As part of our research on corporate parenting, we have developed a simple tool that can be used to assess a company’s parenting strategy and to visualize its key dimensions.
Corporate parents can create value, but they can also destroy it. To ensure that the net value added is positive, select the right parenting strategy.
We took the five categories of parenting activities identified by our factor analysis of the survey data, defined three primary subactivities for each, and arrayed them on a spider chart. The importance of each subactivity to the value added of the corporate center is rated on a scale of 0 to 5. (See the exhibit below.)
When we mapped the data from our survey onto this chart, we found that the six parenting strategies that we identified had distinctive visual profiles. For example, the upper graphic in the exhibit below displays the parenting strategy spider chart for the financial-sponsorship strategy, which is dominated by financing advantages. By contrast, the lower spider chart illustrates the profile of hands-on management. Although financing advantages play some role in this parenting strategy, they are not as important as they are for the financial-sponsorship strategy. What’s more, other activities such as operational engagement are far more important.
The parenting strategy spider chart is a useful way for a company both to identify its current parenting strategy and to visualize the changes it should make to migrate to another, more appropriate parenting strategy.