The takeaway: Focus on what your business does best and do not hesitate to abandon activities that drain resources without yielding commensurate benefits.
Most of the world’s largest companies have created their success on one or very few well-calculated big bets. This is also the case for Berkshire Hathaway, Warren Buffet’s investment vehicle with a current market cap of over $700 billion. A few months ago, we turned away a famous several decades-old Filipino family business because the owners wanted to diversify just for the sake of diversifying and because they got bored with the highly profitable core business. That is not the right reason to diversify.Despite Lego’s remarkable turnaround, the company continues to assess its operating and business model efficiencies.