Managing Executive Attention in the Global Company

Many companies today are truly global in reach. Shell Oil has operations in more than 140 countries, Coca-Cola sells its products in more than 200 countries, and Nestlé boasts that it has factories or operations in almost every country in the world. For the executives running these companies, the challenge of keeping abreast of events in markets around the world is mind boggling. Interestingly, the biggest problem is not a lack of information: Executives are deluged with monthly reports and market analyses for every country in which they operate. The problem is having the time and energy to process the information. Indeed, executive attention is a scarce resource, one that needs to be carefully managed.1

How should executives prioritize their time to ensure that it is focused on the countries and subsidiaries that need their attention? Which markets should they emphasize, and which can they allow to fall off their radar screen? We have researched executive attention in global companies for the past five years, interviewing 50 executives at 30 corporations. (See “About the Research.”) Despite the best of intentions and irrespective of the exhortation that companies should “think global, act local,” the evidence shows clearly that corporate executives end up prioritizing a handful of markets at the expense of the others. One reason for selective attention is ethnocentric thinking — the tendency to assume that the home market is most important. Of course, no executive would state this directly, but the evidence of a home-country bias is widespread and undisputed.2

Another factor is the so-called “herd mentality,” which causes companies to focus on markets that competitors have identified. It is human nature to go “where the action is,” and as a result some countries (most recently, China and India) attract a disproportionate amount of executive attention.

Both of these approaches are entirely defensible: They help channel resources to the most important areas of activity, and they seem relatively safe. But they can also be very wrong. Because executive attention is so limited, focusing on the home market or on a hot market will always come at the expense of other opportunities. The resulting mismatch between what’s possible and what’s needed can be quite damaging: Too much attention can disempower or suffocate subsidiary managers. As one executive noted, managers can become so preoccupied with representing their operations to executives that they don’t have enough time to manage the business.

Too little attention can lead to even bigger problems, because it can result in missed opportunities and decisions by talented employees to leave. Consider, for example, the case of Dun & Bradstreet Corp.’s Australian subsidiary, which was ignored by the U.S. head office for years in the belief that Australia was not a “strategic” market. Frustrated by the lack of attention, the subsidiary’s CEO persuaded the parent company to sell the business to a local private equity company in 2001; within three years, it had doubled in size and increased earnings tenfold. As a subsidiary company, its access to investment capital had been hamstrung by how corporate executives viewed Australia; as a standalone company, it could invest in whichever opportunities offered a promising investment return.

In this article, we examine the nature of executive attention and identify mechanisms by which subsidiary companies draw attention from the top executives of their organizations. Although attention can be harmful as well as helpful, we focus on the positive aspects. In particular, we see executive attention as consisting of three important elements: support, in terms of how headquarters executives interact with and help subsidiary managers achieve their goals; visibility, in terms of the public statements headquarters executives make about how the subsidiary is doing; and relative standing, in terms of the subsidiary’s perceived status vis-à-vis other subsidiaries in the organization.

Conceptualized in this way, we address two important questions: How can a subsidiary attract more attention? And what can headquarters executives do to make sure that the right subsidiaries receive the attention they deserve?

Allocating Attention Across the Corporate Portfolio

How do headquarters executives decide which markets to focus on? While ethnocentric bias and herdlike behavior influence executive attention in profound ways, most global companies have nonetheless established reasonably sophisticated mechanisms for directing attention to the markets that need it most. These mechanisms include choices about lines of reporting, which meetings to attend and which individuals to put in positions of influence. Such mechanisms don’t just channel executive attention to particular markets or issues. They also provide an important signal within the company about which markets matter most.

Top executives obtain insights about which countries or subsidiaries should receive their attention in two ways: externally, in the form of industry reports, the media and competitor intelligence; and internally, from standard reporting processes and the active lobbying of individuals. From this information, we have identified four distinct markets. (See “Attracting Attention in the Global Company.”)

Large global companies often regard countries such as the United States and Japan as “major markets” that attract a high level of attention through both internal and external channels. China and India receive lots of media attention and thus are often seen as “honey pots,” but the business opportunities there may not live up to the buzz. In many companies, Canada and Australia receive attention based on relationships; we characterize such markets as “squeaky wheels” because they represent established operations whose achievements are well known to headquarters executives, even if the markets themselves don’t justify the emphasis. We call the last group the “forgotten markets” because they have difficulty getting onto the corporate radar screen. Note that our framework says nothing about whether the subsidiary is performing well or badly, only the level of management attention the subsidiary receives. Some squeaky wheels are troubled operations that need to be turned around; others might be rising stars; and some of the forgotten markets, like Dun & Bradstreet (Australia) Pty. Ltd., may actually be hidden gems.

