Learn how to analyze the various types of diversification and choose the one that's right for your company.
- As we have discussed so far, … at any point in time every company can potentially pursue … growth by diversifying along a number of directions. … It can create new offerings for existing customers, … or it can target its current offerings … at new customer segments, … or it can engage in radical diversification … by leveraging some core capabilities … to create entirely new products and services … for new customer segments. … No company should attempt to diversify … along multiple pathways simultaneously. … Doing so would result in the company taking on … too much complexity at one time. … The risk is high that this would result … in dilution of resources, efforts, and focus … along all of the new directions … and lead to all around failure. … I propose three assessment screens … to evaluate the potential options for new growth. … First, how attractive is each growth option … in terms of size, growth rate, … and opportunities for differentiation? … When Coke and Pepsi were searching for growth …
- Recognize the problems a company may encounter if it does not achieve growth.
- Identify high-potential opportunities for growth.
- Identify new customers for existing products.
- Use assessment screens to choose the best opportunity.
- Evaluate partnerships and acquisitions as mechanisms to fuel growth.
- Break down the components of an effective and growth-minded leadership team.