Visualizing a Company’s Parenting Strategy

Visualizing a Company’s Parenting Strategy

          
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Visualizing a Company’s Parenting Strategy

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  • In This Article
    • A BCG survey on sources of corporate value creation identified six corporate-parenting strategies pursued by the sample companies.
    • These strategies can be portrayed in terms of their varying emphasis of 15 common parenting activities.
    • The result is a tool that allows companies to visualize their implicit strategy and assess it against their business needs.
     

    As part of our research on corporate parenting, we have developed a simple tool that can be used to assess a company’s parenting strategy and to visualize its key dimensions.

    March 2012
    First, Do No Harm: How To Be a Good Corporate Parent
    Corporate parents can create value, but they can also destroy it. To ensure that the net value added is positive, select the right parenting strategy.
    We took the five categories of parenting activities identified by our factor analysis of the survey data, defined three primary subactivities for each, and arrayed them on a spider chart. The importance of each subactivity to the value added of the corporate center is rated on a scale of 0 to 5. (See the exhibit below.)

    exhibit

    When we mapped the data from our survey onto this chart, we found that the six parenting strategies that we identified had distinctive visual profiles. For example, the upper graphic in the exhibit below displays the parenting strategy spider chart for the financial-sponsorship strategy, which is dominated by financing advantages. By contrast, the lower spider chart illustrates the profile of hands-on management. Although financing advantages play some role in this parenting strategy, they are not as important as they are for the financial-sponsorship strategy. What’s more, other activities such as operational engagement are far more important.

    The parenting strategy spider chart is a useful way for a company both to identify its current parenting strategy and to visualize the changes it should make to migrate to another, more appropriate parenting strategy.

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