Viewpoint: Success through Focus or Diversification?

Diversification must be constrained by strategic focus.

In my last post, I advocated for diversifying your work portfolio while working in the margin to mitigate risk. A recent article from Businessweek, however, offers an important counterpoint - the need to focus.

Apple's Startup Culture (Merchant, June 2010) describes how Steve Jobs resurrected Apple and drove the company's market cap to #1, passing competitor Microsoft, over a 10-year period. The key, according to the author, was the creation of a startup mentality. Singular focus is cited as the first critical element of that culture.

"He refocused the strategy to be about one thing. That meant he killed off even good things...he made the decision to shut down big portions of revenue-generating businesses...because they didn't fit with his vision for the company. Some people thought we was crazy. But he was being extremely clear, and in doing so, he "MurderBoarded"-eliminated many options to get on cohesive strategy-his way to greatness."

To achieve success, leaders must limit diversification. While diversification protects against risk, spreading yourself too thin across too many sectors will ultimately undermine all your efforts. Leaders must assume the risk inherent in specialization to achieve greatness.

So, how do you find a balance between focus and diversification? You must assess risk, rewards, and resources to find the answer.

(See: http://www.businessweek.com/innovate/content/jun2010/id20100610_525759.htm?link_position=link2)

Practicum: The Role of Chance in Success

What role does fate have in success? John C. Maxwell only touches on the subject in The 21 Irrefutable Laws of Leadership, but it would seem that fate, chance, or providence (take your pick) is a significant part of the leadership success equation. There are efforts you put a lot of time into that just fizzle, but then serendipitously a chance encounter results in a big win.

There was a recent proposal that I worked on which required a lot of effort. We (seemingly) did everything right. Our proposal beat the competition, but then the bid was cut. Nobody won. Around the same time, a cold call (actually it was an email) to the right contact and I come up with a success. Why did one thing work while the other thing failed? It reminds me of verse.

"Sow your seed in the morning and at evening let not your hands be idle for you do not know which will succeed, whether this or that, or whether both will do equally well. "

- Ecclesiastes 11:6

Chance plays a bigger role in the margins where more risk is involved. Within the safer, well demarcated zones of the organization it is much easier to control success factors - to know the risks and mitigate them. In the margin, chance events are magnified for good or ill. Perhaps the best strategy is that provided in the verse - keep a diversified portfolio.

Viewpoint: White Space Information Brokers

A 2007 article from McKinsey Quarterly highlights the role of white space social networks in corporate operations. Of particular importance is the broker who strategically connects business units across organizational silos.

"Brokers who serve as bridges across a number of subgroups within networks are often quite influential. 'Bridging' relationships uniquely position brokers to knit together an entire network and often make these interactions the most efficient means of gathering and disseminating information in a high-touch way."

Leaders who manage in the margins often fill this type of information and relationship brokerage role. In my business development capacity targeting a new region, I often find myself linking business units back in the US. For example, a recent response to a client request for information required me bring together information from our IT, Environmental Services, and Training divisions. For another effort, I'm combining Training and Logistics capabilities.

Successful brokerage activities require not only strong communication and team building skill sets, they require tenure. Becoming an organizational information broker doesn't happen overnight. Longevity provides opportunities to develop diverse and lasting connections which can be used for new initiatives.

(read more here: http://www.mckinseyquarterly.com/The_role_of_networks_in_organizational_change_1989)

Practicum: Are "Hunter" Skills Hardwired?

We recently acquired a kitten. He likes play and pounce, particularly at night. I did some research and his nocturnal hyper-activity coincides with his ancestor's need to hunt for food. Indeed, his "play" basically revolves around sneaking, pouncing, clawing, and biting various items. At 2 months, his hunter instincts are hardwired in.

This is not unlike what we can observe in the workplace. While many managers are comfortable within the sheltered walls of organizational hierarchies, budget lines, and positional power, some exhibit hunter instincts - constantly hungry for the next challenge. Working together on a project operating in the margin is often a frustrating experience for the hunter. The non-hunter answer to every suggestion begins with "no".

However, kids are natural margin managers. They are constantly exploring, creating, and testing the boundaries of what is possible. We, like our new kitten, are hardwired for hunting. As we grow up, we are rewarded for conformity, standardization, and institutional compliance. These are all needed to operate effectively as a group, but organizations and individuals should never lose the ability to work creatively outside the lines.

Practicum: Value Hard to Quantify

Sometimes, margin managers struggle to quantify their contributions because they fall outside normal business valuations. For example, generating $1M in new business inside a traditional pipeline with established clients will not be as challenging as bringing in $1M in new business when you are pioneering a new market. If you're evaluated on how much you bring in - bottom line - then you have an uphill road to climb.

This happened to me last week during my annual review. I've been with the same company for 10 years and they've treated me well - very well. However, this last review was my weakest ever. My international move (US to Belgium) took a bite out of my performance, but the evaluation process didn't make tolerances for the adjustment. How do you quantify "adjusting to a new culture"? What value do you put on "learning an entirely new client base"?

Given the long cycle in government contracting (my industry), the results will follow in time. My new skills, capabilities, and knowledge will begin to pay dividends over this next year and beyond as I make it over the most difficult part of the learning curve. As a manager operating in the margins of the company, this is part of the risk I take. Increased risk leading to increased reward...at least eventually.