Roger L. Martin

Jennifer Riel

<article-ideainbrief class="article-ideainbrief">
 <h4 class="ideainbrief-title">Idea in Brief</h4>
 <div class="ideainbrief-contents">
  <h5>The Problem</h5>
  <p>Line businesses increasingly see corporate functions as a drain on resources, taking capital away from investment in frontline initiatives and eroding their companies’ competitive advantage.</p>
  <h5>Why It Happens</h5>
  <p>Corporate functions typically do not formulate a strategy tailored to the needs of the business. As a result, they end up spreading themselves too thin or overinvesting in best-in-class operations regardless of whether they support their companies’ overall strategy.</p>
  <h5>The Solution</h5>
  <p>Leaders should engage in a strategy-making process that starts by asking, What is the implicit current strategy of the function, as reflected in the choices that it makes every day? and then asks, What are the strategic priorities of the rest of the corporation, and is the function critical to them?</p>
 </div>
</article-ideainbrief><p>“Where should we start?” asked Stephen. Recently appointed head of innovation at a large, diversified apparel company, Stephen had been tasked with building a culture of innovation across a pretty traditional, operations-focused set of brands. So, at the end of an innovation workshop we led for him, he asked us for advice on the smartest place to get started.</p>

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<p>There&#8217;s a secret about strategy that no one tells you: Every function has one, whether or not it is written down and whether or not it is the product of an official strategic-planning process. If functions do not adopt a strategy consciously, they almost inevitably end up defaulting to one of two unconscious models, both of which are likely to result in their becoming a drag on corporate performance rather than a driver of it.</p>
<p>Most leaders acknowledge that companies and business units need strategies. But for corporate functions&#8212;shared services such as IT, HR, R&#38;D, finance, and so on&#8212;the need for strategy is less widely understood. In many firms, functions just exist, serving the company in whatever manner and at whatever scale the business units demand.</p>
<p>In this article, the authors describe the problems of the unconscious strategies and outline a strategy-making framework to help functions strengthen the capabilities that set their company apart.</p>

The One Thing You Need to Know About Managing Functions

There’s a secret about strategy that no one tells you: Every function has one, whether or not it is written down and whether or not it is the product of an official strategic-planning process. If functions do not adopt a strategy consciously, they almost inevitably end up defaulting to one of two unconscious models, both of which are likely to result in their becoming a drag on corporate performance rather than a driver of it. Most leaders acknowledge that companies and business units need strategies. But for corporate functions—shared services such as IT, HR, R&D, finance, and so on—the need for strategy is less widely understood. In many firms, functions just exist, serving the company in whatever manner and at whatever scale the business units demand. In this article, the authors describe the problems of the unconscious strategies and outline a strategy-making framework to help functions strengthen the capabilities that set their company apart.

The One Thing You Need to Know About Managing Functions

Summary.

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