The Iceberg Stress Test
A 90-point diagnostic tool for evaluating whether a business unit should be separated from its parent organization.
A 90-point diagnostic tool for evaluating whether a business unit should be separated from its parent organization. Like an iceberg, most organizational stress is invisible below the surface - this test reveals the hidden cracks before they cause sudden separation.
When to Use The Iceberg Stress Test
Use when a business unit feels misaligned or when activists pressure for spinoffs - reveals hidden stress across strategic fit, growth trajectory, and cultural dimensions before sudden cracks appear.
How to Apply
Evaluate Strategic Fit (0-30 points)
Assess customer overlap, technology/capability sharing, and competitive moat contribution.
Questions to Ask
- Do core and unit share customers? (10 = 100% overlap, 0 = 0% overlap)
- Do core and unit share technology/capabilities? (10 = fully shared, 0 = completely distinct)
- Does unit strengthen core's competitive moat? (10 = essential, 0 = irrelevant)
Outputs
- Strategic Fit Score (0-30)
Evaluate Growth Trajectory (0-30 points)
Compare unit performance against core on growth rate, profitability, and capital efficiency.
Questions to Ask
- Unit growth rate vs. core growth rate? (10 = unit growing 3×+ faster, 5 = same rate, 0 = unit declining)
- Unit profitability vs. core? (10 = unit more profitable, 5 = same, 0 = unit unprofitable)
- Unit capital efficiency vs. core? (10 = unit requires less capital, 5 = same, 0 = unit requires more capital)
Outputs
- Growth Trajectory Score (0-30)
Evaluate Cultural/Leadership Stress (0-30 points)
Assess leadership satisfaction, talent mobility, and collaboration quality.
Questions to Ask
- Are unit leaders satisfied with autonomy? (0 = frustrated, 10 = satisfied)
- Is talent transferring between core and unit? (10 = frequent, 0 = never)
- Do core/unit leaders collaborate easily? (10 = strong collaboration, 0 = conflict)
Outputs
- Cultural Stress Score (0-30)
Calculate Combined Score and Determine Action
Sum all three dimensions and apply decision thresholds.
Outputs
- 60-90 points: Healthy integration - maintain connection, monitor quarterly
- 30-59 points: Moderate stress - run 90-day deep analysis before deciding
- 0-29 points: High stress - begin controlled calving planning within 30 days