Does Orkla need a head office?

NHH Forum 2011 was held on Monday 5 September. Orkla was this year's selected company. CEO Bjørn Wiggen gave a talk on value creation in a long-term perspective and this was followed by a debate. During the debate, a professor from NHH questioned Orkla's corporate structure.

06.09.2011 - Espen Bolghaug

'Figuratively speaking, this is where the map meets the terrain,' says Johan Hovland, Senior Vice President of Communication and Public Affairs in Orkla. He was the moderator of the debate, and was referring to the fact that NHH Forum is a meeting place between practically-minded businesspeople and a more theoretical research environment at NHH. In addition to the students, who were also out in force in the main hall on Monday morning.

Independent companies

'I'm impressed by the restructuring Orkla has carried out in recent years. They have hived off some businesses and streamlined the organisation,' says NHH professor Lasse B Lien to the audience in the main hall. He went on to ask almost existential questions about Orkla's corporate structure.

'But if some streamlining is good, does that mean that more streamlining is even better? Does Orkla really need a head office? Or could each business area operate alone as an independent company? Wouldn't separating the business areas be the ultimate streamlining for Orkla?'

Professor Lien's argument is based on the fact that the kind of functions that are found at a head office can either be purchased from external specialists or decentralised to the business areas or to the individual business units within each business area. This applies especially to companies with business areas that are very different from one another. In such case, the differences between the business areas' needs will mean that many functions should be decentralised, while the remaining candidates for centralisation are often so general that external specialists who supply services for many clients will have a natural advantage with respect to scale and specialisation.

'Orkla's business areas are very divergent, and it is therefore legitimate to discuss whether and why a head office is necessary,' Professor Lien points out.

Provocation is a good thing

There was naturally a fair amount of reaction to the NHH professor's talk at the forum, including from CEO Bjørn M Wiggen.

'A little provocation is a good thing, and this is a question that it is important that we ask ourselves,' believes Mr Wiggen.

'Were you a bit provoked by the talk?'

'Not in a setting like this, no. But it's natural to feel frustrated at times when oversimplified solutions are presented. But I am convinced that the Orkla Group is moving in the right direction, and we are much more focused on our core business areas now than we were when I took up the post a year ago.'

Lasse B Lien was one of three NHH researchers who made contributions following Mr Wiggen's lecture. The other two were Professor Katarina Kaarbøe and Dean Iver Bragelien.

Professor Kaarbøe's talk was about whether Orkla is dynamic enough, while Dean Bragelien discussed how Orkla can achieve the best possible synergies between the companies it owns.

'Three very different perspectives, which are all interesting to discuss,' concludes Mr Wiggen.

An oppertunity for students

But it was also a day on which the students at NHH had an opportunity to meet the corporate management of one of Norway's biggest enterprises. After the session in the main hall, there was time to mingle in the canteen, where tapas were on the menu.

Orkla had a number of stands where several members of the corporate management team were on hand to talk to the students. And although it may have been the promise of free food that brought a lot of the students to the canteen, there were also a few who plucked up the courage to speak directly to Orkla's top management.

'I have spoken to Orkla Brands, which I think is an interesting company,' says Russian Elina Kaykova. She has just started on her master's degree in International Business at NHH, and thinks it is good that companies set aside time to meet students in an informal setting.

Bjørn M Wiggen also enjoyed meeting the students at NHH.

'NHH is an important place in relation to recruiting the best talent. I have had a chance to talk to many students today,' says the CEO.

'But I think some of them feel it is too daunting to come over and talk to me, they maybe feel they need a reason to do so,' he concludes.

Read the preview article about NHH Forum.