Diversifying in a downturn
From LBS Professor Freek Vermeulen comes piece of counter-intuitive (and therefore interesting – Bateson) advice: in a downturn a company should diversify rather than focus exclusively on the core product. The rationale is that, in a downturn, no single pocket of revenue is big enough to sustain the firm. This kind of thinking extents to the firm’s clients too:
…firms should not be focused on winning any big accounts, major new products or customers; they should aim for many smaller ones. They are relatively cheap to access and often the firm will already have knowledge about them; they shunned them in the past considering them too small to advance at the time.The only real downside of Vermeulens’ idea is that such diversification and focus on more and smaller accounts will exhaust the managerial and “attentional” resources of the firm, in a period when it needs them the most in order to perfect its operations.
