Parenting Logic
Andrew Campbell
Director, Ashridge Strategic Management Centre
Guiding group strategy
Parenting
Logic
Ashridge Strategic Management Centre
Explore
attractive
businesses
(Business logic)
2
2
The corporate parent
Parent
organisation
Corporate
centre
Divisions
Businesses
Ashridge Strategic Management Centre
3
3
Parent needs to add value
Shareholders / Investors
Parent
organisation
Businesses
4
Parenting logic
LOW
HEARTLAND
Risk of
destroying
value due to
business
model
differences
•German nuclear
•Ruhrgas
BALLAST
EDGE OF
HEARTLAND
•Italian generation
•UK
•Spanish generation
ALIEN
TERRITORY
•Renewables
VALUE TRAP
HIGH
LOW
Ashridge Strategic Management Centre
HIGH
Probability of adding value from parent
5
skills
and resources
5
Parenting logic
LOW
HEARTLAND
Risk of
destroying
value due to
business
model
differences
•German nuclear
•Ruhrgas
BALLAST
EDGE OF
HEARTLAND
•Italian generation
•UK
•Spanish generation
ALIEN
TERRITORY
•Renewables
VALUE TRAP
HIGH
LOW
Ashridge Strategic Management Centre
HIGH
Probability of adding value from parent
6
skills
and resources
6
Conditions for significant added value
• Significant parenting opportunities
– Business units can be improved by 30% or more
• Parent has skills or resources
– That address the parenting opportunities
• Value destruction is low
– Parent managers intuitively understand the critical
success factors (or business model) of the business
Ashridge Strategic Management Centre
7
7
A Parenting Opportunity
“An opportunity to improve the
performance of a business unit (or of
the group of businesses as a collective)
that would not happen without the
involvement of parent managers or
access to parent resources”
Ashridge Strategic Management Centre
8
8
Sources of subtracted value - examples
• Misguided strategic direction
• Inappropriate financial targets
• Inappropriate financial support
• Wrong people decisions
• Constraining policies
• Time wasting and delays
• Inefficient services and functional support
Ashridge Strategic Management Centre
9
9
Sources of added value - examples
• Wise strategic guidance
• Stretching but achievable performance targets
• Financial support not readily available from others
• Better people decisions
• Wise operational or functional guidance
• Resources such as brands or patents or relationships
• Purchasing scale or market position
Ashridge Strategic Management Centre
10
10
Terminology
• Parenting – the act of influencing business units
• Good parenting – parenting that adds value
• Added value – positive influence of parenting
• Subtracted value - negative influence of parenting
• Parenting opportunity – area of suboptimal performance
that might be addressed with good parenting
• Parenting skills – capabilities and resources of parent
levels that may support good parenting
• Parent value proposition – idea of a parent manager
about how parenting might add value
Ashridge Strategic Management Centre
11
11