A place to put random occurrences in my life...

Saturday, June 27, 2009

Is it better to take a big bite from a small pie, or a small bite from a bigger pie?

fig.-5

Every once in a while, I find myself contemplating the idea of focus versus diversification... the question can be applied to large companies, nascent startups or even personal aspects of life, including family and friends.

In the case of family and friends, the question may be one of whether it's better to spend a lot of time with a few very close friends, deepening the bonds and relationships, while likely just having cursory relationships with other friends, or is it better to spread the wealth and have moderately deep relationships with a lot more friends. In a large company, a decision may be made to double down on an existing business and grow it, or to take a chance and use that same investment (time, energy, PR, money) in the pursuit of four or five other businesses. These questions are answered every day, but there are pros and cons to both approaches.

For the entrepreneur, perhaps more so than in my other examples, there is also the notion of risk/reward that has to play a role. Working at a larger organization, and getting paid a nice salary isn't likely to result in a big payout - but there's something to be said for a measure of stability - and the aforementioned nice salary. Going off an a completely new venture is sure to be more exciting, and can also be more rewarding at the end (with a ton of hard work and a bit of luck), but the most likely result is more experience - and experience is what you get when you didn't get what you wanted.

A more intricate question for the entrepreneur is whether to pursue one new venture wholeheartedly or to divide his time up and pursue a few somewhat related but diversified opportunities at the same time. Pursuing one idea gives you clarity of focus and can make the pie bigger at the end - assuming you've chosen which venture to pursue properly. Pursuing multiple fronts is likely to be more exciting and adventurous as there is always going to be something new, but it removes the focus - and any one success is likely going to result in a smaller piece of the pie as there would likely be more people involved.

No answers yet, but will definitely continue to ponder this for a bit...



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