acgnational
By Wes Teague, Senior Vice President, Capstone Strategic, Inc.
The decision to shed a long-standing, profitable unit, division or product is a hard one to make, especially in uncertain economic times. However, with a proper strategic plan in place, it is possible for a company to make a correct and objective decision.
By mapping out the organization’s longer-term growth plans, an organization can make a decision based on clear criteria and priorities that help remove the emotionalism of losing a “favorite child.”
A great example is Lockheed Martin, one of the country’s largest government contractors with $45.2 billion in overall revenue, which recently announced its intention to sell or spin off one of its oldest and most profitable units, the Enterprise Integration Group (EIG).
The EIG had been a unit of Lockheed Martin for over 40 years and accounted for revenues of over $1.3 billion. When the company stepped back and looked at their long-term strategic plan, they realized that the EIG no longer fit due to potential conflicts of interest with other, larger units of the parent organization that were significantly more important to the future of the company.
For companies struggling to take an objective look at their business, facilitated planning sessions can help companies to remove emotion from the decisions, which at first glance, may seem counter-intuitive. Although intuition has its place, a strong, well-thought out plan is usually a better bet for long-term success.
Much like Lockheed Martin, many companies come to a point where a profitable and sentimental business unit no longer fits in with the enterprise’s long term plan and growth strategy. By looking beyond intuition, thinking long term and seeking outside counsel, a company can better make the unpopular decisions that will lead to growth and continued profitability in the future.
