Redefining corporate functions to better support strategy and growth

Unleashing the potential of corporate functions often requires a paradigm shift. Explore how redefining these roles can bolster strategy and growth, transforming the corporate landscape and driving unprecedented success in today's dynamic business environment.

Over the past decade, companies have struggled with organizational designs that vary widely in how centralized or decentralized they are across functions

Patchwork fixes are applied to solve problems with specific functions and business interactions, resulting in diminished clarity and coherence across the enterprise and undermining accountability for service delivery and increasing complexity

Define the organizational strategy and ground it in how functions deliver value at the enterprise and business-unit levels

Define how corporate functions can help maximize value for an organization

A corporate function’s value-creation narrative should cascade from the organization’s strategy
Companies should identify the unique characteristics of the markets they operate in and the competitive dynamics within them
How do companies meet the needs of their core customers?
What products do business units offer, what differentiates them, and what cycle times does each one require

Take a BU-back approach to function design

Organizations should adopt a business-unit lens when designing functions

Corporate functions should reflect the needs of business units
Functions should be set up only when a business unit absolutely needs them
To more easily determine whether corporate functions should exist and how they could maximize value, an organization should start by identifying what type of business unit leaders it needs to maximize value and how empowered and focused they need to be in the context of the overarching strategy

Toward a new approach

Companies should flip the script on traditional value assessment of functions and define functions by looking first at business-unit needs

Centralized functions impose a tax on the organization because they can slow down activity at the edges of business units
Defining “corporate” does not mean functions need to be one size fits all
Trying to force a one-size-fits-all approach in developing and defining corporate functions will lead to frustration and exacerbate existing issues
Basic principles can help leaders narrow the list of functions under consideration

Move quickly to determine how to allocate decision rights and responsibilities

The BU-back approach provides a starting point and ultimately pushes organizations to make more direct ties to the value-creation narrative.

It accomplishes two important objectives: accelerates the centralized-versus-decentralized assignment of functions and aligns corporate-function leadership, business-unit leaders, and top executives with a coherent narrative to optimize value creation.