What is matrix structure?

Matrix structure: an organizational form that gives two (or more) strategic grouping dimensions equal weighting in the organization structure such that the manager of each operating unit reports to two bosses, one for each dimension.

For example one business can have a Business/Function Matrix: On one side there is the traditional functional departments responsible for maintaining their expertise in each function (i.e. R&D, operations, and marketing) and the other side is composed of business groups (i.e. Clothing, footwear and accessories). For each group a head manager will be assign to coordinate and manage the group (i.e. a clothing manager, a R&D manager, a footwear manager etc). Furthermore there will be a total of nine groups for each combination of groups (i.e. R&D-clothing group, operations-clothing group, marketing-clothing group and so on so forth). The manager of each group will report to both respective head managers. This type of grouping is seen as highly penetrated and became popular in the 1980s. It is as you can see much more complex than single dimension organization requiring a dual system of control, roles, and reward to reflect both dimensions. Often it leads to greater confusion, cost and delays in making decision because of two dimensions need to be consolidated before anything is done (which increase the potential conflict). It often becomes the case where one dimension outshines and becomes more powerful than the other, which makes having two bosses even more difficult than it already is.