CLAREMONT, CA—Diversification makes good business sense during COVID-19, provided that the rationale and focus for doing so is clear, according to The Society for the Advancement of Consulting® (SAC). With a clear focus, customers will get enhanced value from products and services, as your business avoids the panic mode that besets weaker competitors.
Get Ahead with a Diversified Customer and Supplier Base
“Manufacturers and distributors are finding out the hard way that having a diversified customer and supplier base is essential,” points out Lisa Anderson, president of Claremont, CA-based LMA Consulting Group, Inc. and manufacturing expert known for creating supply chain resiliency. “Starting on the customer side of the end-to-end supply chain, those clients with a diversified customer base have fared far better than those without one. Deliberately diversify from an industry, size, type of market (B2B, B2C), etc. For example, if you had e-commerce capabilities, your business has likely skyrocketed.”
“On the supply side,” Anderson adds, “suppliers that appeared reliable pre-coronavirus could rapidly shoot to the bottom of the list. On the other hand, those manufacturers that assessed risk and kept backup suppliers in motion, even at a higher overall cost, have successfully navigated supply challenges and have experienced fewer disruptions and stockouts. Diversify in a strategic way and you’ll better navigate disruptions and changing conditions.”
The Wisdom and Peril of Diversification
“Leaders are now faced with unprecedented challenges: leading their organization through a global pandemic.” says Dr. Maynard Brusman, a San Francisco Bay Area consulting psychologist and executive coach.
According to Dr. Brusman, “Moving into different business areas can increase your sales and revenue, but might stress your business more than the move is worth. Before you enter uncharted territories, determine if the downsides will outweigh your benefits or if any damage to your business won’t justify diversification.”
Dr. Brusman advises his executive coaching clients, “If customers want your new product or service, the requirements to fulfill those sales might strain your ability to operate. On the other hand, not diversifying may put your survival in peril.”
Leverage Existing Resources and Expertise
“We have been suggesting to clients that they leverage existing resources and expertise to create a new product, service, or to provide help to those who can benefit,” advises Kathleen McEntee, President of Kathleen McEntee and Associates, Ltd (KMA), a full-service marketing firm that provides companies with expert support in reaching their target markets with the right message, through the right media, for the greatest impact.
“One client developed an ‘Ask the Expert’ program,” she adds, “connecting internal experts with customers and colleagues to resolve technical questions and problems. We promoted it in social media, emails, video, and press release. We received trade press coverage, resolved complex questions, and have generated new business.”
“Another client provides expert witnesses to resolve disputes. They really are in the business of packaging people skills,” McEntee notes. “They recruit, vet, and position experts to shine their best. We helped them create a webinar series to help people assess their skills and talents as they consider the next step in their career. For now, this is offered at no charge, but who knows what’s next? Sometimes we overlook talents that are valuable. Leveraging value to create more value is certainly the American way.”
Diversification Enlightens Our Partnerships and Professionalism
“COVID-19 has created an unprecedented disruption to the global supply chains which highlights their weaknesses and the need for improvement,” according to Art Koch, president of Miami, FL-based supply chain strategy firm Arthur Koch Management Consulting.
“Now there’s the renewed enlightenment of diversification engulfing the world.
Let’s not squander this moment in history,” enthuses Koch. “Instead, use the energy as a catalyst to strengthen our supply chain professionalism and supplier partnerships with uncompromising diversification.”
Answer the “Can” and “Should” of Diversification
“Diversification needs to make sense from both a business capability viewpoint (can we do this?) and the customers’ point of view (should we do it”),”says Evan Bulmer, owner of Evan Bulmer Consulting, Australian-based expert in generating cash for business, and author of the book Numbers that Matter: Learning What to Measure to Achieve Financial Success in Your Business.
“Neither of these questions can be answered well if the business is in a fearful or panicked state of mind,” adds Bulmer. “The fear and panic of Covid-19 has shown us is that if the answer to both questions is, yes, change can be implemented very quickly.”
Diversification is Good, if it Puts Customers First
“Diversification is always a good idea. However, it needs to be strategically designed. It cannot be implemented overnight,” according to Diane L. Garcia of Lorraine Consulting, LLC, has over 13 years’ experience in operations and supply chain management and is an expert in helping clients improve on their unique business processes. Diane applies cutting edge supply chain optimization knowledge and implements best practices with manufacturing and distribution companies in North America.
“Start by considering your customers’ needs in conjunction with your supplier’s capabilities, and your own core competencies,” Garcia points out. “How could you expand your delivery options, products, customer offerings, or brands? What industries are you ignoring where you could add value? Are all your key sourced materials coming from the same region?”
“Next, prioritize a quick-win choice and move forward to gain momentum,” she notes. “Rinse and repeat. Just be sure diversification efforts continue to make sense, given your business strategy.”
Diversification is a Balancing Act
“The pandemic has shown that diversification is important,” says Praveen Puri, president of Puri Consulting LLC and Strategic Simplicity® expert who advises on IT and business simplification. “For example, if you source your supply chain from one geographical location, you’re vulnerable if they have a severe outbreak and have to lock down. However, too much diversification (in supply chain, products, services, markets) can dilute effectiveness and over-complicate your business. A light bulb, which diffuses in all directions, is much less powerful than a laser, which concentrates light.”
“The key is balance: diversify just enough to protect your business from situations you can’t control, while still being able to focus for quality,” advises Puri.
Intelligent diversification using PoDs
“Look along your value chain for PoDs (Points of Diversification),” advises Steven Hunt, an expert in global leadership growth at Steven Hunt & Associates. “PoDs are sub-processes and elements that can be easily modified. Identify which PoDs your customers want and need. Then pick one PoD and prioritize its execution. This is what the best companies did when Covid-19 hit.”
“A good example is professional service firms,” says Hunt. “The best have resisted jumping on the ‘Let’s-get-into-Zoom-Webinars’ bandwagon. That space is already crowded out by businesses and organizations that have built up the experience, technology, and process know-how, over years.”
“Instead, the best companies integrate a mix of technology,” he adds, “like Zoom meetings backed up with existing apps, or simply PDF and PowerPoint—to enhance customer experience. They focus on making it easier for customers to get what they want. This is intelligent diversification.”
Repackage Existing Offerings to a More Diverse Customer Base
“Diversification makes sense when it ties to your core marketing strategy,”
according to Linda Popky, president of Redwood Shores, CA-based strategic marketing firm Leverage2Market Associates, and author of the book Marketing Above the Noise: Achieve Strategic Advantage with Marketing That Matters. “Can you repackage existing products and services to be attractive to new markets and customers? Or, can you create new products and services that bring you increased share of wallet from your existing customers? Are there new or different applications for your offerings because of COVID-19 changes?”
“It’s important to remember that diversification efforts needs to be accompanied with appropriate marketing support,” she said. “Don’t presume new audiences have the same familiarity with your brand as your existing customers. You’ll need to educate these prospects as to why your offering is the preferred choice.”
Focus on The Diversification Goal
“Terms such as “diversification” or “digital transformation” are thrown around these days like seeds on a lawn,” says SAC Founder Alan Weiss, PhD. “They don’t all grow naturally.
“Diversification requires clarity if it’s to improve the business, and that’s the key: focus on the goal, not merely the task,” Weiss points out. “Create diversity among people, ideas, and approaches that improves the business and is not merely a distraction for the business in an attempt at ‘lip service.’ Remember, your employees and new ideas should mirror your prospective customers and their needs.”
Originally published at SAC, August 1, 2020