A company may elect to classify its various units into different categories on the basis of their market opportunity and performance. For instance, a unit might be labeled “grow,” “maintain,” or “dispose of” to indicate its likely degrees of success. In addition, each category has guidelines that show how resources will be assigned. This approach allows managers to determine whether the different areas of the company will be successful. It also removes many of the politics from the process and focuses attention on how each unit is contributing to important strategic goals.

When Lee Raymond was CEO of Exxon Mobil, he required that 3% to 5% of the company’s assets be designated for disposal each year. The burden to prove that an asset should be kept was on a particular division. A division could keep an asset only if it could present a compelling plan that a unit was improving. The net effect was healthy turnover and upgraded units despite the natural desire on the part of executives to keep all of the units, even the ones that were not performing well.6 Such a process encourages the evaluation and reallocation of assets within a company and causes people to rethink how the firm can best achieve its strategic goals. This approach also makes managers constantly assess the overall health of their business units so that changes can be made if necessary.

Companies should be proactive about assessing their strategic assets so that critical decisions can be made about which assets are eliminated and which are retained. Consider the following questions that explore these issues

If you were given the task of evaluating and reallocating the strategic assets of your employer, how would you approach these duties?