Our framework suggests that a subsidiary can use two very different strategies to attract the attention of executives at the parent company: It can count on its weight as a player in an important market, and it can exert its voice by working through channels within the company. Some subsidiaries focus on one or the other, while others pursue both approaches in parallel. We will explain how these two approaches work.

Attracting Attention With “Weight”

In global organizations, subsidiaries that play pivotal roles in the success of the overall business have no trouble getting attention. China, for example, is a critical market for ABB Ltd., the Switzerland-based engineering group: In 2006, ABB’s Chinese subsidiaries contributed $2.9 billion in revenues — approximately 12% of ABB’s global business. The previous year, it captured capital funds and investments of $80 million out of $454 million for the whole corporate portfolio. Like other multinational corporations, ABB has high hopes for the Chinese market in the years ahead. But as China prepares for elections in 2008, there is considerable uncertainty about how best to maintain a positive climate for investment. ABB executives spend several hours a week on conference calls with their Chinese counterparts to identify and mobilize the necessary corporate resources and to ensure that the company’s executives in Zurich are up to speed on major developments in the region. Ulrich Spiesshofer, ABB’s head of corporate development, recently noted that “questions related to the activities of our Chinese business get top management preoccupied on a daily basis.”3

A subsidiary’s weight is not simply a function of its size. In many cases, it also reflects the impact it has on the company’s global network. Subsidiaries occupying highly valued roles — for example, as centers of competence or as technological hubs — have significant weight as well. Pratt & Whitney Canada Corp., for example, is recognized for its expertise in the small aircraft turbine market. Because of its highly skilled labor force and advanced technologies, many sister subsidiaries look to it for technological advice and support.

Attracting Attention With “Voice”

How does a subsidiary that lacks weight capture the attention of top management? Our research found that subsidiaries without weight often seek other ways to gain visibility in a global company. Many managers rely on two types of proactive efforts: initiative taking and profile building.

Initiative Taking

This approach involves strategically selecting projects or ventures to grow the subsidiary, perhaps by developing new products, penetrating new markets or simply generating new ideas.4 Such actions can influence the attention of the parent company in very direct ways. For example, when Fred Kindle, the CEO of ABB, visited the managers of the company’s Czech subsidiary, he learned that managers there had found an innovative way of networking the company’s administrative computers at night (when they were not used) to leverage their built-in processing capacity. This enabled the company to run complex research and development algorithms more quickly and, in turn, gave the Czech subsidiary valuable recognition and corporate support.

Initiative taking can also draw attention from headquarters in ways that are less direct. Individuals behind successful initiatives, for example, can build reputations that open doors to opportunities. For instance, Sara Lee Corp.’s Australian subsidiary became known within the company for its leadership on diversity issues, thus making Angela Laing, the diversity champion, a rising star. She soon became vice president of human resources for the company’s worldwide household and body care division, and several others from Sara Lee Australia moved into senior positions elsewhere in the corporation. Nestlé Canada Inc., which developed a new line selling custom batches of frozen foods to food service operators, has leveraged this innovation into increased attention overall. (See “Defining a Value-Added Role for Nestlé Canada.”)

Profile Building

Subsidiary managers use a variety of mechanisms to improve their image, credibility and reputation within the global company. If initiative taking occurs in the local context, profile building focuses on the things managers do within the broader corporate network. We found that successful profile builders focused on three types of activities.

They build a stellar track record.

The managers of profile building subsidiaries delivered results above the expectations of the parent company for a number of years. As Mark Masterson, vice president of health care product maker Abbott Laboratories’ Pacific, Asia and Africa operations, observed, “Getting attention is about establishing credibility, and it doesn’t happen within a short period of time. People need time to evaluate how you run a business. If you demonstrate predictability and results over time, you start to gain more confidence to put more challenging options to the company.”5

They support corporate objectives.

To the extent that managers pursued their own local priorities, they did not downplay corporate concerns in the least. This may be common sense to seasoned executives, but it can also call for some careful juggling as subsidiary managers attempt to balance local initiatives with commitments to the corporate cause. Many of the subsidiary managers we spoke to described how they “push back” on some corporate requests and how they explain problems to their immediate bosses. “You are stupid if you don’t keep some things up your sleeve,” one manager explained. “You have to manage expectations, which involves not telling the whole story until you are ready. So I act as a buffer.”

