Management SummaryStern Stewart Research // Volume 57
The responsibility of a modern corporate headquarters is not just to crunch numbers or to represent the company, but to lead. A powerful corporate headquarters consists of strategists and leaders who are experts in markets and business models. At the same time, when it comes to the head count, corporate headquarters have to have a lean setup but can react flexibly to instruct and enforce and, where required, to lead with a firm hand. The more entrepreneurial responsibility that is transferred to operative management, the more important structures with strong functional and disciplinary guidance and reporting line will become in regulatory functions. Corporate headquarters determines portfolio strategy in addition to the structural and leadership model of operative business. The structure of operative business has to follow market requirements and strategies and not company affiliation. Different divisions require different leadership structures. Therefore, leadership should happen within flexible business models instead of within rigid matrix organizations. Implementing strong leadership requires processes which are subject to a clear division of responsibilities. The success of practiced governance is characterized by team spirit and trust in the horizontal and vertical leadership structure. Here are five theses on strong leadership in clear structures:
1. Concentrating on a strategic and effective minimum – Corporate headquarters focuses on the actual leadership tasks 2. Establishing organizational structures with strong functional and disciplinary guidance and reporting line – Ensuring powerful functions and a one community thinking 3. Reducing organizational levels and focusing on the business purpose – Proximity to business is mirrored in the structure 4. Strengthening practiced governance – Easing the tension between entrepreneurship and the culture of consensus 5. Implementing a competitive target and resource allocation – “Capital for return” as opposed to spreading resources too thinly
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