IDENTITY-BUILDING. The second activity that the CEO's office must use the conglomerate's vision, mission, and values as the basis for is building a corporate identity. Without encroaching on the preserve of business-unit-level brand management, the New CEO Centre must forge a persona that the individual businesses can relate to when synergising with each other. Otherwise, the benefits of being a collective entity will be lost. For instance, raising capital for the conglomerate or group as a whole will no longer be possible. Nor will different units be able to cash in on common resources like, say, brands or people.

Managing the external environment will become part of this portfolio, too, since it is the corporate entity--and not individual businesses--that exists as a unit in the customer's, the stakeholder's, and the policy-maker's perceptions. Thus, the Corporate Centre of the Wipro Group--its Corporate Executive Council--assiduously builds its corporate brand with precisely this objective, besides orchestrating customer satisfaction and employee satisfaction surveys across the organisation. Says Azim H. Premji, 53, CEO, Wipro Corporation: "The Corporate Centre is involved in creating processes and systems which drive performance across the corporation."

SYNERGY-EXTRACTION. Caught up in their own operations, managers at the business-unit level will, obviously, not have the meta-business perspective that can look for synergies between units. This will be the responsibility of the New CEO Centre, which must explore and expand synergies through several mechanisms. First, the CEO's Office must co-ordinate the sharing or transfer--as the case may be--of resources between units. This, indeed, is its primary task--its raison d'étre. If the resources are so-called public resources, which can be used simultaneously by several businesses--brands, for instance--the New CEO Centre will have to only cultivate them. If, on the other hand, they are private resources--which can be used by only one unit, to the exclusion of another, at any given time--the CEO's Office must perform the more complex task of creating the rules and systems for allocation. For instance, it may choose to simulate a market in the group, thus forcing every unit to compete for the use of internal resources.

Second, the New CEO Centre must facilitate the seamless flow of information, knowledge, and best practices across the boundaries of different business units. This it can do by creating a suitable culture, rewarding knowledge-building and sharing activities, organising formal and informal fora where knowledge can be shared, and using people-mobility as a means for spreading the learning around. Consider Global Telesystems, a 10-year-old telecommunication-solutions company. Already, the two first-generation entrepreneurs who started the company have realised the importance of a value-adding central function in an industry where technology obsolescence rates are very high. Its Corporate Centre manages the processes of sharing of best practices, management development, and management initiatives, and terms the heads of its 4 businesses entrepreneurs instead of business heads. Says Fritz d'Silva, 34, Vice-Managing Director, Global Telesystems: "We include a business head's risk-taking ability in their appraisals. So, the organisational structure is fully supportive of minimum interference."

SUPER-OPERATIONS. Providing the glue between diverse activities, or the grease that lubricates the parts and enables them to move as a whole, will be the operational contribution of the New CEO Centre. When co-ordination is needed between different functions, it will come from the CEO's Office. More significantly for the strategic perspective, the responsibility for evolving performance-evaluation standards--jointly with the business units--for conducting these assessments, and for re-aligning business priorities according to the results will also lie with the New CEO Centre. At the Steel Authority Of India Ltd (SAIL), for instance, the success of the business plan depends on the interaction between the Corporate Centre, Central Marketing Organisation (CMO), and the plants and the R&D centre for iron and steel. Once the annual business plan and financial budget are finalised by the plants, the process is reviewed and monitored at the CEO meetings.

The CEO's Office will have to swing into action whenever combining the might of different units may prove more beneficial. At the GIC Group, it's GIC, the holding company, that makes collective long-term investment decisions for its 4 subsidiaries: National Insurance, New India Insurance, Oriental Insurance, and United India Insurance. Says P.M. Venkatasubramanian, 59, CEO, GIC: "Investment decisions are taken jointly so that the bargaining power is not frittered away by the individual low surplus." sail's CMO manages the marketing for its integrated steel plants collectively to capitalise on the volume and variety of the combined output, pooling which gives greater flexibility in meeting customer needs. Adds C.P. Krishnan Nair, 73, Chairman, Hotel Leelaventure: "Cost management is another area that needs to be co-ordinated by the Centre." The CEO must remember, however, that the crucial issue here is not the actual task of execution--which need not be done by the New CEO Centre itself--but of the institutionalisation of the centralised service.

CAPABILITY-CREATION. The 3 critical resources that any corporation will need are low-cost finance, the best people, and a powerful information infrastructure. Relegated in the past to support mechanisms, these are emerging as crucial differentiators for competing. For the multi-business group in particular, these are vital not just because they are enablers of success where every other resource is easily duplicable, but also because they can help the parts of the conglomerate add up to something that is greater than the whole. For, they can be used to ensure that every business unit benefits from belonging to the same group as the rest. All 3 areas will demand direct participation from the New CEO Centre, and not just arm's-length monitoring and delegation. Why do these need to be centralised operations in a multi-business group which may well decentralise even traditionally-consolidated operations like purchasing or distribution? The answer lies in the fact that all 3 are critical to the New CEO Centre's mission of leveraging learning that may originate in one pocket of the group for the benefit of all businesses. While some competitive advantages can only be specific to a particular business--and do not need to be translated into common competencies--the advantages of cheap capital, knowledge-workers, and streamlined information-flow can be experienced across the group.

