Closing the execution gap

Our seventh study into corporate headquarters focuses on the increasing pressure for CHQ to develop new capabilities and position itself as a partner to operating business units, all while delivering maximum value with minimal resources. A follow-up to our study entitled Re-considering Corporate Headquarters (2012), this edition reveals yet again that many companies have failed to closely examine the real value and "parenting advantage” that CHQ adds or does not add to its operation. Offering empirically substantiated guidance, our action-oriented 2014 study is a proven tool to optimize corporate headquarters regardless of industry sector, size, management concept, or country of origin. Performance can be boosted and the execution gap can be closed, and now is the time to take considered action.

We have adapted six fundamental capabilities and six value adding capabilities from our previous survey and explored them in greater detail in light of interviews with experts, a review of relevant literature, and our own project experience. The six value adding capabilities have been broken down into five clear, research-based recommendations per focus area and a special consideration has been given to the three areas with the biggest deficits: managing complexity, innovation, and providing talent.

• Although corporate headquarters are shrinking in relative size for the first time since 2005, it should not be seen that the importance of CHQ is on the wane. "Corporate headquarters need to adapt their brief to the new situation in the markets and redefine their role," says Tim Zimmermann, Partner at Roland Berger Strategy Consultants. "Operating units look for greater support from their corporate centers in volatile times. Value adding capabilities have a particularly important role to play in that context.” There is no perfect CHQ. Company size, management concept, and functional clusters all determine what is right for a particular company, but old ways aren’t working anymore no matter what your CHQ blueprint looks like. Now is the time to think and act ahead, rise to new challenges, and judge your corporate headquarters by its performance—that is, the real value it adds to your company.