THE DAILY DRUCKER

Diversification
“Shoemaker, stick to your last!”

The old cliché is still sound advice. The less diverse 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 business is, the fewer things can go wrong. And the more complex business is, the more difficult it is to figure out what went wrong and to take the right remedial action. Complexity creates problems of communications. The more complex 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 harmonised into unity. 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 common market. And 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 common technology.

• Extracted from Peter Drucker’s book The Daily Drucker.

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