Does the\u00a0 work of a top manager change when the company acquires or launches additional businesses,\u00a0 and how?\u00a0\u00a0 Intuitively,\u00a0 it seems as\u00a0 if something is going to be\u00a0 different in the\u00a0 manager’s use of time, focuses, skills and attitudes to be\u00a0 effective and efficient in the new role.\u00a0\u00a0\u00a0\u00a0 Very little has been said about this subject.\u00a0 The reason is simple: a large number\u00a0 of Estonian organizations\u00a0 are essentially so-called single-business\u00a0\u00a0 organizations.\u00a0 One produces and sells dairy products, the second provides\u00a0 accounting services,\u00a0 the\u00a0 third provides construction services,\u00a0 etc.\u00a0\u00a0 At the same time, we already have\u00a0 companies that have grown into\u00a0 business groups (e.g. forestry group Lemeks, Eesti\u00a0 Energia, etc.).<\/p>\n
Let there\u00a0 be an example from the world stage \u2013 the Royal Dutch Shell (hereinafter Shell).\u00a0 It is\u00a0 an\u00a0 oil and\u00a0 gas company of British-Dutch origin and operating on the international stage,\u00a0 headquartered in The Hague,\u00a0 The Netherlands.\u00a0\u00a0 The company employs more than 80, 000 people. Shell delivers virtually all\u00a0 parts of the oil\/gas business vertical and not only.\u00a0 For example:\u00a0 search for new deposits, production (upstream<\/em>);\u00a0 refining, distribution and sales (downstream<\/em>);\u00a0\u00a0 production and sale\u00a0 of oil-based chemicals; trading; green energy\u00a0 business (biofuels, wind energy,\u00a0 etc.). Shell is\u00a0 also a very large retail company with its 44000\u00a0 service stations\u00a0 (for comparison: Circle\u00a0 K\u00a0 has\u00a0 59 full-service stations, 17 automatic stations and 2 convenience stores in Estonia).\u00a0 So this is\u00a0 a serious giant\u00a0 led\u00a0 for many years by\u00a0 Dutch leader Ben van Beurden. Van Beurden grew to\u00a0 be chairman of Shell’s board of directors in-house from\u00a0 their chemicals business\u00a0 in the same way that Microsoft’s current CEO,\u00a0 Satya Nadella, came from the\u00a0 company’s\u00a0\u00a0 cloud services business.<\/p>\n What must change in the\u00a0 head of a manager, if one day he\u00a0 can manage not only his\u00a0 old business, but\u00a0 also new ones,\u00a0 and has to make decisions in\u00a0 areas whose wider contours he knows but not in detail? At first glance, it\u00a0 seems that if you have successfully managed\u00a0 one business, then it\u00a0 will not be difficult to\u00a0 manage a whole portfolio of businesses\u00a0 after a while.\u00a0 If the head of one business\u00a0\u00a0 has so far valued the success of\u00a0 his own business first and foremost, then now a step higher must be taken\u00a0 and start to value the performance\u00a0 of all businesses. This\u00a0 can be emotionally challenging when you yourself have\u00a0 previously been in the role of a business manager. Another challenge is\u00a0 not\u00a0 to go\u00a0 hand-in-hand into the management of a particular business if the desired results do not manifest.<\/p>\n In the management of a group of businesses,\u00a0 complexity in strategic management increases.\u00a0 Answers need to be found to questions about\u00a0 the\u00a0 combination of businesses in the portfolio (is this\u00a0 enough today? will there be synergies?\u00a0 Do they balance any business risks?), organizational design (e.g.,\u00a0 centralization of functions versus decentralization;\u00a0 establishing group level,\u00a0 etc.), general development trends, capital allocations and financing.\u00a0 What kind of businesses need\u00a0 to be added, changed, developed so that the company is positioned correctly?\u00a0\u00a0 Management decision-making must be based more and\u00a0 more on empiricism: does\u00a0 the company have the necessary data and tools to\u00a0 make decisions?<\/p>\n On the soft side, the\u00a0 head of the business\u00a0 group must have the skills of developing business leaders.\u00a0 A business manager needs to have an understanding of who his potential successors are among\u00a0 industry leaders should he one day leave. It should be said that in many organizations there\u00a0 is\u00a0 no direct level of\u00a0 management of portfolio of businesses, but this role is already performed by the CEO.\u00a0 In international conglomerates, these roles can also be separate.\u00a0 One good example here\u00a0 is \u00a0Berkshire Hathaway (BRK),\u00a0 led by legendary\u00a0 investor Warren Buffett. BRK’s portfolio of businesses\u00a0 consists of companies operating in\u00a0 a wide variety of industries.\u00a0 The conglomerate’s insurance business is run by Ajit Jain.<\/p>\n","protected":false},"excerpt":{"rendered":" Does the\u00a0 work of a top manager change when the company acquires or launches additional businesses,\u00a0 and how?<\/p>\n","protected":false},"author":6,"featured_media":1100,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_stc_notifier_status":"sent","_stc_notifier_sent_time":"2022-10-25 12:58:48","_stc_notifier_request":false,"_stc_notifier_prevent":false,"_stc_subscriber_keywords":"","_stc_subscriber_search_areas":"","inline_featured_image":false,"footnotes":""},"categories":[84],"tags":[],"class_list":["post-1591","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog"],"acf":[],"yoast_head":"\n
\nAt the group level,\u00a0 management becomes more holistic.\u00a0 The manager of portfolio of businesses must understand the\u00a0 intricacies of running various businesses,\u00a0\u00a0 understand the developments in society, technology and industry.\u00a0\u00a0 They need to prepare\u00a0 themselves\u00a0 to make high-impact\u00a0 decisions, take greater risks and act in vague situations.\u00a0 The ability to lobby may become important.<\/p>\n