Why Diversification is the Way to Think About Growing Your Business in This Digital Age
In this fast-moving digital age, where innovation is driven by technology, diversification is the way to think about growing your business:
- Artificial intelligence (AI) and machine learning are automating more and more jobs and processes, so it’s unrealistic to believe that your business provides ongoing security of income, or that a single source of income, can be taken for granted.
- Fortunately, having your own business, or being a long-serving CEO or Senior Executive, allows you to look for additional sources of income to add to the mix that maintains or increases your income.
- According to a recent article by McKinsey,“It’s easy to become numb to the onslaught of new technologies hitting the market.
- But the magnitude of these changes is also opening the door to new innovations, businesses, and business models.”
- Think about it in terms of your investment strategy. Placing all your funds into a single asset is a high-risk strategy. You should instead diversify your portfolio to spread the risk around.
Diversification is also the way to think about your Business.
According to the HBR:
“Whether or not to diversify is one of the most challenging decisions a company can confront. The potential rewards and risks can be extraordinary”.
- But, everywhere we look, new technologies are forcing companies to redefine what it is they have to offer.
- Diversification will inevitably involve uncertainty; All major business decisions do. Your path toward diversification will, to some extent, be decided by how much of a risk you are willing to take – and how much money you have available to take it.
- So, don’t let change just happen to you. Instead, plan and create your change proactively, on your own terms.
If your current Strategic Plan does not already include a diversity strategy, I recommend you update it ASAP to include one. It could add a whole new dimension to your future business growth strategy and increase your rate of growth.
The key questions you need to ask yourself before you start diversifying your business.
In light of the impact of increasing automation, and since the private sector is notoriously unpredictable at best, it can pay to pursue new opportunities – no matter how confident you may be in your existing products & services.
The cost of ignoring this can be severe. For example, the home entertainment industry was littered with companies that failed to adapt to a changing market.
Remember Blockbuster, where we used to go to get our videos to watch at home on our TV?
As the world went digital, Blockbuster and other video-hire companies failed to claim their place in the new digital world. This transition nearly claimed the life of Netflix. Until they realised that streaming – not DVD rentals, was the future of home entertainment.
The scope and breadth of industries, and the diversification strategies they choose to pursue can vary dramatically from business to business.
So, the 3 key questions you need to ask yourself before Diversifying Your Business will be:
- What can our company do better than any of its competitors in your current markets?
- The next question would then be “Can those skills also give us a competitive edge in other markets?
- What can our company learn by diversifying, and are we sufficiently organized to learn it?
Like good chess players, forward-thinking managers will think two or three moves ahead
As we read above, ““Whether or not to diversify is one of the most challenging decisions a company can confront. The potential rewards and risks can be extraordinary”.
For many reasons, the scope and breadth of industries, and the diversification strategies businesses choose to pursue can vary dramatically from business to business.
Many Companies will retain an experienced business coach or consultant to oversee the diversification process. Your external expert should have extensive experience and skills (Ideally at “C-Suite” level). Experience of working with a Private Equity company to enhance their portfolio would be an added bonus.
Conclusion
If you would like more information about why Diversification is the Way to Think About Growing Your Business in 2024, how to integrate it into your Strategic Plan, and how I can work with you to create and implement your diversification strategy, you can request a Free 20-30 minute discovery call with me by clicking on the link below:
Click Here to Book Your Free Discovery Call
You will receive an email confirmation and a reminder from my booking system prior to the meeting.
Or alternatively, message me in LinkedIn, or just send me a text message with heading “Diversification”, and your first name, and I will call you back within 24 hours to arrange a time for an initial chat.
My mobile number in Australia is 0418 277 137.
My business email address is: [email protected]
I look forward to talking with you.
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