Supporting coordination

The ABB case illustrates the difficulties of finding the right structural solutions and coordination mechanisms to cope with the complexity of international business. In this chapter, we first outline different forms of structural coordination that appeared as global firms evolved beyond a simple “transnational" matrix to more differentiated multidimensional forms - complementing vertical integration with structural elements of horizontal coordination - and why the cycle of continuous adaptation is likely to continue. The best way to address the complex business challenges facing global firms is through enhanced cross-boundary collaboration, our focus in the latter half of this chapter. Making effective decisions in multidimensional structures requires new coordinating mechanisms, such as lateral steering roles and lateral steering groups, which can supplement, if not replace, traditional top-down hierarchical decision-making. To make this work, lateral and network steering requires the ability to exercise leadership with little formal authority, a competence that needs to be developed, cultivated, and rewarded.