Letting go and wishing well: The art of corporate divestiture

Google did it with Waymo. eBay did it with PayPal. And in 1999, Hewlett-Packard did it with a small company called Agilent Technologies that has since become a $5-billion-dollar company in its own right. So why do some spin-offs become innovative engines while others fizzle and fail? According to Gies Teaching Assistant Professor Sandra Corredor, it largely comes down to one thing — how much the parent company is willing to let go.

“When a corporate parent divests one of its business units, they can do it in different ways,” said Corredor. “They could say, ‘OK, I’m not going to retain any ownership, but I am going to retain three seats on the board of directors of the spun-off company, or I’m going to sign a service agreement with the spin-off company and keep providing administrative services to them.’ These are ways in which corporate parents keep intervening in operations, and all of it affects the divested unit as a stand-alone company.” Much like helicopter parents in the real world, Corredor says over-involvement can stunt the growth of entrepreneurial offspring, creating limits and restrictions that prevent them from coming into their own.

Google is a good example of this phenomenon, because they’ve tried both paths. “They have had companies that they really let go, and then they have had companies that they keep really close. They keep some companies close because they think it can work for them and get some money, but often these companies perform worse.”

The students in Corredor’s class could one day have to make those kinds of decisions, which is why Corredor is excited to be teaching managing organizations and strategy in the iMBA program at Gies. If the halls look familiar to the new member of Gies’ specialized faculty, there’s a reason. Prior to teaching strategy at the University of Connecticut School of Business, Corredor completed her PhD at Illinois, making her new job a bit of a homecoming.

As a teaching assistant at Illinois, Corredor served as the iMBA faculty coordinator, which means she’s already familiar with the staff of the program, as well as its global impact. “The iMBA is allowing people to access education despite the multiple economic, personal, and political barriers they face. We had a student from a Middle Eastern country who wrote and said, ‘You know, if it weren’t for this program, I couldn’t have access to any education at all here in my country right now.’ That resonated with me,” said Corredor. “This is a mission. At Gies we are making high-quality education accessible to people who can’t afford to leave their job, their country, or even their house. Think about working parents. They can pursue their graduate degree and be ready to go back to the labor market. I am excited to contribute to this great mission.”

One of her main goals as she rejoins the program is to ensure that students get the framework they need to make good decisions. She also hopes to give them a broader perspective. “Not every company behaves like a US company, and we have many things to learn from companies all around the world,” said Corredor, who came to Illinois after earning a master’s in economics in her native Colombia. “I want to show my students a more diverse perspective. So, I bring examples of cases from Latin America, India, and China.”

In addition to the exceptional research opportunities available at Gies, Corredor says she’s excited about the opportunity to continue working with the outstanding faculty in the iMBA program and the opportunity to watch it grow. In just four years, the iMBA has grown from 114 to more than 3,800 students. “The U of I is home to me and I feel very fortunate to be part of the team.”