BUSINESS SUPPORT
THE LEADING EDGE: THE NEW ROLES OF THE SUBSIDIARY TO HELP GLOBAL ENTERPRISES DRIVE TRANSFORMATION AMIDST THE POLYCRISIS ― Subsidiaries are an important lever for enterprises to drive transformation by increasing their capacity for change and enhancing their ability to win.
By Mohit Mehrotra, Executive Director, Monitor Deloitte, Deloitte Asia Pacific; Samrat Bose, Director, Monitor Deloitte, Deloitte Southeast Asia; Bill Jarmuz, Senior Manager, Monitor Deloitte, Deloitte US; Ashwini Vaidya, Senior Consultant, Monitor Deloitte, Deloitte Southeast Asia; Jasmine Doo, Consultant, Monitor Deloitte, Deloitte Southeast Asia; and Fathan Amartya Mahardika, Strategy Analyst, Monitor Deloitte, Deloitte Southeast Asia Transformation and adaptability are fundamental for 21st century leaders to tackle a highly dynamic and disruptive operating environment. The global enterprises of today have had little respite from new and unprecedented risks. In order to navigate this polycrisis, winning enterprises, which Deloitte refers to as “Exponential Enterprises”, need to orientate their businesses around two dimensions – the ability to win and the capacity for change. The two dimensions of Exponential Enterprises Exponential Enterprises have the capabilities to stay ahead of technological, social, and governance trends, and set themselves apart from their peers. They embrace volatile market conditions by incorporating the ability to win and capacity for change in their business strategies. The ability to win comprises all-weather value drivers that grow an enterprise through a wide range of potential future scenarios. It is a distinctive advantage that enables the enterprise to retain its value and competitive advantage in the long term. The capacity for change complements this ability to win and provides the foundation for an enterprise to adapt effectively to shifts in the market and operat-
52 / orient-magazine.com
ing environment – it monetises a company’s ability to win. The subsidiary Exponential Enterprises can leverage their subsidiaries as important levers to increase their capacity for change, enhance their ability to win and support their ‘always-on’ transformation capability. On average, Exponential Enterprises that do so earn valuations that are 176% higher and 30% less volatile than industry competitors that do not adhere to this fundamental enterprise design principle. To activate this lever, a new relationship paradigm between a global enterprise and its subsidiaries must be established, so that the relationship is more integrated, seamless, real time, and bi-directional. A subsidiary should go beyond its role as a “Resource Deployer”, which is simply tasked to deploy headquarters’ resources to drive sales and run capability centers. Deloitte’s recent report, The Leading Edge, explores three subsidiary archetypes that will enable a subsidiary to make the transition from a “Resource Deployer” towards future states aligned to the aspirations of Exponential Enterprises.
Issue 95 / November 2023
