Why Corporate Functions Stumble

This project was carried out jointly with professors Sven Kunisch and Günter Müller- Stewens at St Gallen and David Collis at Harvard University. The output was an article Why Corporate Functions Stumble published in the Harvard Business Review December 2014 issue. Research included a survey of 761 of the largest corporations in North America and Europe which showed that the number of corporate functions had increased by about a third from 2007 to 2010. Leaders at three out of four companies believed that their functions’ influence had grown but, at the same time, complaints about the performance of corporate functions were increasing. The project combined the survey data with insights from structured interviews at large European multi-business organizations to understand why corporate functions so often underperform and what might be done about it. They learned that the performance of these functions may well be related to how they respond to the varying management challenges they face at different life-cycle stages.

As the executive summary of the HBR article put it “In youth, for example, the function may not be seen as valuable by all the businesses. Its mandate may be unclear, its staffing problematic, and its efforts to get up and running overhasty. In adolescence, the function may have a tendency to expand its activities without due regard for how that affects its relationships with the business divisions. In maturity, when it is well established and its mandate is fairly stable, it may spend too much time benchmarking and searching for best practices, diverting attention from the needs of its internal clients. In the fourth stage, which calls for change, the function’s managers may fall into the trap of looking for opportunities to redeploy their skills rather than acquiring new ones.”