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Diversification

“Shoemaker, stick to your last!”

The old cliche is still sound advice. The less diverse a business, the more manageable it is. Simplicity makes for clarity. People can understand their own job and see its relationship to results and to the performance of the whole. Efforts will tend to be concentrated. Expectations can be defined, and results can easily be appraised and measured. The less complex a business is, the fewer things can go wrong. And the more complex a business is, the more difficult it is to figure out what went wrong and to take the right action. Complexity creates problems of communications. The more complex a business, the more layers of management, the more forms and procedures, the more meetings, and the more delays in making decisions.

There are only two ways in which diversity can be harmonized into unity. A business can be highly diversified and yet have fundamental unity if its businesses and technologies, its products and product lines, and its activities are embraced within the unity of a common market. And a business can be highly diversified and have fundamental unity if its businesses, its markets, its products and product lines, and its activities are held together in a common technology.

ACTION POINT: Examine your business. Is it focused or diffused? If diffused, develop a plan to bring unity out of the diversity using market or technology as the basis for unity.

Management: Tasks, Responsibilities, Practices

* Source: The Daily Drucker by Peter F. Drucker

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