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)