Corporate strategy

What is corporate strategy?

Corporate strategy is how a company with several businesses decides where to invest and how the parts add value together. Business strategy asks how one unit wins. Corporate strategy asks which businesses to own and what the parent adds. Michael Porter wrote on it in Harvard Business Review in 1987, and David Collis and Cynthia Montgomery warned in 1998 that many multibusiness companies add little beyond the value of their units.

Why it matters to a revenue leader

In a buy-and-build platform, much of the corporate strategy lands on the revenue leader's desk. The parent's case rests on adding value to each acquired company, and the commercial part of that case is selling more service lines into a shared customer base with one pricing discipline. If the revenue leader cannot show that combined sales motion working, the platform looks to buyers like a set of small companies under one logo.

A platform owns a fire protection company, a backflow testing company and an elevator inspection company. Its corporate strategy says the parent adds value by selling all three services to the same property managers. After two years, 14 percent of customers buy more than one service, up from 3 percent at the first acquisition, and the sponsor can show the combination is worth more than the parts.