy necessary for the matrix form to operate smoothly.
Currently the account executive that is designated to be the liaison between clients and specialists is often bypassed. If that were to occur in the matrix, Aquarius would have a complex management system in place that still did not provide the coordination between functions that they need. With training, the managers and account executives could “grow into” a matrix form. However, for now, the best recommendation from a consulting point of view would be to strengthen the integrative capability of the account executives while it is in its functional structure.