Letting Go

Organizing Abandonment

The two biggest questions when considering organized abandonment are what to abandon and how to do it. Drucker suggests you answer them by making organized abandonment part of your business routine. He cites one company whose executives meet every month to discuss businesses to let go. Repetition sharpens everyone's eye for declining opportunities and provides a forum for developing innovative techniques for getting out of old businesses.

In addition to areas that have stopped or are about to stop growing, look for areas in which your company is no longer competitive. One of the main reasons for flagging competitiveness is that the required skills have changed. This is the case in the electric-utility industry, Collier says, where executives familiar with working in a highly regulated monopoly are ill-suited for the competitive, deregulated playing field reshaping the industry today.

Drucker offers one caveat: Before you abandon anything, do a test-run. Initiating a pilot project lets you see how you might close down the business, as well as whether the new business you want to enter or re-emphasize will perform up to standards, he says.

Even with pilot projects, organized abandonment is risky. It's hard to stop offering a service without offending existing customers, Miller says. He discovered this when telling clients he was getting out of accounting. Some were using both his IT consulting and accounting services, and others were accounting clients and IT consulting prospects. Rather than drop them cold, Miller offered referrals to other providers. "It wasn't just, `Sorry, we don't do that anymore,' " he says.

On the plus side, organized abandonment is unlike many management ideas in that it need not cost anything. In fact, it can actually add cash to your coffers, which is what happened when Miller sold his accounting services division. Remember, though, that abandonment may hurt your sales in the short term until you complete the reorganization of your company with its new focus. "When you do that switch," warns Miller, "your revenues are going to go through a dip."

You don't need any special training, technology or consulting expertise to abandon. You do need conviction, however, especially when the familiar old business beckons from time to time. "The hardest thing to do," Miller relates, "was saying no to business when we needed that revenue."

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This article was originally published in the February 2000 print edition of Entrepreneur with the headline: Letting Go.

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