42. Corporate Management Styles

1 December 2022
How can the corporate center best steer its business units?

Key Definitions

Firms often organize themselves into business units when they serve different markets and need to be responsive to the differing customer requirements and competitive dynamics encountered in each market. Each business unit will develop its own specific business strategy, while the firm as a whole will formulate a corporate strategy.

The business units will typically report to a headquarters, called a corporate center, that in turn will steer the business units in a particular way, which is called corporate management. There are different approaches to steering that the corporate center can take, referred to as styles.

Conceptual Model

The Corporate Management Styles framework outlines five different approaches to steering the business units, along a continuum from a high level of corporate control to a high level of business unit empowerment. The styles higher up the continuum are used when the corporate center needs to take the lead and integrate the business strategies to ensure that the important synergies are realized. The styles lower down the continuum are used when the business units need to take the lead and differentiate their business strategy to ensure responsiveness to their specific challenges.

Key Elements

The five corporate management styles are the following:

  1. Integrated Organization Style. In this style the corporate center runs the firm as if it was almost a single business unit. One integrated corporate strategy is set, that needs to be implemented at the business unit level, with only minimal wiggle room for specific adaptations. Many primary activities are centralized or highly coordinated, as are almost all of the support activities, in order to maximize cross-business synergies.
  2. Strategic Direction Style. In this approach the business units have a more distinct identity as separate vessels, but the corporate center keeps the fleet closely together to ensure that the significant cross-business synergies are realized. These synergistic activities tend to be centralized and/or coordinated, as are support activities, while on other activities the units have more room to maneuver as long as they stick to the overall strategic direction.
  3. Strategic Control Style. Using this style, the corporate center strives to balance between steering the business units towards specific synergies and empowering them to take the initiative and respond to the demands in their own market. Therefore, the strategy will be a co-production, with the corporate center setting a general direction, challenging BU ideas, and giving final approval. Centralization and coordination of activities will be more selective.
  4. Strategic Guidance Style. In this approach the business units are clearly in the lead, giving them the autonomy to flexibly respond to developments in their own market. The corporate center will give them some strategic guidelines (e.g., grow or hold) and financial targets, while challenging and ultimately approving their plans. Cross-business synergies will be limited and often not mandatory for the business units.
  5. Financial Control Style. Finally, in this style the corporate center behaves more like a holding company, running a portfolio of financial investments, with little more than financial synergy between the business units. There might be some strategic discussions between the corporate center and the BU teams, but the performance targets set and monitored will be financial. Meeting these targets will ensure that the business units remain empowered.

Key Insights

  • Corporate centers have a management style. In model 14 (7I Corporate Center Model) it was outlined that every corporate center can play 7 roles, but it wasn’t described how differently these roles can be played. The specific approach taken by a corporate center to playing these roles, and thereby steer the firm, is their corporate management style.
  • Corporate centers balance control and empowerment. One the one hand, corporate centers want to exert control over their business units, actively influencing what they do, to increase corporate value creation (see model 35). On the other hand, they want to empower their units, to be responsive to market conditions and create business value.
  • Corporate centers can select from 5 styles. There are 5 corporate management styles on a continuum from corporate control to business unit empowerment. In the first two (integrated organization style and strategic direction style) the corporate center is in the lead, with the business units following and adjusting. In the last two styles (strategic guidance style and financial control style) the business units are in the lead, with the corporate center placing guardrails. The middle style (strategic control) is balanced.
  • Corporate centers can easily overdo control. Control needs to add value, by facilitating synergies and challenging BU management. But corporate centers easily descend into knowing everything better, crushing BU initiatives, pursuing useless synergies, and imposing one-size-fits-all solutions. Without reflection, corporate center domination lurks.
  • Corporate centers can easily overdo empowerment. Empowerment also needs to add value, by allowing business units to be entrepreneurial and responsive. But corporate centers easily allow stubborn BUs to undermine synergy efforts and act like cowboys, as long as the targets are met. Without reflection, corporate centers can steer too little.
Subscribe to our monthly Management Model

Do you want to be notified of our monthly Management Model? Please fill in your email address here.

Publication Schedule

February 2024
BOLD Vision Framework

January 2024
Duty of Care Feedback Model

December 2023
Best Practice Sharing Modes

November 2023
Stakeholder Stance Map

October 2023
Status Snakes & Ladders

September 2023
Customer-Centricity Circle

August 2023
Activity System Dial

July 2023
New Pyramid Principle

June 2023  
Cultural Fabric Model

May 2023       
Corporate Strategy Framework

April 2023  
Ambition Radar Screen

March 2023
Resistance to Change Typology

February 2023   
5I Innovation Pipeline

January 2023     
Thinking Directions Framework

December 2022      
Corporate Management Styles

November 2022     
Strategic Action Model 

October 2022
Psychological Safety Compass

September 2022
The Tree of Power    

August 2022
Value Proposition Dial

July 2022
Sustainable You Model

June 2022
Change Manager’s Toolbox

May 2022
Corporate Value Creation Model

April 2022
Organizational System Map

March 2022
Creativity X-Factor

February 2022
Strategic Alignment Model

January 2022
Market System Map

December 2021
Team Building Cycle

November 2021
Disciplined Dialogue Model

Oktober 2021
Strategy Hourglass

September 2021
Powerhouse Framework

August 2021
Fruits & Nuts Matrix

July 2021
Everest Model of Change

June 2021
Followership Cycle

May 2021
Knowledge Sharing Bridges

April 2021
Innovation Box

March 2021
Empowerment Cycle

February 2021
Digital Distribution Model Dial

January 2021
Digital Product Model Dial

December 2020
4C Leadership Levers

November 2020
Rebound Model of Resilience

October 2020
Strategic Bets Framework

September 2020
Storytelling Scripts

August 2020
7I Roles of the Corporate Center

July 2020
Strategy Development Cycle

June 2020
Rising Star Framework

May 2020
The Control Panel

April 2020
Strategic Agility Model

March 2020
Leadership Fairness Framework

February 2020
11C Synergy Model

January 2020
Competition Tornado

December 2019
Confidence Quotient

November 2019
House of Engagement

October 2019
Revenue Model Framework

September 2019
Interaction Pressure Gauge

August 2019
Digital Platform Map

July 2019
Mind the Gap Model


Double-click to edit button text. crossarrow-leftcross-circle