This month, LinkedIn members have been discussing diversification, and whether the old adages of ‘sticking to your knitting’ or focusing on ‘core competencies’ provide the best advice for a modern organisation.
One member said it was a matter of where you are in the development phase within the business. At the beginning, focusing on the core is vital; after that, diversification is essential to grow and spread risk.
Another argued that it was an essential way for companies to evolve, drawing on the case study of IBM, which started out making typewriters. He said: “Many companies find themselves in dying companies and industries. They face stark choices, but often a pathway to survival is to refocus the business.”
A third suggested that many companies successfully diversify, and their only core competency is making money. He added: “Certainly some companies may and do get diversification wrong: if they are into empire building, do not have a disciplined approach to reviewing various parts of the business, sacrifice value for growth, pay too much for acquisitions, and are slow to divest persistent non-performers. These weaknesses are not inherent in diversification; they may simply be human character weaknesses or are found in management teams that do not have a systematic strategic management process.”
Other subjects under discussion this month include what members have learned from the process of linking technology to business strategy, why power is considered a dirty word and what the concept of trust means in the workplace. Why not join the discussion?