Iain Jenkins Jenkins Electric Co.
Charlotte, North Carolina
Marketing & Industry Awareness Committee Member
Recessions provide a fertile environment for learning about the importance of business diversity. As an EASA business manager for the last ten years, I’ve done my fair share of learning. The following are a few quick impressions of what diversity has meant in our company.
Effective diversification involves finding ways to apply your company’s existing assets, particularly your employees’ experience and skill-sets, to new markets. These “knowledge” assets take time to build, are hard to duplicate, and are much more versatile than a purpose-built machine or building. New markets include new industries, new customer types (utility, military, etc.), new geographical regions, and fulfilling different needs for the customers that you already serve.
Diversifying provides a key advantage over adding entirely new business. You already understand how to manage your assets and thus can continue to manage and provide administrative support for them. Furthermore, you see the value in those assets (you likely represent one of them yourself) and can understand better than others how they might be profitably applied to new activities.
Example: In the 1950s we combined our motor winders’ skills at making coils with our engineers’ knowledge of transformer design to provide transformer rewind services. In addition, we began manufacturing standard replacement transformers. While the new transformer customers were in similar industries to those we served with our motor repair service, they represented a much broader geographical region.
Each time you diversify you tend to add assets that might breed further diversification. It is likely that you will add a new piece of equipment or learn a new skill. In this way you are building your company’s assets to take advantage of future opportunities.
Example: In the 1960s we combined our understanding of motor operation and testing with our experience designing and winding testing transformers to begin selling motor test systems. Thirty years later we decided to add report generation to our test systems and an engineer learned to write test documentation software. We now employ six engineers developing custom test and measurement systems for customers. In some cases they are the same customers we serve in the repair shop. However, most of this new work deals with corporate engineers in industries we did not serve.
Diversity takes advantage of opportunities as much as it creates them. When I look back at our company’s history of diversification, I see more opportunism than long-term planning. Having the mindset that we will find new ways to use our equipment, skills and knowledge to serve customers has allowed us to see new opportunities. Getting into replacement transformer winding was a response to fill time during slow motor repair periods rather than managerial strategizing.
Similarly, becoming a test and measurement system integrator was a response to a request for documentation in our motor test systems. In both instances we were presented with opportunities we might have turned down had we defined our- selves by our existing products and services. My hope is that we can continue to have the good fortune to be presented with opportunities that allow us to use the assets we already have to serve new customers.
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