Are you hungry to diversify and take your business to the next level? Here are 7 points you can’t ignore.
Are you hungry to diversify and take your business to the next level? Strategic Factors management consultant Graham Kenny offers 7 points you can’t ignore:
Diversifying a business away from its core has its critics. Some say it’s madness, others say it’s the way to go. I’ve conducted plenty of research on successful diversified firms, which has been published in my book Diversification Blueprint.
As a result I’ve reached a number of conclusions on why managers come to negative views on the issue as, well as how successful diversifiers achieve their results.
My research identified seven characteristics of successful diversifiers, which I suggest you follow in your quest to make diversification a winner:
For more essential advice from Kenny and numerous business experts, keep an eye out for this year’s MPA Business Strategy supplement - on desks with issue 14.7 of MPA in late June.
Diversifying a business away from its core has its critics. Some say it’s madness, others say it’s the way to go. I’ve conducted plenty of research on successful diversified firms, which has been published in my book Diversification Blueprint.
As a result I’ve reached a number of conclusions on why managers come to negative views on the issue as, well as how successful diversifiers achieve their results.
My research identified seven characteristics of successful diversifiers, which I suggest you follow in your quest to make diversification a winner:
- Establish a supportive corporate centre: The emphasis here is on ‘supportive’. Avoid a head office that interferes in divisional management trying to run the division itself.
- Select capable division managers: Managers who know the industries of their divisions.
- Install appropriate performance measures: In Wesfarmers, for instance, a central focus of its corporate measurement is return on equity. All division measures are linked to this.
- Set effective incentives: This means motivate your staff through financial or non-financial means. In large companies this might entail some hefty bonuses – but bonuses are not a must.
- Align the corporate culture: As a CEO of a major diversifier put it to me: getting the culture right is essential, it’s difficult to establish and easy to destroy.
- Secure competitive advantage: By this I mean each division needs to focus on gaining an edge in its territory.
- Buy well and integrate: This applies if you intend to diversify via acquisition. In short, don’t pay too much and after acquisition work hard on having new staff feel part of the total entity.
For more essential advice from Kenny and numerous business experts, keep an eye out for this year’s MPA Business Strategy supplement - on desks with issue 14.7 of MPA in late June.
