When most people think of Amazon, they picture books, electronics, or Prime Video. But in 1994, Amazon started as a simple online bookstore. What made the company unstoppable was not selling more books; it was the strategic decision to expand into new products, services, and markets. By branching into electronics, cloud computing with AWS, and streaming, Amazon created multiple revenue streams that could withstand market shifts and fuel long-term growth. The lesson is clear: growth is not just about doing more. It is about doing different things strategically.
What Is Diversification?
Diversification means building multiple streams of opportunity so your business is not overly reliant on a single product, service, or market. It allows your business to thrive even when trends shift or unexpected challenges arise.
Diversification can include adding new products or services that complement your core offering, reaching new customer segments you have not served before, or exploring new industries or markets where your skills or brand can add value. The key idea is to avoid putting all your eggs in one basket.
Why Diversification Matters
Relying on just one product, service, or market is risky. Markets change, competitors enter, and trends shift faster than we often expect. Diversification helps your business reduce risk by not depending on a single revenue source. It drives growth by attracting new customers and builds resilience so your business can pivot when circumstances change.
Consider Blockbuster. It was once the leader in DVD rentals, but its success relied almost entirely on one product. When streaming transformed the entertainment industry, Blockbuster could not adapt fast enough. The result was a rapid decline and eventual closure. Their story reminds us that relying on a single revenue stream can be catastrophic.
Create Your Own Mutual Fund
Think of your business like an investment portfolio. If all your revenue comes from a single product, your business is vulnerable to changes in the market, similar to Blockbuster. If your offerings are spread across multiple products, services, or markets, one slowdown does not derail your business. This approach is similar to a mutual fund.
For example, a bakery that only sells bread is exposed if demand drops. By adding pastries, coffee, or delivery services, the bakery creates multiple revenue streams. If bread sales dip, other offerings keep the business thriving. This approach protects your company while opening the door to new opportunities.
How to Apply Diversification in Your Business
You do not have to overcomplicate diversification. Start by leveraging your strengths and building on what you already do well. Listen to your customers to identify complementary products or services they need. Pilot new offerings on a small scale before fully committing. Collaborate strategically to enter new markets faster and with less risk. Last but not least, measure results to ensure your new offerings add value. These steps help you diversify thoughtfully, protect your business, and create multiple paths for sustainable growth.
Key Takeaway
Diversification is not about abandoning your core business; it is about strengthening it. Each new product, service, or market you explore spreads risk and builds resilience. Amazon shows what is possible when diversification is done thoughtfully, while Blockbuster demonstrates the dangers of relying on a single revenue stream. The choice is clear. Diversify wisely to grow, adapt, and thrive.
See you tomorrow at 7:00 PM EST to explore Growth Strategy #6: Customer Retention.
