Activating global collaboration is difficult and expensive to engineer under the best of circumstances. Unnecessary vertical layering of business units and functions and proliferation of profit centers make it even more difficult. Horizontal connections are more easily wired together when units that must work together have a clearly designated partner at a single anchor layer. We define an anchor layer as the organizational level where the core P&L units are embedded in large, multinational companies

When one layer is designated as the anchor operating unit layer and all others serve that layer, waste and duplication are eliminated in the vertical structure and accountability is enhanced. However, isolating the right anchor layer requires a bit of due diligence.

It is important to decide at what level the primary strategic and tactical P&L decisions in the business should get made. A simple test is to ask: At what level can trade-off decisions across categories, markets, and investments in innovation and brand building be optimized for the good of the enterprise, while still keeping decision making close to the customer? The anchor layer should define the optimal level for these types of operating decisions.

In a global product or brand business the anchor layer is the strategic business unit (SBU), the layer that is primarily accountable for developing growth strategies and the plans to execute them. SBUs typically own a set of customers, channels, and competitors, with its own cost structure. In a geographic sales and customer-management organization, identifying the anchor layer requires more judgment. Here the anchor layer is the key point of delegation into “the field,” the optimal level for making trade-off decisions across global product lines or brands, to grow profitable sales.

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Another useful question in identifying the anchor layer is: At what level do we want leaders to have the authority and the accountability for the full results of a business in order to assure the right trade-offs? Getting it right enables clear accountability, higher degrees of delegation (including less vertical overlap in managerial roles), and the right docking points between global and local leadership.

Unnecessary layers (and proliferation of profit centers) make it difficult to build the bridges across global and regional business units and functions. Roles and decision making become confused. Establishing an anchor layer makes it easier to establish clear docking stations that connect global and local units.

Amy Kates & Greg Kesler
Managing Partners