The title of this post already gives an idea of my thought process. Over the years, I’ve been involved in setting up and running a few start ups/business units and I currently work for a organisation that has spun up a number of business units that will push out new products into the market
There is a lot of fear and uncertainty in launching a new idea into the deep which common with this terrain. One of such fears comes with how to allocate resources from the parent organisation to its subsidiaries.
I usually like to use the analogy of parenting to describe how I feel this challenge should be tackled.
As a parent, I nuture my children from birth to adulthood. While they are with me and under my roof, I fend for them, feed them and handle all their bills. I also help them to find their footing, I guide their dreams and I provide direction and advise. Once they come of age, I will need to step back and let them stand on their own. At that time, most (if not all) the support is removed for two reasons – the first, is that I want them to no longer feel the need to rely on me. The second reason is that I wasn’t them to grow strong enough and possibly rise better than I ever did.
Now let’s juxtapose this idea of parenting unto the parent company and the subsidiary. I believe the same should be the case. Businesses should not start up a subsidiary and expect that small/weak company to somehow support the larger organisation. That would be an unfair expectation.
Rather, the parent organisation should for a limited time support and handle the bills of the child company up and until a time when that child company can support itself and can stand on its own.
Sadly, when this is not done, in most cases it leads to the death of those subsidiaries. I’ve seen a lot of these in the industry in recent years.
Obviously, starting up a subsidiary or spinning up a new business unit is not as simplistic. In fact, it’s one of the most complex aspects of a business and there are many, many things to consider and set in place for success.