Fighting the “Headquarters Knows Best” Syndrome Harvard Case Solution & Analysis

Narrowmindedness holds back many organizations in their own attempts to turn international presence into a real source of competitive advantage. In this article, the authors investigate the manifestations and prices associated with what they call the "headquarters knows best" syndrome, as well as ways businesses can address the problem. Many of the things companies have done are fairly predictable, for example internationalizing senior management, changing the reporting relationships, decentralizing global duties, and creating cross-national teams. While this was expensive -and something the CEO's successor ultimately did away with in 2015, the choice to manage out of dual headquarters helped the firm realign its focus, and it had important positive effects on the operation of Irdeto. The writers assert that many corporate executives are not aware that the "headquarters knows best" syndrome exists. Commonly, top executives interact with executives from the subsidiary companies that are closest to headquarters (in terms of geography, economic development, and culture); the executives frame of reference is based on subsidiary managers who gain from considerable focus, autonomy, or sway.

Executives from peripheral subsidiaries are the ones who are most likely to be affected and least inclined to be heard. Furthermore, the worth of missed chances and lost ability is difficult to assess, and headquarters executives can easily invoke contextual variables (including competition for labor) to clarify difficulties. They can also try to pin blame on the local entities. After establishing its dual headquarters in 2007, the authors note, Irdeto saw quantifiable improvements on four fronts: increased top management attention, greater subsidiary company contributions, lateral exchanges that were richer, and tighter local connections. The writers maintain that the expertise of Irdeto yet offers comprehensive lessons for firms seeking to eliminate their local prejudices and become international although what works for one company may not be right for another. These lessons call for openness to altering the present construction, a dedication to promoting fairness, as well as the willingness to learn what it takes to operate virtually.

PUBLICATION DATE: January 01, 2016 PRODUCT #: SMR545-PDF-ENG

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