We look at functions as “capability builders” – charged with building the processes, systems, and talent that can identify and move knowledge, ideas, and insights into the strategic decision making of the company. Therefore, the thoughtful design of business and corporate functions is essential to enabling the work of product groups, geographic market units, and customer teams.

Take the example of the Consumer Insights function. Today many companies have fractured insights groups with resources distributed widely in marketing and brand teams and across regional commercial groups. The opportunity to leverage expertise, to share knowledge, and create a single analytical platform is missing. Recognizing this, a leader might think to consolidate insights into a global organization. But centralization often results in disconnection from local market needs and may not bring better insights into business decision making. If, on the other hand, insights professionals in the business units are linked from the center into a network that employs a common consumer or customer framework (i.e., consumer occasions), supported by common analytical tools and talent development standards, the benefits of both global scale and local presence are achieved. Let’s look at this center-led model more closely. As we will see, it is dependent upon a frame of value-adding layers of functional management, each with a clear and unique contribution.

For a business seeking greater integration across business and markets units, the functions should share a common design logic that allows them to connect consistently into the business/market node in the matrix. The logic starts with a clear understanding of the difference between center-led and centralized management as shown in the model below. The vertical axis represents degrees of integration or linkage. The top of the axis doesn’t imply that work has to be done at a global level; rather, the company is able to use its size to afford very specialized resources and move management time and attention around the world onto the highest-value problems and opportunities. This can only be achieved if there is an enterprise view on talent, budget, resources, and priorities. The horizontal axis is about control—how tightly decisions are controlled with regard to how functional work is done in the operating units.

CL functions

The goal should be to gain high degrees of integration without high degrees of control for work that must deliver both scale and speed. Some work and decisions—risk management, brand standards, big investments—should be centralized at the corporate level. Other work and decisions are so local, such as translations and local promotions, that no value can be added from people sitting outside a given market and are best left fully decentralized. However, in most global companies there are many decisions that require speed and local responsiveness, but which also benefit from being aligned with a common, global agenda. This can be achieved through a sophisticated use of formal networks, centers of expertise, shared agendas, strong governance, guardrails, and common process.

Amy Kates and Greg Kesler

Managing Partners