Related Experiment Videos
Lead from the center. How to manage divisions dynamically
1Business Administration, Harvard Business School in Boston, USA.
Harvard Business Review
|May 11, 2001
Summary
In turbulent markets, corporate headquarters should be more directive, not less. This ensures strategic flexibility and future collaboration opportunities between company divisions.
Area of Science:
- Business Strategy
- Organizational Management
Background:
- Traditional business strategy advocates for divisional autonomy, especially amid market uncertainty.
- This approach assumes divisions possess superior knowledge of local markets and emerging trends.
Purpose of the Study:
- To challenge the conventional wisdom on divisional autonomy in uncertain markets.
- To propose a more directive role for corporate headquarters in managing interdivisional cooperation.
Main Methods:
- Analysis of four corporations: Sprint, WPP, Teradyne, and Viacom.
- Examination of traditional diversification models (related vs. unrelated divisions).
Main Results:
- Research suggests corporate offices should be more directive in turbulent markets.
- A dynamic approach to interdivisional cooperation, allowing varying degrees of relatedness, is advocated.
- Balancing current divisional autonomy with future cooperation needs is crucial for corporate-level strategic flexibility.
Conclusions:
- Companies need a dynamic strategy for managing divisions, adapting cooperation levels based on circumstances.
- Corporate headquarters must actively guide divisional strategy to foster future collaboration without sacrificing current competitiveness.
- Four tactics are offered to assist executives in dynamically managing corporate divisions.