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Masterpieces are only lucky attempts.George Sand

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Diversification: apply with care!

Diversification: apply with care!

Having trouble reaching your growth objectives? Diversify, some suggest. However, take care in choosing which new businesses to develop!


Many companies whose growth is on hold see diversification as a way to solve their problems. A few legendary examples, such as the diversification of Nokia from rubber boots to cell phones, and the chain of successes of Virgin and General Electric, tend to create the impression that diversification is an effective way to create growth and generate additional profits.

In practice, however, there are more failures than successes. A huge number of attempted diversifications end in frustrated hopes, significant losses, and negative repercussions on the rest of the business. That is why the publications we have selected encourage managers to look very carefully before they make the leap to develop new businesses:

– Start by ensuring that your core business is in sufficiently solid shape before you attempt diversification.

– Search for diversification opportunities methodically in order to make sure you identify the most promising ideas.

– Use a very rigorous selection process in order to retain only ideas that have every chance of succeeding.

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