Stone Finch, Inc.: Young Division, Old Division

By: Elizabeth Collins and Richard G. Hamermesh

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Synopsis: CEO Jim Billings wants to attract energetic, entrepreneurial talent to Stone Finch, Inc., which comprises an older division that fabricates products like piping and tanks for water and wastewater processing plants, and a much newer division that develops biochemical solutions associated with water purification. To accelerate the company's growth, Billings sets up subsidiaries to create cutting-edge technologies that can be brought to market by the biochemical solutions division. After a few years the subsidiaries have indeed produced innovative products and driven growth; however, problems are surfacing. Much of the investment in the subsidiaries has come from the old manufacturing-based "cash cow" division, which is now suffering from turnover, loss of morale, and loss of competitive position. Moreover, the solutions division -- which has absorbed numerous employees who became wealthy by developing successful subsidiaries -- is plagued by increasing polarization between the "haves" and the "have-nots."