They work as internal brokers.

Successful subsidiary managers spend a lot of time building relationships within and beyond their corporate network. Some of this work is to build awareness — letting other parts of the company know what the unit does, how well it does it and what it might be able to contribute in the future. It can also be targeted toward specific projects and take the form of preselling ideas and lobbying with key power brokers in the corporate hierarchy. For example, one manager talked about the preselling process: getting all interested parties involved early and “oiling the wheels” so that when the formal proposal is presented it encounters no resistance. Another manager noted the importance of timing: “If you tell the story too early, you risk getting shot down or building up unreasonable expectations; if you tell it too late and they get mad, you will struggle to get support.” It is important to recognize the level of planning required for a successful campaign to build support for new investment and new initiatives.

The Threat of Strategic Isolation

In addition to the strategic approaches subsidiaries used for attracting attention, we found two particular contexts where initiative taking and profile building were especially important: when subsidiaries were located far away from corporate headquarters and when the subsidiary’s activities were focused solely on the local market. This finding is not entirely surprising: Remote operations are especially likely to fall off the radar screen of headquarters executives. But for subsidiary managers, it is reassuring to know that there are ways to overcome the “tyranny of distance.”

We found that profile building was the more effective approach to capturing attention, either on its own or in combination with initiative taking. One of the dangers of subsidiary managers pursuing initiatives on their own is that unless they have already built a track record with the parent company, the initiatives can be seen as empire building. The initiatives may also compete with the entrepreneurial activities of subsidiaries in other parts of the world for headquarters’ attention. Subsidiary managers often seek to mitigate these concerns by approaching initiatives cautiously: focusing on ideas and projects that will add value to the rest of the global company or collaborating with peers in other countries. For example, the CEO of Oracle Corp. Australia Pty. Ltd. sponsored the design of an integrated approach to education, which he believed had the potential to revolutionize methods of learning within the K-12 school system. But pursuing this initiative required substantial funds and did not fit into the existing corporate research and development priorities. By lining up support from his overseas colleagues, the Australian CEO was able to build a critical mass and attract notice from the head office.

Subsidiary managers often argue that their ability to influence their own destiny is undermined by their lack of decision-making power. However, we found that a subsidiary’s degree of decision-making autonomy has no meaningful effect on the level of executive attention it receives. Indeed, in many instances subsidiary managers used their limited degrees of freedom to great effect. For example, Yum! Restaurants International’s KFC division in Australia has built a reputation as a leading innovator in its global business. One of its most notable breakthroughs involved its drive-through business. For a variety of reasons (some of which had to do with technical problems relating to the drive-through speaker box), customers at many stores had been reluctant to use the drive-through window. With a modest investment, however, Yum Australia redesigned the entire drive-through experience: It expanded the order window, redesigned the menu board and trained employees to assist customers with their menu choices.

The result was a dramatic increase in drive-through sales and customer satisfaction and enhanced visibility for Yum Australia within the corporate system, reinforcing its position as a leading global innovator.

Refocusing Executive Attention

What lessons can corporate headquarters executives draw from our research? What sorts of changes should they make to get the most out of their portfolio of subsidiary companies? Our findings suggest four broad approaches.

Create channels for attention.

Attention is channelled through a number of formal and informal mechanisms, many of which are designed explicitly to direct executive attention to the biggest or weightiest issues. But if executives want to find ways to amplify the voice of their subsidiaries around the world, they need to give creative thought to the meetings, events and forums they participate in. Some examples of what we observed include:

