The concept of the corporate center in this article is profound and how it measures its success is critical for large, multi-faceted companies. An interesting case is the challenge faced by the DuPont Company—my old stomping grounds. A few aggressive investors are pushing for breaking up the company by separating the Agricultural business from the rest to optimize value for the stockholders. The DuPont management suggests there is strong synergy among all the business around technology/science. Defining and measuring the strength of the corporate center as defined in this article could be very telling on which approach will generate more stockholder value.
…that Microsoft is battling the classic tension between operating as one and as many. The telltale sign is the company’s swing from emphasizing “focus and accountability” within its recently disbanded divisions to a loud new call for “One Microsoft.” I said that Microsoft is not alone in this battle; every enterprise faces the strain between the whole and its parts (Sept. 19, 2013 posting)…..
...In our experience, a company must have two big intangibles to punch above its weight: a respected corporate center and a strong corporate affinity. A respected corporate center doesn't rely on compulsion to drive coordination across the enterprise, and it’s able to minimize the balkanization, redundancy, and competing agendas that often result from demanding sharp accountability of the organization’s individual parts. A strong corporate affinity makes people want to collaborate and it induces them to accept accountability for producing results without the complete autonomy and authority they can never be given.
So what makes for a respected corporate center? For starters, it measures itself by one key metric: how well the businesses perform in their markets specifically because they are part of a bigger whole. It’s not good enough for a corporate center just to be the “necessary overhead” that goes with running a large company. The rest of the organization needs a compelling case and tangible evidence of how it benefits from having a head office. There are just a handful of ways for a corporate center to succeed by this measure, and no one company employs all of them, nor do any two employ any of them in the same way