Companies operate in many ways. Some are highly centralized, others are highly decentralized.
Your corporate operating model is a key factor in deciding how to create alignment.
The following list is not meant to be exhaustive but can help you articulate your operating model.
The “One Business” Company
- Company competes primarily in One Market
- Most likely, the company is organized functionally (sales, marketing, manufacturing, etc.)
- Most likely, there is One P&L
The Highly Centralized Corporation
- Big, strong corporate headquarters
- Most of the big decisions are made at corporate
- Divisions are partially autonomous
- Alignment is primarily created “top-down” by corporate
The Multidivisional Corporation
- Strong corporate headquarters and strong divisions
- Division leaders are General Managers
- An even balance of power between corporate and divisions
- Cross-divisional alignment is created by corporate
- Moderately strong corporate headquarters
- Autonomous divisions, often led by Presidents
- Only a small amount of “top-down” corporate-level alignment
- Alignment is primarily created at the divisional level
- Small focus on cross-divisional alignment
The Conglomeration – A Company of Companies
- Small corporate headquarters
- Company Presidents are highly autonomous
- Alignment is primarily created at the operating company level
- Little or no focus on cross-company alignment
- Corporate has very little power
- Members choose to affiliate—or not
- Members pay to be a part of the association
- Corporate has limited decision authority, and primarily exists to serve the members
- Alignment is often around a common agenda
- Many different operating models
- Some have very strong corporate-driven alignment … others have very little
- Always bound together by One Doctrine and/or One Tradition
- If your company is in this category, you definitely need my upcoming book, Drive One Direction!
What is your company’s operating model?