With so much of their time and energy spent building their businesses, executives can often get blind sided by the speed of macroeconomic, competitive and technological change. And much like the clutter in my basement, parts of their business or product portfolio may no longer serve a strategic purpose or may require disproportionate resources no longer justified by the return it generates.

In this day and age of "lean startups", "lean manufacturing" and "leaning in", executives can ill afford maintaining "basements" because scarce operational and financial resources and underperforming assets make businesses bloated and less responsive to change.

For many executives who are personally invested in businesses they've created, parting with an underperforming product line or operation is an emotional decision considered tantamount to admitting a mistake. In addition, recent academic studies show that almost half of all acquisitions fail to achieve their original objectives. So there seems to be much room for process improvement (much like my '80s wardrobe, which I remember seeing somewhere around here...).

To that end, the financial services industry tells us a lot about portfolio management; capital preservation and asset allocation are the core tenets of building wealth. If an investment fails to achieve its targets (and even when it does), prudent portfolio managers sell to cut their losses or use profits to invest (or reinvest) in companies with greater likelihood of success.

Sure, buying and selling stocks may be easier to transact than businesses but the process and the discipline is much the same.

When viewing your business portfolio, how do you arrive at the critical decisions to invest or divest?

Here are a few things you can try:

1. Lead a systemic review and resource allocation process for your business. Use the process to review investment/business results in the context of current conditions, technological and market trends and other potential disruptive events.
2. Consider a decentralized organizational model or establish an accountable business "owner" for any new investments
3. Establish acceptable performance and financial metrics based upon industry norms or your own cost of capital.
4. Decide realistic company baselines and milestones before making any significant investment to measure progress.

Most importantly, if a decision to invest or divest is required, don't rationalize and don't look back (something is definitely gaining on you). Rather, review the process outcomes to decide if adjustments are needed without compromising key performance criteria. Improving the allocation process should be the objective.

There's an apocryphal story of Intel's founders who, when faced with intense Japanese competition, couldn't decide whether to remain in the DRAM memory business or pivot to the emerging microprocessors. 

Andy Grove, then Intel's CEO, told Gordon Moore (he of Moore's Law), "If we got kicked out and the board brought in a new CEO, what do you think he would do?" Gordon answered without hesitation, "He would get us out of memories." Grove stared at him, numb, then said, "Why shouldn't you and I walk out the door, come back and do it ourselves?"

Sometimes a fresh perspective is all that's needed to say goodbye to your "memories" and commit yourself (and your organization) to a more purposeful and rewarding future.