Michael Goold

Corporate strategy and parenting theory

Abstract In November 1987, the Ashridge Strategic Management Centre was established, with the mission of carrying out research focused on corporate-level strategy and the management of multi-business companies. In November 1997, we ran a major conference to review what we had learned during the last decade. Since Brief Case has reported piecemeal on a variety of the research initiatives that we have carried out during this time, we felt that it would be appropriate to publish the background paper that we prepared for the conference, which gives a brief overview of the main propositions that we believe we have established. We would very much welcome comments on these propositions: Which do you agree or disagree with? Which are most or least important? What areas merit further research and investigation?

Creating a strategic control system

Abstract Strategic controls can be considered to be non-financial performance measures and they are of particular value in a diversified company in controlling, monitoring and guiding the development of operating units. The development of a strategic control process is described and its implementation.

Parenting in Complex Structures

Abstract In complex, interdependent corporate structures, there is overlap and sharing of responsibilities between the operating units and the corporate parent. As a result, the distinction between “business” and “parent” is blurred and a focus on the role and added-value of the parent is less obviously relevant. This article explores the nature of corporate parenting in complex structures and draws out the particular demands placed on parent managers in these structures. It also examines the role of the parent’s functional support staff and the complications that result from having more than one level of parenting. It concludes that there are some special parenting challenges in complex structures, but that the quest for “parenting advantage” should remain a fundamental driver of corporate strategy and structure.

The Value of the Parent Company

Diversified companies consist of a number of businesses under the joint ownership of a single parent company. For this arrangement to make economic sense, the parent company needs to create value from its ownership of the businesses. Unfortunately, many parents destroy rather than create value. Value destruction is common because it is only under limited conditions that value will be created, and these conditions are often absent. Successful diversified companies have unique qualities that enable them to create a great deal of value. They also have a parenting advantage: they can create more value from owning their businesses than could be created by rival parents. Using the criterion of parenting advantage as a goal for corporate strategy thinking makes it possible for corporate parents to avoid situations where they are likely to destroy value and to decide which skills need to be built to support new corporate strategies.

Redesigning the corporate centre

The authors report the results of a recent large study of corporate centre transformation: a question which is often an early priority when a new chief executive takes office. This article summarises their approach to corporate centre design which maximises value creation. Recognising that there are differences in the pattern of headquarters between countries, the authors base their recommendation for a corporate centre design process on three different roles played by headquarter staff: mimimum corporate parent role, value-added parenting role, and shared services role. A case study of Burmah Castrol is described as an example of the method

Strategies and styles revisited: Strategic planning and financial control

Abstract Developments in the companies described in Strategies and Styles in 1987 are updated to 1992, and the management styles framework is reviewed in the light of these experiences. Conclusions concerning the strengths and weaknesses of the Financial Control and Strategic Planning styles, and concerning the importance of matching a companys style to its portfolio of businesses are confirmed and refined. A further article in the December issue of Long Range Planning will review the Strategic Control style.

Structured Networks: Towards the Well Designed Matrix

Abstract Many companies face market and competitive conditions that have led them to adopt multidimensional, matrix organisation structures. But these matrix structures have often proved difficult for the managers working within them. This article puts forward the concept of a “structured network” as a means of overcoming the problems typically associated with traditional matrix organisations. In structured networks, the organisational units retain considerable autonomy, but collaborate extensively through voluntary networking between units. The organisation is largely self-managing, but has sufficient structure, process and hierarchy to achieve coordination and implement the corporate strategy. The objective is to obtain the benefits of interdependence that are designed into a typical matrix, but without sacrificing clear responsibilities, managerial initiative and accountability, speed of decision-making and lean hierarchy. To design a structured network, it is necessary to achieve clarity about each unit’s role without hemming managers in with too much detail. It is also necessary to support mutual learning without compromising distinctive differences, to defend specialist culture units from domination by mainstream units, to promote cooperation without embarking on unnecessary synergy initiatives, to recognise shared responsibilities without diluting unit accountability, and to encourage the corporate hierarchy to add value without creating redundant overheads and interference. Organisations designed in this way will have enough, but not too much structure.

Taking Stock of Synergy: A framework for assessing linkages between businesses

Abstract This article provides a framework for companies that wish to conduct an audit of how well their approach to synergy management is working. The framework, which has been used successfully by several companies, provides a practical and systematic way of pinpointing unrealized opportunities and creating an agenda of initiatives for addressing them. A detailed illustrative example shows how the framework was used in a specific company.

The Growth Imperative

Abstract Brief Case is a portfolio of commentary, opinion, research and experience. The editorswelcome contributions, comments and ideas from readers.These should be sent to MarcusAlexander, Andrew Campbell and Michael Goold at Ashridge Strategic Management Centre, 17Portland Place, London W1N 3AF.

Strategies and styles revisited: ‘Strategic control’—is it tenable?

Abstract Developments in the companies described in Strategies and Styles in 1987 are updated to 1992, and the management styles framework is reviewed in the light of these experiences. Conclusions concerning the strengths and weaknesses of the Strategic Control style are reviewed, and fresh light is cast on the diversity of portfolios that it can manage effectively. The difficulty of changing style, except in a crisis, is confirmed. An earlier article in the October issue of Long Range Planning reviewed the Strategic Planning and Financial Control styles