apply-dormant-asset-revival

Apply Dormant Asset Revival

Use a dormant, discredited, or failed asset as the vehicle for something new — preserving the residual value it retains (licence, brand equity, talent, installed base, established standard) while replacing the soul that failed.

Why This Is Best Practice

Origin: Stratagem #14 of the Thirty-Six Stratagems: "Borrow a corpse to resurrect the soul" (借屍還魂). The image: a spirit that has lost its body takes possession of a corpse — the body provides the vehicle for the spirit to act in the world again. Applied to strategy: when you need access, legitimacy, or capability that would be expensive to build from scratch, find a dormant or failed entity that already has those things in residual form and use it as your vehicle.

Adopted by: Dormant asset revival is the logic behind acqui-hires, brand licence acquisitions, regulatory shell strategies, and technology resurrection. Facebook acquired Instagram and WhatsApp not for their revenue but as vehicles for their user bases and engineering teams — the corpse was the struggling independent product; the soul was Facebook's network and advertising platform. Square Financial Services acquired Radius Bank's banking licence in 2020 rather than applying for a de novo charter — the regulatory process for a new bank licence takes years; acquiring an existing community bank licence takes months. Android used the Linux kernel — a mature, stable, widely-deployed body — as the vehicle for a new mobile operating system rather than building an OS kernel from scratch.

Impact: Building legitimacy, regulatory approval, brand equity, or technical foundations from scratch is expensive and slow. A dormant asset that retains residual value in these areas provides a shortcut — at the price of acquisition cost and the complexity of separation (keeping what matters, discarding what doesn't). The strategic return is time and market position, both of which compound.

Why best: Dormant asset revival is underutilised because failed or dormant entities are stigmatised — the assumption is that the failure contaminated everything. Often it did not. A startup that failed commercially may have exceptional talent, an important patent, or a customer base. A dormant brand may have residual recognition that would cost ten times as much to build. A deprecated standard may have wide adoption that a new standard cannot replicate for years. Separating the failed soul from the residual body value is the strategic insight.

Sources: Thirty-Six Stratagems #14 (Sawyer trans. 1994); Christensen, The Innovator's Dilemma (1997); Drucker, The Effective Executive (1967) — abandonment before exploitation

Steps

Step 1: Identify dormant assets with genuine residual value

The corpse must have something real remaining. Categories of residual value in dormant or failed entities:

Asset type	What fails with the entity	What survives
Failed startup	Revenue, customer growth, founder morale	Talent, IP, architectural decisions, customer relationships
Dormant brand	Active marketing, distribution	Brand recognition, trust associations, trademark protection
Abandoned platform	Active development, community maintenance	Installed base, integrations, developer familiarity
Deprecated standard	Active governance, new adoption	Existing implementations, compliance infrastructure, interoperability agreements
Distressed regulatory licence	Capital adequacy, management team	The licence itself — charter, approval, operating rights
Legacy technology	New feature development, vendor support	Battle-tested stability, existing integrations, operational knowledge

Step 2: Map the residual value — what remains after the failure or dormancy?

For each candidate asset, answer specifically:

• What does this asset retain that would be expensive or slow to recreate?
• Who values that residual asset (customers, regulators, developers, investors)?
• What is the realistic lifespan of the residual value — does it degrade further over time, or is it stable?
• What liabilities come with the corpse — legal, reputational, technical, contractual?

The liabilities matter as much as the value. A dormant brand may carry a legacy crisis that contaminates the new initiative. A failed startup may have outstanding litigation. A deprecated platform may have security vulnerabilities in widely-deployed code.

Step 3: Assess whether the residual value is genuinely enabling

Dormant asset revival is justified when:

• The residual value provides access, legitimacy, or capability that would take 12+ months to build from scratch
• The acquisition cost (cash, time, integration complexity) is less than the cost of building the equivalent from scratch
• The liabilities are bounded and manageable

It is not justified when:

• The acquisition cost exceeds the build cost
• The corpse's stigma contaminates the new initiative's market perception
• The residual value is illusory — brand recognition that is actually negative, a licence that is under regulatory scrutiny, talent that will leave on acquisition

Step 4: Acquire or revive — and immediately separate soul from body

Acquisition is followed immediately by a separation decision: what from the corpse is preserved, and what is discarded?

Element	Preserve or discard
Talent	Preserve the specific people whose capability you acquired; let go of others where there is no role
Brand	Preserve under a specific use case (premium product, specific geography); retire from others
IP	Preserve patents and trade secrets; audit for encumbrances; discard dependencies on deprecated libraries
Customer relationships	Preserve relationships with customers who will transition; manage exits for customers who will not
Contracts	Honour what can be honoured; renegotiate or terminate what cannot
Culture	Do not preserve the failed culture; establish the new culture explicitly from day one

The failure to separate — keeping everything from the corpse including the features that caused the failure — is the most common revival error.

