Dear PM Advisor. Jan 27, 2014

Dear PM Advisor I saw your post last week about weak, balanced and strong matrix organizational structures and have a follow-up question. What's the difference between Functional and Projectized org structures. It looks like in the functional structure the projects are only being done by the V.P.'s.

Structured. Hartford, CT.

Dear Structured,

In the Functional org structure, projects are done within each department but coordination across departments for the project's sake are done at the department head level. This tends to be old-fashioned project management so we have to picture ourselves back in Henry Ford's day.

Henry Ford tells his people in 1908 that he wants to create a new car: The Model T. He asks the head of R&D to develop the new design. He asks Manufacturing to figure out how to mass-produce it. He asks Finance to figure out how to price it so that every working man can afford it. He asks Marketing to figure out how to get all these families to buy one. Each department head now has one or more projects to run and he is the Project Manager. No team member on R&D can ask a manufacturing team member a question without going through their department heads.

Coordination BETWEEN projects is done at the department head level. So Henry Ford is the Program Manager and his direct reports are the Project Managers. This is an old-fashioned and extremely inefficient way of managing projects and is rarely seen anymore today.

Contrast this with a Projectized org. structure:

In this structure there are no department heads, only heads of projects. The CEO recognizes that no ongoing operations are going on in this portion of the company, merely projects. Each Project Manager has at her disposal, all the functions required to run the project: R&D, Manufacturing, Marketing, Finance, QA etc. All these people are fully committed to the project. The PM can hire and fire at will to suit the needs of her project.

This structure works best in companies that have large, LONG-TERM projects. Because when the project is ending, the team member has no place to go and starts getting nervous about his job. Boeing can be run like this, Google cannot.

Good luck,

PM Advisor

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