Aligning Strategy Across Multiple Business Units

To do that we try to focus on a small number of high-level lenses that we look through.

Working strategy as an enterprise that has multiple business units is a pretty tricky thing, because we’re always trying to strike a balance between autonomy of the business units. At the end of the day, they’re the ones closer to their closer to their customers and know best what they ought to be doing, versus maintaining consistency across the businesses.

Here are a couple of examples. In a financial services company, where the products on the surface might seem similar, they can run into the trap of one size fits all and having more of a peanut-butter approach to measuring and strategizing within those companies. One company that was focused on lending expanded into insurance, as an insurance brokerage firm. They were trying to measure themselves in insurance brokerage by using the same metrics that they used for loans and trying to figure out how to measure charge-offs in an insurance business. Clearly it just didn’t make sense. That’s an obvious example of where trying to force a consistent approach doesn’t make sense.

At the same time, however, we are looking for some consistency, some balance across the businesses, because, at the center we are ultimately doing resource allocation between the businesses. To do that we try to focus on a small number of high-level lenses that we look through. One, in particular, relates to value creation. That’s something that is a universal lens that you can look through at any business and uses as a basis for allocating resources from capital to time across the businesses in the portfolio. That’s one element where we strive for alignment.

ACTION POINT: What activities create value across all of the business units? Focus on those by allocating capitol and time to them.