Thus, the New CEO Centre must comprise hands-on actors--not off-the-stage directors--in building, improving, and distributing these resources. The Tata Group, for example, has concentrated the finance function in a central department reporting directly to the group CEO, Ratan Tata. At HLL, each of the 8 business groups dip into the Corporate Centre's people pool instead of recruiting on a divisional basis, to ensure both a distribution of knowledge and better fit between the individual and the job. Says M.S. Banga, the 43-year-old Director (Soaps & Detergents) of HLL: "The business units draw on the Corporate Centre for their people requirements. We have an excellent tracking and monitoring system to trace each person's career-path." And at Ranbaxy Laboratories, building and managing the information infrastructure is the direct responsibility of the company's Head of Strategy, Vasant Kumar. Adds Alok B. Shriram, 38, Deputy Managing Director, DCM Shriram Consolidated: "We are increasingly trying to focus on our core competency. Competency-management is something that can be driven in the new environment from the Corporate Centre."

BUILDING THE new CEO centre

The CEO of the focused conglomerate must structure the New CEO Centre primarily in response to the manner in which his group uses its resources. That the multi-business group can thrive only by leveraging a set of common resources is understood. Indeed, the more the resources that its businesses share, no matter how many businesses it is in, the closer is the conglomerate to following the principle of core competence. The responsibility of the New CEO Centre is, obviously, to ensure maximum use of the corporate resources. Says Arvind Pande, 56, Chairman, sail: "The corporate office has delivered strategic support in providing synergies across the sail plants and aided in enhancing the competitiveness of the plants through well-planned modernisation programmes." The manner in which the CEO's office chooses to do so, however, is less obvious. What are the alternatives? On the one hand, it may prefer completely centralised resources, allocated by the New CEO Centre using whatever parameters it sees fit: these range, typically, from freezing budgets to meeting emerging contingencies. On the other, it may opt for completely decentralised resources--allowing the different units to access the corporate resources in any manner they want to, without referring to the Corporate Centre at all. The mechanisms of allotment might be market simulation--where units compete for the same resources--or a spirit of mutual co-operation, or a combination. Says Bharat Doshi, 49, Executive Director (Finance & Corporate Affairs), M&M: "Our company regularly has a war-room review strategy where the president of a business unit is an open target for anyone who wishes to use him as a resource and question his decisions."

It is axiomatic that the choice will determine the dimensions of the New CEO Centre. It will need more people in the first case--when it has to manage the activity of allotment--than in the second. Thus, the CEO's Office may have no more than 50 people in the latter eventuality, but up to 100 in the former--with the number being ruled by the number of businesses and the complexity of the resources involved. In either event, the cardinal rule is that the New CEO Centre must be manned by people who have 3 critical characteristics. First, they must be accomplished line-managers, so that they bring an understanding of different corporate functions to the New CEO Centre. Says hll's Banga: "The members of our Management Committee hold the experiences of exposure to a variety of businesses and functions in HLL."

Second, they must enjoy high levels of credibility with the managers in the business units. And third, they must thrive on change, and not be addicted to routine. The wise CEO will staff his office only with people who have been rotated around business units; have strong financial, analytical, and people management skills; are fluent communicators; and, most important, are committed to leading rather than doing. The second vital task for the New CEO Centre will be the design and creation of process and system interfaces with the line-managers and business units. It has to choose one or more interface mechanisms: task-forces, cross-functional top management teams, management committees, centres of excellence, review meetings, dedicated managers et al. The Reliance Group, for instance, uses task-forces to interface on short-term projects, and executive committees for recurring issues--such as compensation review and corporate governance.

A subtle balancing act is involved here: specifying the relationship between the members of the New CEO Centre and the CEOs and functional heads of the individual businesses. Turning the managers of the business units into direct reports of the managers in the New CEO Centre--using a direct functional mapping--will clearly curb their independence. On the other hand, without an accountability structure, co-ordination between, say, the group CFO and the CFOs of the different businesses--so essential for value-addition--will be impossible. The happy middle-ground usually lies in adopting 2 tactics. First, designate the reporting relationship as a peer-interaction rather than a superior-subordinate issue. And second, flowing from the first, make membership of the New CEO Centre as rotational affair, so that the functional heads of different businesses are co-opted by it at intervals.

Perhaps no other form of organisational change demands as radical a shift in the responsibility-set of the CEO and his office as the New CEO Centre does. Says Narsim Shenoy, 67, Chairman, ABB Group (India): "The restructuring of the group, and the Corporate Centre, was necessary to meet the challenges of the new Millennium, making the company globally and locally competitive." The very notion that individual businesses will chart their own strategic and operational course--while the New CEO Centre's function moves from control to catalysis, from command to co-ordination--is difficult to accept. The more so because the CEO is, after all, accountable for the overall success of his group. To take on this responsibility, but to exercise power primarily through context-creation and resource-management, requires a leap of faith. And yet, it is one that the CEO has no choice but to make. As hll's Banga describes it: "There are processes which are built in for inter-dependency, but, ultimately, every business functions like a mini-company and is very self-contained in terms of the decisions that need to be taken." The truth is that the best decision today is the one that's taken at a point as near the customer as possible.

Equally, it is possible to combine disparate resources and business units to create results that are far more than the simple sum of the parts--so long as the relationships between them are constantly monitored and managed for best results. That, ultimately, is what the New CEO Centre sets out to do. In its focus, it may have shrunk to a small point at the very core of the corporation. In its effect, however, it is sensed everywhere. It is, to borrow a punchline, all corporation, no centre.

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