Business Units

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A New Playbook for Diversified Companies

Scholars have argued for years that high levels of diversification harm company performance and value creation. But multi-business companies can do quite well. Those that thrive tend to do three things: They limit the number of business models in their portfolio and support them with a cohesive operating model. They tailor the corporate parenting strategy to the needs of individual business units. And they allocate resources according to the role played by each business unit.

Four Logics of Corporate Strategy

Organizations often struggle with corporate strategy because executives lack clarity on how the parts of the corporation fit together. Without a shared understanding of the relationships between headquarters and business units, executives risk talking past one another when discussing strategy.

Building a Winning Business Model Portfolio

Many companies today are operating several business models at once. But despite the potential that business model diversification has for generating growth and profit, executives need to carefully assess the strategic contributions of each element of their business model portfolio.

The Importance of Structured Management Practices

  • Research Highlight
  • Read Time: 4 min 

New research suggests that a particular set of management practices, which the authors call structured management, is tightly linked to performance and success. For instance, consistent hiring, performance review, and incentive practices are as important to productivity as research and development investments, and more than twice as important as IT implementation. The research shows that manufacturing plants using more structured management practices have higher productivity and profitability.

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Courtesy of SAP.

How to Manage Virtual Teams

Based on an investigation of the performance of 80 software development projects with varying levels of dispersion — members in different cities, countries or continents — this article asserts that virtual teams offer tremendous opportunities despite their greater managerial challenges. In fact, dispersed teams outperformed their colocated counterparts when they had the appropriate processes in place. Those processes can be classified in two categories: task-related and socio-emotional.

Integrating the Enterprise

Vertical “command and control” sabotages organizations that need bottom-up innovation to be competitive. Yet organizational integration is increasingly essential. New research shows how technology is helping cutting-edge companies meet the challenge by integrating horizontally.

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