Abstract

The M-form, in which a corporate parent manages relatively freestanding business units, was the most successful organizational design of the twentieth century. However, contemporary economic conditions call for designs that allow firms to exploit synergies across their business units, and on this dimension the M-form is notoriously weak. This article reports on empirical research that highlights the fundamental tension between clear lines of authority and the exploitation of synergies that firms face as they move away from the M-form and implement shared service centers, corporate account management, and matrix organizations. However, a limited but substantial number of firms have evolved organizational designs that signal a new way of resolving this tension. These firms are organized around multiple dimensions (e.g., region, product, and account) and are able to simultaneously hold different managers accountable for performance on these dimensions. The multidimensional organization is best understood as the next step in the evolution from a resource-centric physical production model to a customer-centric knowledge-exploitation model. It is a way of organizing that is particularly well adapted to stimulating the teamwork that is necessary to create economic value in complex markets on the basis of distributed knowledge and intangible resources.