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But it’s important to distinguish between diversification that maintains focus and diversification that is defocusing. As noted before, successful go-it-alone businesses are good at inexpensively testing new offerings and rapidly bringing them to market. These offerings are part of a laserlike strategy: They enhance the core business, they rely on the same repeatable functions, and they require very little extra infrastructure. In essence, they are part of the same basic focus.

One simple test for distinguishing between valuable diversification and diversification that diminishes focus is the amount of new infrastructure required for a new offering. By and large, if no new infrastructure is required, then you are enhancing your business and maintaining your focus. If new infrastructure is required, you should think seriously about whether this new initiative will quickly lead to weaker business by increasing complexity.

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GO IT ALONE! Copyright 2004 by Bruce Judson. Reprinted by permission of HarperCollins Publishers. All rights reserved.