Several years ago, Chase Manhattan Bank embarked on an ambitious plan to develop a common back-office processing system for its overseas branches.1 The bank established at headquarters a cross-functional team of information systems, finance, and operations professionals to develop the design and lay out the implementation approach. Later, the bank added branch operations managers to meet “local” requirements. These managers retained their reporting relationships within their country organization structure, yet headquarters staff managed and evaluated their work on the project team. Conflicts were inevitable. After months of frequently fractious meetings, the headquarters staff prevailed, and a small group of branch managers reluctantly agreed to support implementing the new system on a pilot basis. Because the team concentrated on reconciling differences rather than on understanding similarities, the project was extended over several years. Ultimately, the bank achieved its objective of operating on a common infrastructure, but at high political, human, and competitive costs.
When facing a similar need, a large Korean chaebol took a different approach.2 To achieve its objective of global expansion, during the past decade the company focused on building production and marketing capabilities in many diverse geographies. Developing management control and reporting systems was lower priority and was principally the responsibility of local staff in each country. Under pressure to improve the timeliness and accuracy of financial reporting, the small corporate staff asked the functional managers in each country to make additional investments in the infrastructure of their management control systems. General guidelines were communicated at occasional meetings in Korea. Although the local managers discussed the generic applicability of these guidelines, they did not have a formal mechanism to identify substantive changes and elaborate on requirements. Local managers exercised substantial latitude in system specifications and implementation approach. Thus, although the reporting systems improved, concerns remained about the reliability and consistency of information across countries.
These two efforts are examples of infrastructure transitions, complex undertakings that require the cooperation of broad swaths of organizational resources. Not only is the economic justification for such efforts frequently unclear, but the legacy infrastructure also must remain operational during the transition. In managing these transitions, most global organizations establish teams drawn from headquarters staff and line business units, as did Chase and the Korean firm. Typically, such teams operate in a matrix structure. The way they function follows one of two patterns.