Fighting the "headquarters knows best" syndrome

Bouquet, C, Birkinshaw, J and Barsoux, J-L (2015) Fighting the "headquarters knows best" syndrome. MIT Sloan Management Review, 57 (2). pp. 58-66. ISSN 1532-9194

Abstract

Many executives believe their companies suffer from "headquarters knows best syndrome". This syndrome can hinder a company's global competitiveness. One company achieved a change in mindset by establishing more than one headquarters. Narrow-mindedness holds back many organizations in their efforts to turn global presence into a real source of competitive advantage. In this article, the authors explore the manifestations and costs associated with this way of thinking and ways companies have addressed the problem. Many of the things companies have done are fairly predictable, such as decentralizing global responsibilities, changing the reporting relationships, internationalizing senior management, and creating cross-national teams. In Irdeto's case, the company tried a more extreme remedy: It created two headquarters, one in the Netherlands and the other in China. The decision to operate out of dual headquarters provided an effective way to realign the focus of the company, and it had significant positive effects on Irdeto's performance. The authors offer a broad set of recommendations to help executives overcome the headquarters knows best syndrome and position themselves more effectively for global growth.