Recently I have been reading the book written by Shigetaka Komori, former CEO of Fujifilm, One of Japan’s biggest global companies. His biggest achievement lies in leading Fuji successfully through the digital revolution. It was also that time when their biggest rival, Kodak, filed for bankruptcy.

Here, I would like to focus on one of his philosophies on the topic of SUCCESS. For him, Fuji became successful because they were able to provide what is currently needed as well as invest in long-term business. Before the digital revolution, they can already see where film industry is going. While maintaining their film business, they started investing in their R&D to develop raw materials for LCD screen, which we all know, became very successful. They also invested in Pharmaceutical business and now, the medicine they developed decades ago is being considered a cure for Covid19. Aside from those businesses, they also have a stake in cosmetics. One word explains their strategy of mixing a wide variety of investments, diversification.

Diversification is a strategy used by many big companies. It can also be adopted by SMEs. So, how can SMEs diversify? Before that, let me explain what I named the title as such. In my years of experience help SMEs, I noticed that many of them focus on one specific business and spend the rest of their lives in that business. I see nothing wrong with that. However, that strategy only makes them survive. Again, nothing wrong with that if that is their preference, but, what if we can turn survival into success, isn’t that great?

Going back to the question of how SMEs can diversify.

One way is to target a different market segment. For example, if you are selling office clothes for females, you can add office clothes or accessories for men. This way you add something to your business. For bigger companies with more resources, they can be present in different price segments. I know a company who sells furniture and they have brands for different segments. They capture the market from low to high.

Another way is to invest in a different line of business that is unrelated to what you are currently doing, just like Fuji. They have investments in different industries and products. It is like betting on different horses and averaging your profit. In other words, the profit of one business can cover for the loss of the other businesses. If Fuji did not diversify, they would have gone the same direction as Kodak.

A business can move from survival mode to success by diversification by investing its resources in different industries or different market segments. Let me leave you with this thought. How can you apply this to your business?