• Holding performance reviews in the country or region being evaluated. One Australian subsidiary manager had been meeting his European boss in Bangkok as a way to share the travel time. But once he was able to persuade his boss to travel to Sydney, he noticed a dramatic — and positive — change in his boss’s attitude toward the subsidiary.
• Locating board meetings overseas. Companies have found that this often leads to dramatic changes in outlook, providing board members with opportunities to talk directly with distant customers and examine production operations firsthand. Melbourne- and London-based global mining company Rio Tinto, for example, took its entire board to China for a week in 2005. London-based engineering consultancy Arup Group Ltd. holds every other board meeting in an overseas location such as Poland or Brazil.
• Cultivating interpersonal ties. The attention headquarters executives pay to subsidiaries typically stems from past interactions and how well executives know the local people. Accordingly, many companies host forums for the purpose of cultivating ties among different players in the organization. For example, ABB brings its country managers together at least twice a year both to socialize and to share important local insights. In addition, staff from subsidiaries around the world meet with headquarters staff regularly through their involvement in cross-country teams.
• Assigning mentorship responsibilities. At Procter & Gamble Co., country managers are formally linked to a corporate executive, who is expected to keep his antennae out and play a championing role in helping the subsidiary gain access to corporate resources. Ultimately, however, it is up to the subsidiary staff to inform mentors of interesting local developments and to build the case for what they can contribute to the company as a whole.
• Recognizing that regional support for subsidiaries can cut both ways. Regional headquarters can help subsidiaries attract attention, but they can also act as a harmful buffer. IBM Corp., for example, re-evaluated the role of its European headquarters recently, and ended up replacing its Paris headquarters with two new focused headquarters serving North/East Europe and South/ West Europe, respectively.

Seek out the hidden gems and give them a platform.

It is worth paying special attention to subsidiary companies that deliver surprisingly good results in relation to their overall stature. Over and above delivering stellar numbers financially, they may also be sources of new insights or practices. Finding these subsidiaries is partly a matter of opening up the attention channels. But it also may require some extra analysis. Which subsidiaries are attracting more interest internally than their market position might warrant? And which are responsible for the biggest annual jumps in sales and profits?

Groupe Danone, the French food products company, does a good job of giving a platform to its hidden gems. Following a major initiative aimed at increasing the company’s top-line growth, Danone recently identified the leading countries in the world for certain activities and designated them as the corporate “champions” that others could learn from. Frucor Beverages Group Ltd., Danone’s New Zealand subsidiary, became a center for innovation, and executives from elsewhere in the company have been encouraged to spend time in New Zealand to understand how it has been able to deliver revenue growth of 7% to 10% over the past 10 years in a flat market. Similarly, Indonesia was recognized for its expertise in “affordability.”

Measure returns on executive attention.

A slightly different challenge is how to assess the value of investments in attention, particularly as they relate to big emerging markets: In essence, this involves understanding how to leverage attention into capability. General Electric Co.’s experience in this area provides useful insights. Like executives of most global companies, GE executives pay huge amounts of attention to growth opportunities in China, India, Russia and markets in the Middle East and Latin America. But they are highly disciplined about how they go about it so that the investment opportunities aren’t wasted. Their motto is: “Go big and continuously look back.” Indeed, they don’t get involved unless they can help the company win mega project proposals in the region — for example, airport expansion programs in China or major water-power programs in India. Less significant opportunities are left for local talent to ponder. Perhaps more importantly, they continually evaluate whether these investments are delivering against their performance expectations, and this analysis becomes a significant input into subsequent investment decisions.6

Give subsidiaries a chance to contribute.

Good subsidiary managers are looking for ways to contribute to the company as a whole over and above achieving good results in their own business. One of the roles of headquarters managers is to define the needs. For example, executives at several Australian subsidiaries spoke about how their parent wanted them to develop management talent for the rest of the company. Many were reluctant to give up their most promising managers to careers in Europe or North America. But Roger Eaton, the CEO of Yum Australia, decided to make exporting talent a cornerstone of his strategy. Each year he recommended three senior managers for key assignments outside Australia; as these individuals have excelled in their new assignments, the reputation of the Australian operation has grown. “You can’t avoid the Aussies in YUM globally,” notes Eaton. “If you look at the top 200 executives in the company, you’d find over 20 Australians!”

MANAGING ATTENTION IN A GLOBAL COMPANY often boils down to specific and apparently small actions: holding a board meeting in a remote city, initiating a forum to discuss emerging market opportunities or asking a division head to groom executives for overseas assignments. However, in an environment where high-level attention is in such short supply, small actions can have enormous consequences. They can furnish opportunities for subsidiaries to showcase their initiatives or gain access to expansion capital. They can trigger important shifts in the parent company’s overall growth trajectory.

We are accustomed to thinking of subsidiaries as having fairly fixed roles.7 But actually, the roles can be fairly fluid, changing to reflect evolving opportunities and new competencies the subsidiary can contribute. Executive attention can facilitate these internal shifts. Attention may not be the ultimate objective, but it is a necessary ingredient for any subsidiary that seeks to play a more pivotal role in the global company.