2 Questions to Ask before Diversifying
Believe it or not, some innovations are too innovative. Before you pursue the next big thing, ask these two questions to determine whether your core business will embrace or reject the new product or service:
1. Does the new innovation conflict with your fundamental business model? If so, stop. Undermining your business model for the sake of a new innovation wastes money and valuable management time.
2. Is the new innovation closely related to the five dimensions of diversification? These dimensions are: customer, distribution channel, product/service, geography, and competency. If the new product or service is closely related to many or most of these dimensions, then pursuing it will be less risky.
Today's Management Tip was adapted from "Is This Innovation Too Disruptive for My Firm?" by John Sviokla.
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