Holding groups grow by adding companies. Without a clear operating model, each one ends up with its own strategy and the group loses the advantages of being one group.
A holding group usually starts with one strong business. Over the years it adds a second, then a third, often in different sectors. Each company builds its own finance team, its own systems and its own way of reporting. Each one has good reasons for its choices. After a while, though, the board receives a dozen reports that cannot be compared, and the group struggles to say what it gains from being a group at all.
The signs
- Head office and the subsidiaries repeat the same work, from finance to procurement.
- Decisions about shared resources, such as people, capital or customers, turn into negotiations.
- A group strategy exists, but the subsidiaries' plans do not refer to it.
- The board spends its meetings reconciling numbers instead of making decisions.
Three roles a head office can play
Before redesigning anything, the board needs to decide what kind of parent the holding company wants to be. In practice, most groups sit somewhere between three roles.
- Investor: the holding sets financial targets, allocates capital and leaves operations to each company.
- Strategic guide: the holding sets direction and shared priorities, and the companies decide how to deliver them.
- Operator: the holding runs key functions directly and the companies work closely to a common model.
None of these is right for every group. A diversified group in unrelated sectors often works best as an investor. A group whose companies serve the same customers usually benefits from a stronger centre. What matters is choosing deliberately, then designing everything else to match.
What a target operating model settles
A target operating model turns that choice into practical answers. It sets out what the holding decides, what each company decides on its own, and which services are shared. It does not need to centralise everything. Many groups keep sales and operations close to each business while sharing finance, legal, technology and procurement.
The core tool is a decision rights matrix for the group, similar to the one used in family businesses. For each major decision it records who proposes, who approves and who must be consulted, so that subsidiaries know where their authority ends and head office knows where it should not interfere.
Shared services, done carefully
Shared services can remove a great deal of duplicated cost, but only when the service is clearly defined and measured. Each shared function needs agreed service levels, a fair way of charging the companies that use it, and a regular review in which the subsidiaries can say whether the service is working.
Making it stick
The model works only when it reaches daily routines. That means one set of group objectives cascaded to every company, a programme office that tracks the main initiatives, and a reporting format that lets the board compare businesses quickly. It also means executive incentives that reward group results as well as company results, so that leaders are not paid to work against each other.
Common pitfalls
- Copying another group's structure without first agreeing what role the head office should play.
- Centralising functions before the shared service is ready to deliver.
- Changing the structure but leaving incentives and reporting untouched.
- Announcing the new model without involving subsidiary leaders in its design.
How Ordovexa approaches it
Ordovexa starts with a diagnosis of where decisions slow down, where work is duplicated and where policies conflict. It then works with the board to agree the role of the head office, designs the operating model and decision rights with management, and supports the first months of implementation so that the new structure, the way people are measured and the way they are rewarded all point the same way.
