The case for nonspecialized diversification

Professor Milton Leontiades teasingly reminds us of Thomas Huxley's quip about tragedy in science being the slaying of a beautiful hypothesis by an ugly fact. One of the favorite beautiful hypotheses of business and economics is that diversification—especially unrelated diversification—is bad. Specialization, on the other hand, is supposed to be good. For a list of arguments that could shake your blind adherence to this theory, see box, “Six Myths About Diversification” (Page 29). Professor Leontiades makes a strong case for nonspecialized diversification. If the thought of maneuvering your firm away from its core activity sounds like heresy, read on. He even provides you with guidelines for committing diversification heresy the tight way. Didn't we learn in the 70s and 80s that it was disastrous to stray from your core business? Here's the contrarian argument from Myth Management: An Examination of Corporate Diversification as Fact and Theory.