# Three hidden costs of breaking up your company

> Companies restructuring into business units face talent, AI and leadership gaps that can undermine the whole strategy.
- Title: Three hidden costs of breaking up your company | Shortify
- Summary: Companies restructuring into business units face talent, AI and leadership gaps that can undermine the whole strategy.
- Keywords: unilever, citigroup, philips, business unit model, organizational restructuring, general managers, corporate center, ai strategy, talent management, management, Harvard Business Review
- Source: Harvard Business Review — https://hbr.org/2026/11/the-risks-of-decentralizing-your-organization
- Author: Alyson Potenza
- Published: 2026-11-06T13:05:43+00:00
- Read time: 2 min
- Topics: unilever, citigroup, philips, business unit model, organizational restructuring, general managers, corporate center, ai strategy, talent management, business, management
## Why big companies are breaking apart
Unilever, Citigroup and Philips have restructured to give business units greater accountability while streamlining corporate management. Supply-chain disruptions, geopolitical uncertainty and AI momentum make centralized decision-making too slow.
## The business unit model explained
Business units operate with focus on distinct customers, innovation cycles and supply chains while bound by a shared mission. The model echoes Jack Welch's conglomerate playbook where the corporate center allocates resources and arbitrates conflict.
## Problem one: unprepared leaders
General managers promoted to lead business units typically rise based on success in one function. A Kearney review of ten companies found a third of general managers failed in their first year.
## What GMs lack
New general managers bring expertise in their area but lack supply chain, R and D, and finance fluency the role demands.Few are ready to operate as end-to-end business leaders accountable for P and L outcomes.
## Solution: education and mentoring
Companies should build academies or boot camps teaching new GMs integrated business planning, innovation governance, financial management and capital strategy. Pair them with seasoned functional leaders for apprenticeship and mentoring.
## Bring in outside talent
Companies should hire experienced general managers from other organizations who have worked in the business unit model and know what good looks like. They model right behaviors and set standards for the transition.
## Rewire career paths
Instead of training rising leaders only in their function, give potential general managers rotational experience across the organization. A marketing leader might take a supply-chain role or an engineer rotate through finance.
## Problem two: AI readiness gap
General managers struggling with fundamentals have little bandwidth for AI strategy.Many delegate it to IT technicians rather than treating it as a strategic question.

> I'm still very much at the novice stage of my own AI learning journey.
## AI strategy belongs at the top
The executive team should set organization-wide AI strategy by exploring where AI creates or erodes competitive advantage, what the P and L could look like at scale, and how to prepare the workforce.
## Problem three: hollowed-out center
The shift to business units triggers a talent exodus from the corporate center as best people follow career opportunities into business units.
## Keep the center strong
The corporate center should give clear mandates for topics that cannot be decentralized like geopolitics, compliance, foundational systems and AI. It should elevate resident experts and offer shared services as needed.
## The center as flexible support
The corporate center should be a small but mighty flexible group of experts that shifts to support business units needing most attention.
## Success requires rethinking talent
The business unit model remains powerful but companies that stop at structural change without rethinking talent, AI readiness and the corporate center trade one set of vulnerabilities for another. All three must be addressed.
## Key takeaway

Unilever, Citigroup and Philips have decentralized into business units for speed, but must address three risks: unprepared general managers, AI strategy gaps, and a weakened corporate center.