The Economist’s Schumpeter Looks At What Companies Can Do Culturally For Spinoff Success

We often mention how long the spinoff process can take. There are a lot of reasons for that including paperwork, but basically it isn’t easy to carve out a brand new entity. There is a lot of internal work and planning that needs to get done during that period to ensure a smooth transition. Nothing sexy and the work  often shows up as so called ‘one time’ expenses which many tend to ignore.

The Economist recently wrote about spinoffs, specifically focusing on the cultural and morale issues companies face during spinoffs and how they might be mitigates.  The article tells the story through the prism of  ITT’s(ITT) 2011 spin of Xylem(XYL) and Exelis(XLS). ITT has spins in its DNA having progressively shrunk from a massive conglomerate several decades ago to its current size today. Most of the discussion makes a lot of sense, but this factoid had us scratching our heads:

No detail was too small to bother with. Exelis made its employees hand in their old knick-knacks—such as pens and mugs that bore the old logo—and issued them with new ones. It also held parties to celebrate the birth of the new firm.

Frankly, that just seems weird, and more than a little creepy.

We do have to give kudos to the author for managing to include the phrase ‘amoeba porn’ in there, though.

 

Disclosure: Author currently holds no position in any stock mentioned.