Skip to main content

Degrees of freedom for subsidiary businesses

I've talked to several large US technology companies over the last couple of months about their product and go-to-market strategies in Europe. The common theme running through these discussions has been how to maximise the effectiveness of their regional operations. This is a complex question to answer as it covers all aspects of the business, from broad brush strategy down to staff incentivisation. It's also very possible that there's no best practice that applies to all companies in a sector.

What struck me, however, is that there's a dearth of methodologies for establishing the correct strategy for subsidiary businesses. To that end, I've started developing such a methodology. The first component in my view is defining the dimensions that promote or restrict freedom of action for a subsidiary company. These aren't hugely different from the dimensions of any business at the macro level - I see them as freedom to act on:
  1. Brand and marketing strategy
  2. Portfolio strategy
  3. Product development
  4. Go-to-market strategy
  5. Organisation structure
  6. Operating processes & systems


1-4 represent strategic degrees of freedom, 5 & 6 are executional degrees of freedom. In the picture below, I've used the framework to compare the typical subsidiary strategies of three companies:

This is interesting and fun, but I see the most value being in comparing the success of different regional operations in an enterprise with their freedom of action against the degrees of freedom. That'll mean interviewing heads of regional operations and getting into the financials in some detail. My next step, therefore, is to refine my strawman scoring system with some colleagues who are expert in this area before going out and finding a guinea pig.

While I'm doing that, any thoughts on the categorisation would be greatly appreciated - I reckon this could be an interesting area of study in FY11.

Labels:

Comments

Post a Comment

Popular posts from this blog

Impacts of a handset leasing model on mobile telcos

Following yesterday's post, here's some related thinking on the impacts on operators of handset leasing. Handset sales represent around 25% of operator revenues in a typical European market, but generate only around 5% of margin. It may therefore be the case that the scenario described would lead operators to a more profitable structural model than exists today. Oil companies are consistently and acceptably profitable, despite being (literally in some cases) the ‘dumb pipe’ that operators are so desperate to avoid becoming. One of the reasons for the oil majors sustained profitability is clear focus on their role in the value chain – to supply the fuel that enables transportation, relying primarily on location, then brand and finally product innovation to compete. BP or Shell do not need to subsidise the purchase of a car in order to drive consumption of fuel because consumers are ‘hooked’ on it (it gets them from place to place) and there are many credible car manufacturers an
9 comments
Read more

Value drivers for telecoms retail

I've been doing a really large number of driver trees recently - we've taken to using them on every project to get really into the guts of value creation for businesses and thus decide where to focus initiative development (How To Win, if you're keeping score). Anyhow, I had to pause for thought recently to work out how to represent the subscription aspect of telecoms retail for a client. Since it took me a minute, I thought I'd share... its lack of elegance suggests that its not quite right, although it was enough to demonstrate that there was a certain lack of coverage in the initiatives that my client was pursuing and thus spark a debate. Enjoy.
1 comment
Read more

Chief Strategy Officers II - Career Development

Here's a follow up to my earlier post on the starting point of Chief Strategy Officer (CSO) careers in the FTSE 100 and S&P 500 companies - a visualisation of two steps in their careers: their first employer or job and the job they had before they got their current position. Lots of work went into this... so any insights that you glean from the visualisation would be great to hear about :). The CSO is a crucial strategic role on the executive (!) and the owner of the tone and philosophy of decision making across much of the business, knowingly or unknowingly. Scrutiny of their experience in defining the process and language of strategic management is therefore appropriate not just amongst their executive peers, but in my view amongst shareholders. The days when being very smart and able to analyse large amounts of data were enough to be a CSO are basically gone... has the profession moved on enough to cope?
4 comments
Read more