This post was contributed by Capstone Senior Vice President Wes Teague:
Lockheed Martin (LM), one of the country’s largest government contractors, recently announced its intention to sell or spin off one of its oldest and profitable units, the Enterprise Integration Group. The EIG, a unit of LM for 42 years and with revenues of over $1.3B (out of LM’s $45.2B overall revenues) would no longer fit in LM’s long-term strategic plan, due to potential conflicts-of-interest with other, larger units of the parent organization that were significantly more important to the future of LM.
The decision to shed a long-standing, profitable unit or division or product is a hard one to make, especially in uncertain economic times. With a proper strategic plan in place that maps out the organization’s longer-term growth plans, the decision can be made objectively, based on clear criteria and priorities that help remove the emotionalism of losing a “favorite child”. Facilitated (to remove emotions) planning sessions can help companies make these decisions that at first glance seem counter-intuitive. Intuition has its place, but a strong, well-thought out plan is usually a better bet for long-term success.