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Published: February 26, 2013
 / Spring 2013 / Issue 70

 
 

Beyond Functions

This approach would link the specialists of the enterprise more directly to the capabilities that directly support the company’s core strategies, lifting them to a new level of accountability and reward above the status they would have had in functions like supply chain, finance, or marketing. Instead of providing services, they would be part of a team responsible for one of the organization’s core strengths. In other companies, new senior roles are coming to the fore, such as chief innovation officer, chief risk officer, and chief customer officer. These leaders oversee people from multiple functional groups, such as supply chain, marketing, finance, and R&D, with the idea of developing capabilities systems. For example, many companies, particularly those with complex or highly engineered products, are rethinking the product manager’s role. The “strong-form” model gives responsibility for top-line growth and other financial outcomes to one person, who also has cross-functional decision-making authority (see “Product Management Gets Stronger,” by Barry Jaruzelski, Richard Holman, and Ian MacDonald, s+b, Spring 2013).

In constructs like these, the original, more specialized functions may take on more of a role in people development, serving as a professional support community and training and development base for particular branches of expertise. Wherever they sit in the organization, specialists would be able to draw on this support; they would still be tracked and rewarded for their functional skills, but they would also have opportunities to cross over into broader roles. This is analogous to the way that symphony orchestras operate; conductors are responsible for the whole work, but if a soloist needs help, he or she will turn to masters of the particular instrument for guidance. 

Different companies will find different paths, but every company will have reason to reconsider the functional organization as a primary way of managing specialized expertise. The most important factor shared by all these alternatives is the capabilities imperative: Companies need to be clear about what they can do better than anyone else, how this benefits them in the market, and how they need to build and improve their capabilities to fill the gaps. With this clarity, leaders can assemble the right expertise in the right combination. This will give functional leaders and staff the support they need to be truly fit for purpose, to match their own work to the overall business strategy of the enterprise.

The most farsighted functional leaders are not just waiting for these changes to affect them. They are taking the first step in the transition by helping evaluate the current state of their company’s capabilities system, and suggesting ways to bring it closer to its potential. This is part of the functional leader’s new mandate as a strategic partner for the enterprise: delivering not what individual constituents demand, but what the enterprise needs.

Reprint No. 00161

Author Profiles:

  • Paul Leinwand is a partner with Booz & Company based in Chicago, and coauthor (with Cesare Mainardi) of The Essential Advantage: How to Win with a Capabilities-Driven Strategy (Harvard Business Review Press, 2011).
  • Cesare Mainardi is the chief executive officer of Booz & Company.
  • Another version of this article appeared on the HBR blog network.

 

 
 
 
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Resources

  1. Deniz Caglar, Jaya Pandrangi, and John Plansky, “Is Your Company Fit for Growth?s+b, Summer 2011: A better way to deploy resources, and the original source for the three types of capabilities.
  2. A.G. Lafley and Ram Charan, The Game-Changer: How You Can Drive Revenue and Profit Growth with Innovation (Crown Business, 2008): Inside look at the relationship between innovation and (among other things) functional leadership at Procter & Gamble and other companies.
  3. Booz & Company Supply Chain Capabilities Profiler: Allows supply chain leaders and managers to diagnose their proficiency and opportunities for leverage in light of their company’s strategy.
  4. Fit for GrowthSM is a concept developed by Booz & Company to help companies in a variety of industries become more strategically and organizationally effective while focusing investment more coherently. For more information on this service offering, see booz.com/fitforgrowth.
  5. For more thought leadership on this topic, see the s+b website at: strategy-business.com/strategy_and_leadership.
 
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