Corporations: The Litton Lesson

"Our method of management," says Litton Industries President Roy Ash, "is a way to solve problems as well as to pursue opportunities." When it comes to pursuing opportunities, at least, Litton's past performance certainly bears Ash out. In the 14 years since it was founded by Chairman Charles ("Tex") Thornton and Ash, the Los Angeles-based conglomerate has ballooned into a $1.7 billion-a-year giant by diversifying into everything from cash registers to shipyards.

The company's ability to solve problems is now getting a major test. Reason: Litton has suffered a reversal after 57 straight...