Divorce and disintegration: the cost of flying apart.

In business, as in society, we seem to be increasingly moving apart from each other--getting divorced. Internally merger/acquisition/divestiture, consolidation. termination, outsourcing, reorganization, transfer, special short-term assignment--all tend to separate us from our colleagues. Externally, customer defection, mobility and alternative channels usage remove us from our customers. Finally, even the tenure of stock holding has decreased significantly over the years. Colleagues customers and shareholder relationships have all become more transient.

Why? Opportunity for benefit: Colleagues either find a better opportunity to work elsewhere, or companies finds an economic benefit to changing employee roles or removing them from the payroll. Buying, selling or merging entities is done in order to grow larger. Customers find a better "deal" elsewhere. Shareholders cash out their gains, cut their losses or give up on waiting.

Clearly there are numerous examples where parting ways is the very best solution. Yet often the benefit is very tangible to the company, but the disadvantages are less so. The recent research on marital divorce seems to indicate that the costs are probably greater and longer lasting than we had realized. Why is that and how does it apply to "separation" in our business relationships?

I have often thought that if we could think of our organizations differently we might gain some insight to the cost of growing apart. What if we had a department in our company where we consolidated all of the pending and actual separations--employee, customer, shareholder--and called it the Department of Divorce (DOD). What if its primary function was to manage all of the efforts required with losing and replacing customers, employees and shareholders. In fact, what if it had all of the revenue and expense associated with business divorce, including lingering morale and related productivity and focus issues? In your company, how big would that department be and would it be expanding rapidly?

There is a term for "parts" that were once together moving apart. It is called disintegration and it describes how things once together, move away from each other along with the attendant chaos that it causes. Just how prominent have the challenges of disintegration become?

Just today, a major bank announces it is acquiring a major credit card company. The lead statement below the headline is "6,000 jobs to be eliminated." It appears that the "divorce" of a number of employees is the reason for the "marriage." Wail Street can do the math very quickly to see that a significant chunk of cost is going to be removed. What may be less clear is the longer-term impact on employees and customers and ultimately on shareholders when this change shows up as retarded revenue growth. In many of these organizations, there is a lingering effect that stifles organic growth for some period of time. Eventually, this causes the organization to be rather desperate for another big "divorce play" that will drive the next round of earnings and excite shareholders. Once started down this path, the "serial" acquirers, it seems, cannot break the cycle. This path of multiple acquisitions means having a growing pool of stakeholders, especially customers and employees, who are impaired by the organizational health and aftermath issues--like morale, functions that never get properly integrated together, and parts that just do not fit.

However it is not just acquisition that leads to disintegration. Look at Sony Corp., the creator of the Walkman and its recent loss in its race with Apple in the "iPod" sweepstakes. How could a space it so dominated be lost to Apple? The head of United States operations speaking to The Wall Street Journal described their poor competitive response: "Different groups within Sony handled different parts of the service, and they didn't work well together." Another Sony executive went on to say: "Sony's gotten so big that things don't connect any more." Just because you stay "married" does not mean you will avoid growing apart in a way that stifles organic growth and winning of markets. A number of organizations seem to have outgrown or out-diversified their ability to integrate the pieces of their business. The New York Times recently described the efforts of one CEO: "[He] has taken a number of symbolic steps to address looming concerns by investors that his company ... is too immense to manage, not to mention grow."

Many organizations have figured out how to make money by divorce--by dividing. Few have learned how to transition from dividing to multiplication--to overcome the stresses of divorce and disintegration that impede the longer term health of the organization and organic growth. Jesse Browner said it well: "We are incomplete alone and compromised in company." Perhaps there has never been a time when we need to pay more attention to how healing and integration take place in organizations because I seriously doubt that the level of divorce and "dis-integration" is going to decline any time soon.

Robert Hall is author of "The Street Corner Strategy for Winning Local Markets." E-mail: [e-mail]