When Tony was resisting giving Carmine and Johnny Sack a piece of his HUD deal, New York put a halt to the Esplanade project until this conflict was resolved. Because Tony was diversified in his businesses and Johnny Sack was not, Tony was able to wait out Carmine and Johnny until they were ready to negotiate the lower percentage cut that he thought was appropriate. His other operations continued to bring in money and give him a cushion that Carmine and Johnny lacked. In many ways, this is similar to some organizations that are diversified in several overseas markets, the theory being that one country’s sales will compensate for another country’s devalued currency.
From a strategic standpoint, some executives don’t like diversifying revenue streams when one stream has been flowing swiftly and steadily for a sustained period of time. In the past, this may have made sense. Today, though, there’s so much volatility that diversified revenue seems critical for most operations. Therefore, you should do the following.
Explore diversification options. Of course, this is easier said than done, but every leader owes it to his organization to at least investigate alternative revenue possibilities. This is a long-term goal, but smart leaders like Tony realize that they make themselves vulnerable when they lock into one revenue source. As wonderful as that source has been, the odds are that it won’t continue to be wonderful indefinitely.