“How are you adding value?”
That’s the question Neville Isdell, Chairman and Chief Executive Officer (CEO) of the Coca-Cola Company, asked the functional leadership of the company in March of 2005. Isdell challenged his corporate leaders to rethink how they were supporting the operating units around the world.
Isdell’s question is one that we still hear from many CEOs today, whether they are leading legacy companies undergoing strategic transformation or high-growth digital firms facing new complexity brought on by multi-dimensional strategies, or they are just looking to simplify and gain efficiencies.
Leaders continue to be frustrated with the performance of corporate functions, alarmed by rising headquarter costs, and the proliferation of ever new functional departments in areas such as risk management and digital technology that create work and demands on the business units. (Campbell, Kunisch, Muller-Stewens). Unfortunately, the design of effective corporate centers continues to be an often-neglected discipline in the organization design community.
We worked with Isdell and his team to redesign nine corporate center functions at Coca-Cola and since then have supported the end-to-end redesign of hundreds of functions. Most of this work has been in global companies with multiple lines of business undergoing significant growth or change. This article shares what we have learned about how to design the corporate center to drive growth, agility, and efficiency.
A note about definitions that we use. Corporate center, headquarter, or “enabling” functions are those that are found in nearly all organizations to support operations. Typically, they include human resources, finance, information technology, legal, communications, procurement, and strategy. “Business” functions are the unique set of units that drive a specific business strategy. These are typically manufacturing, supply chain, engineering, product development, research, marketing, channel management, and sales. The design concepts discussed here apply to both, but in this article we are focused on the enabling functions.