Every organization has to deal with a mix of ongoing and project oriented work. But, even if you structure your teams into departments to optimize ongoing work, they keep trying to self organize into project focused teams.
Matrix Management vs Project Organization
There are the regular tasks and chores, and there are the bigger undertakings which try to bring the organization as a whole forward. To balance both, you have two ways to structure your organization: Structure by department and have cross-departmental project teams or structure by project. Structuring by department is often called Matrix Management whereas structuring by project is often referred to as “project-oriented organization”.
Departments Focus On Specialization
The advantage of splitting teams into departments is that even though they might work in different projects they still can share their experiences and exchange ideas and learnings in their specific field. That way everyone can improve his specialization e.g. in product management. A disadvantage of that structure is that your project teams are distributed over various departments. This makes it harder for everyone to focus on the project goals as top most priority.
Project-oriented Organizations Foster Cross-Functional-Work
If your main way of structuring your organization is by project you group all specialists around those bigger undertakings. Everyone required for project success sits and works together and everyone can focus on the project goal. The disadvantage of this structure is that all people with the same specialization like product management hardly get to exchange experiences and learnings. There is a need for cross-project exchange, which you need to enforce to make it happen.
Teams Gravitate To Project-oriented Organizations
So, which organizational form is better? Of course, it depends ™. But, more often than not, people given a choice prefer working in cross-functional project teams. Even loosing the advantages of working with collegues of the same trade, they seem to gain more profit out of working together in a project. Co-location and constant informal information flow within the project team gives a team a great boost in productivity and reduces stress and friction between team members.