"Today's digital giants are changing the definition of a diversified portfolio. As industrial giants like GE and Honeywell-once models of diversified portfolios-split up, consider how companies like Amazon, Apple, and Alphabet operate across many unrelated sectors, like e-commerce, cloud computing, entertainment, financial services, smart homes, logistics, and healthcare. As traditional diversification theories based on economies of scale and scope become less relevant in the digital age, the growth of AI is also ushering in new opportunities to create value with shared data, expertise, and network effects, and a new imperative for business leaders to reshape their strategies."
"Bill Achtmeyer is Chairman and Managing Partner of Acropolis Advisors. He was the founder, former Chairman, and CEO of Parthenon, now EY-Parthenon."
Digital giants are redefining portfolio diversification by operating across many unrelated sectors such as e-commerce, cloud computing, entertainment, financial services, smart homes, logistics, and healthcare. Traditional diversification theories rooted in economies of scale and scope are becoming less relevant in the digital era. The growth of AI enables new value creation through shared data, pooled expertise, and stronger network effects across distinct business lines. Companies that combine multiple platform capabilities can extract synergies that differ from industrial conglomerates. Business leaders face an imperative to reshape strategies to exploit cross-domain data, AI, and network-driven advantages.
Read at Harvard Business Review
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