Among a long list of words I’d like to ban, somewhere in the middle lies the word “diversify”.

It isn’t really a bad word, per se; it’s just so often used incorrectly that I’ve grown to cringe when I hear it.

Investors diversify their portfolios, but they don’t do it by buying every stock that they hear about on TV or read about on the web. They do it by selecting a few options that are strategically aligned with the rest of their portfolio – items that offset a potential weakness in their assets, or items that reflect a well-rounded approach to their financial goals. To buy and sell stocks based on what’s “hot” is not diversifying, it’s just trading.

In the A/E world, we talk about diversifying our portfolios in very much the same way. Unfortunately, for many firms the word is completely misused, and is more akin to just a scattered approach to marketing. So, I’ve compiled a list of the 5 differences between diversifying and pursuing every opportunity that comes through the inbox.

1. Diversifying Requires a Plan
If your firm is truly diversifying, it must do so in both the Business Plan and the Marketing Plan. In those plans, there should be specific markets to focus on, not just an overall revenue target. If your firm doesn’t have one or both of these plans, there is a good chance it isn’t diversifying.

2. Diversifying Has Nothing to Do with Chasing the Money
Chasing the next big public budget that’s about to be announced is also not diversifying. It would be silly to choose to focus on a new client-type without awareness of what’s going on in the market, but chasing budgets does nothing for your firm except keep you in constant flux and burn your marketing department out.

3. Diversifying Starts from Within
Diversifying is a decision that starts from within the firm and takes into account expertise, resources and your plan. Starting internally keeps your marketing messages honest, accurate and on-brand as you focus on new endeavors. Choosing to diversify based solely on what’s going on outside of your walls is reactive, scattered marketing and never allows you to develop an expert presence with any client type.

4.  Diversifying Is Not a Business Development Activity
Yep, you read correctly. Diversifying is a function of marketing, operations, finance – the entire organization – and it has very little to do with Business Development until the end of the cycle. A good BD professional can get in a lot of doors and help win contracts with new clients, but without the professional infrastructure and expertise in place, that win is unsustainable.

5.  Diversifying Takes Commitment and Time
For an industry with such a long project life-cycle, often our marketing expectations are flat out unrealistic. Many firms begin with a plan and abandon it within six months because they haven’t seen enough new leads. Strategic activities in professional services firms can take years. Diversifying means considering options like mergers & acquisition – things that aren’t overnight decisions!

True diversification is an investment, and it can be a risky one that requires an immense amount of change in an A/E firm. If you find your firm discussing diversifying, but realize that you’re not really putting much on the line to do it, there is a very good chance you’re just pursuing work with a low hit-rate.