Increasing social and political pressures are making it harder for CEOs and companies to focus on what they do best.In developed economies, diversified companies suffer from a 13 per cent to 15 per cent discount on the stock market compared with single-segment competitors.
If the best management minds agree on anything, it is the importance of corporate focus. Management guru Peter Drucker repeatedly argued that deciding what not to do is as important as deciding what to do. The chief executive of Apple, Mr Tim Cook, once said that “we believe in the simple, not the complex. We believe in saying no to thousands of projects so that we can focus on the few”.
Mr Tom Peters, who recently announced his retirement from writing after decades searching for excellence, advised companies to “stick to their knitting”. At an executive breakfast on May 9 at the Ivy Club in Covent Garden by the Global Peter Drucker Forum and featuring management thinkers as well as former and current executives, the most popular answers to the question of what ails the corporate world were “lack of focus” or excessive complexity.