What is functional strategy? And should functions even have strategies?

"A prevalent view holds that functions shouldn't have strategy; they 'just execute.' In my experience, it is a hot and contentious issue. I understand why. Functions have become huge in terms of both dollars spent and people employed. In that 2019 article, we pointed out that on average the Dow Jones 30 companies spent $20B/year on their functions in 2017 and it would undoubtedly be more today. So, there is lots at stake."

"It was a much simpler world through the mid-1950s when companies were functionally organized. The CEO acted as the sole integrator and made the set of decisions that would currently be called strategy. Starting in the late 1950s and continuing through the 1960s and 1970s, virtually all large companies converted to business unit (BU) organizations - in large part because they had diversified and coordinating across the various product lines had become ever more difficult within a functional structure."

Strong disagreement exists over whether functions should have strategies or simply execute. Many believe functions should 'just execute,' but functions now manage enormous budgets and workforces, making strategic clarity critical. Large companies spent on average $20 billion per year on functional activities in 2017, indicating substantial stakes. Organizational forms shifted from functional structures, where CEOs integrated decisions, to business-unit organizations from the late 1950s through the 1970s due to diversification and coordination challenges. Business strategy and business-unit organizing emerged together in the 1960s as complementary practices that reshaped corporate decision-making.

Read at Fast Company