chapter  8
25 Pages

Changingconfigurations

Part II considered each of the corporate configurations in detail and, in this part of the book, we consider other aspects of applying the overall model in practice. This chapter focuses primarily on movements around the model and thus builds on the migrations and transitions that were discussed in earlier chapters. Before considering major transitions that can be made from one side

of the model to the other, the chapter deals with several other aspects of the configurations model that are important to applying the model successfully over time. Most corporate centres can be described as being congruent with the underlying businesses comprising the group, but this may not be the most value-adding option. A congruent, or coherent, corporate centre is one where the strategy of the centre is aligned with the strategy being implemented by the business units. Moreover this alignment of strategic intent should also apply to the organisational structures and processes that are applied within the group. It is, however, possible to add value by applying an opposite

approach in the corporate centre to that adopted in the business units, as has been illustrated in some of the case studies used in Part II.These issues are drawn together and developed in this chapter, but the majority of groups do still utilise a coherent approach to the selection of the style of their corporate centres. These corporate centres may cease to add value eventually and the group may then try a more radical approach which is to introduce a divergent corporate level strategy. This involves changing the corporate centre configuration without changing the focus or composition of the business units within the group. The objective is to generate positive creative tension between

the centre and these business units as they adjust to the new role adoptedby the centre. Obviously there is a risk that the corporate strategy becomes incoherent and consequently value destroying. This can happen when the change introduced by the corporate centre creates too much confusion within the group, or when the business units do not accept the changed role of the centre. Quite frequently this occurs when the corporate centre changes the configuration at the same time as it significantly changes the composition of the businesses comprising the group. In order to understand the implications of these transitions from one

configuration to another, some transitioning models are introduced and then applied to the more dramatic potential transitions around the model. Also a concept we have called ‘swimming upstream’ is discussed. This looks at ways in which corporate centres try to avoid the natural movement through the model that is suggested by the corporate lifecycle whichwas introduced in Chapter 3.