Step 5: Signal the revival clearly — distinguish the new soul from the old corpse

The market, customers, and talent must understand that the new initiative is meaningfully different from what failed:

• Name the new initiative separately from the old entity (or if using the old brand, visibly relaunch it)
• Communicate what specifically has changed — the leadership, the product direction, the business model, the market positioning
• Use the residual credibility of what was preserved to accelerate the new initiative's market entry
• Do not lean on the old entity's narrative; create the new soul's narrative explicitly

Rules

• The corpse must have specific, identified residual value — not just a low acquisition price. Acquiring a failed entity because it is cheap, without a clear theory of what residual value you are deploying, produces an expensive distraction.
• Map liabilities before committing. Outstanding litigation, regulatory investigations, customer disputes, and security vulnerabilities in legacy code are not visible in the asset's price. Conduct due diligence on the liabilities as thoroughly as on the value.
• Separate soul from body immediately. The longer you wait to make the separation decisions, the more the corpse's features contaminate the new initiative. Make separation decisions before or at the time of acquisition.
• Signal the new soul's distinctness clearly. A revival that looks too much like the original — same product approach, same market positioning, same team structure — invites the same failure mode. Make the differences legible.
• Do not pay for the corpse twice — in acquisition cost and in integration cost. If integration consumes the resources needed to build the new initiative, the revival fails for financial rather than strategic reasons.

Examples

Acqui-hire: talent and IP from failed startups: When a startup fails commercially but has built exceptional engineering capability or holds a relevant patent, acqui-hiring extracts the soul (talent and IP) while letting the corpse (the commercial product) be wound down. Google's acquisition of DeepMind (2014) was not an acqui-hire — DeepMind was healthy — but earlier Google acquisitions of startups like Slide, Meebo, and Scape Technologies followed the acqui-hire pattern: the commercial product was shut down, and the talent was redirected into Google's existing product lines. The corpse was the failed product; the soul was the engineering team.

Regulatory licence acquisition: Square (now Block) acquired Radius Bank in 2020 to obtain an Industrial Loan Company charter, enabling Square Financial Services to take deposits and make loans without the multi-year de novo bank application process. The corpse was a community bank with limited growth prospects and a small customer base. The soul — the federal banking licence — gave Square the regulatory standing to compete in financial services immediately. The community banking operations were maintained at minimum scale while Square's financial services products were built on the regulatory foundation.

Dormant brand revival: Polaroid's brand (recognised globally for instant photography) was dormant after the company's 2001 bankruptcy, but its brand equity — association with creativity, nostalgia, and the physical-photograph experience — remained valuable. Multiple companies have licensed the Polaroid brand to attach it to new instant camera and photo printer products. The brand's soul (recognition, nostalgia, creative association) survived the commercial failure; the new product companies borrowed the brand as the vehicle rather than building brand recognition for an unknown name in a crowded market.

Abandoned standard as platform: When Android needed a mobile operating system, Google used the Linux kernel — an established, battle-tested, widely-deployed open-source kernel — as the foundation rather than building a new OS kernel from scratch. Linux had been designed for different use cases (servers, desktops), but its stability, security model, hardware driver ecosystem, and developer familiarity made it a valuable corpse. Android's soul — the mobile interface, the app model, the Google services integration — was built on top. The Linux foundation accelerated Android's development by years and gave it immediate compatibility with hardware vendors who already supported Linux.

Common Mistakes

Acquiring the corpse without a theory of the soul: Buying a failed startup, dormant brand, or abandoned platform without a specific plan for what residual value you will deploy produces an expensive integration project with no strategic return. Identify the soul before acquiring the corpse.

Keeping the corpse's failure mode: The most common revival error is preserving the features of the failed entity that caused the failure — the same product approach, the same management decisions, the same market positioning — while changing only the ownership. The revival must be genuinely different from what failed.

Underestimating legacy liabilities: Outstanding litigation, regulatory violations, security vulnerabilities in deployed code, and reputation damage from past failures are not eliminated by acquisition. They transfer. Conduct due diligence on liabilities as rigorously as on residual value.

Paying for recognition that has degraded: Brand equity, platform installed base, and regulatory standing all degrade over time. A brand that was prominent five years ago and has been dormant may have lost the recognition that made it valuable. Validate the residual value's current state, not its historical peak.

Neglecting the separation decision: Taking everything from the corpse — including the team, the culture, the product, the customer commitments — creates an integration burden that consumes the resources needed to build the new initiative. Make explicit, early decisions about what to preserve and what to discard.