Saturday, May 10, 2008

Minerva's Owl 2 :: Corporate version

Twilight moonIn hindsight, what have we learned? What would we have done differently?

Between support meetings, we've all been debating what happened. Our emerging consensus is that there are five expectations that parent companies have for their distant divisions. Some are more important than others, all are necessary.

  • Return on Investment.

Success here ("Making the numbers") will make up for lots of other problems. Revenue and Income are both important, along with subsidiary numbers like margin and year-over-year top-line growth. 90% of expectation may be a "gentleman's miss", but less is failure: miss this, and everything else needs to go right.

  • Quality

Put out a product that works well and satisfies customers, avoiding surprises and recalls. It also means that you don't tarnish your own brand or the parent's reputation with customers or regulators.

  • Market Penetration

Pick your targets and hit them, executing strategies that lead to absolute and share growth. This also picks up elements like opening new geographies and obtaining reimbursement.

  • Build the Business

This picks up the organizational aspects of acquiring talent, making everyone productive, establishing business processes, managing cash flow, and meeting timely reporting standards.

  • Communicate

Set realistic expectations, build relationships, establish trust, and avoid surprises.

I think we know which ones we hit and which ones we missed and most of the subsequent debate revolved around what changes would have turned around perceptions of our value.

Conversely, could Corporate have been a better parent?

I read an interview with Pankaj Ghemawat, author of Redefining Global Strategy, who emphasized that many US companies see the world as flat, without significant regional differences that affect their overseas divisions. In this state of "semiglobalization", companies must recognizes and manage differences among countries:

The range of barriers that companies face in their global efforts are called "distances", and come in four basic types: Cultural, Administrative, Geographic, and Economic (CAGE). To make any global strategy actionable, you have to go down to the industry level and thing about which distances matter the most and address these through a tailored combination of adaptation, aggregation, and arbitrage.

'sounds like business-speak, but he makes a number of really good points that reflect my own experiences.

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