In finance, diversification means reducing the risk of a portfolio and maximizing its performance by investing in a variety of assets. Just as in finance, diversification is important in all other aspect of business like the types of products a company offers, its employees and geographic presence. What’s more interesting to me is that diversification seems just as beneficial in almost all aspects of our personal lives as it is in business. From something as simple as the type of food we eat to significant things like our friendships and careers, could this one simple rule “diversification” help us maximize our potential?
An example that comes to mind is our personal and professional relationships. Generally speaking, the bigger a person’s social network the better because it enables them to be more resourceful. The most successful people I have come across in life though don’t just have a large network. They have a diverse network. They are just as comfortable befriending a CEO as the doorman working in the building of the CEO for example. This diversity helps them be even more resourceful and tap into unique sources of information that other don’t.
Similar to “who you know” it’s interesting to think about “what you know” in the context of diversification. Many of us spend a lifetime becoming specialists in our chosen field of work and education. The most successful people though invest time in learning not only their chosen fields but also many other disciplines. They may switch jobs to an area they know nothing about or have different hobbies outside of work or read books completely unrelated to their discipline. This diversity not only makes them more interesting, it gives them unique insights into new and different ways of solving problems.
The list could go on about all the ways in which diversification benefits us and it’s hard for me to think of examples of when diversification is a bad thing. One example might be close personal relationships like your marital partner. I can’t imagine the response one would get on proposing the benefits of diversification to the relationship. Even then, I think it’s important to diversify your dating pool before settling down, so when and if you do decide to choose a partner, you know that it’s the right choice for you.