How Corporate Parents Add Value to The Stand-Alone Performance of Their Businesses |
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| Authors: | Michael Goold rew Campbell Marcus Alexander |
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| Affiliation: | Michael Goold, Andrew Campbell and Marcus Alexander are directors of the Ashridge Strategic Management Centre. Prior to establishing the Centre, Michael Goold was a Senior Research Fellow at the Centre for Business Strategy at London Business School, where he began to work with Andrew Campbell on the management of multibusiness companies. Previously he was a Vice President of the Boston Consulting Group. Andrew Campbell co-authored "Strategies and Styles" with Michael Goold while at London Business School, and before that, was a consultant with McKinrey &Co. Campbell is currently working on the management of synergies between businesses. Marcus Alexander's research focuses on networks, strategic alliances and outsourcing. Previously, he worked for the Boston Consulting Group and established GAH Ltd. |
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| Abstract: | Corporate parents have the potential to add value to their businesses through their influence on the stand-alone performance of the businesses, but for a variety of reasons, including what we call the 10% versus 100% paradox, they more often destroy value instead. This article examines four companies, Dover, BTR, Emerson and RTZ, which succeed in creating value through stand-alone parenting influence, and draws out the conditions necessary to do so. These are that (1) there should be a genuine parenting opportunity to improve the performance of the business, (2) the parent should have skills, management processes, and other characteristics that are suitable for realising the opportunity, and (3) the parent should have sufficient feel for the critical success factors in the business to avoid inadvertently destroying value through inappropriate influences. |
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