Okay...I’m going to date myself a little, but when I was a kid, it was the heyday of America’s business boom. Conglomerates were conglomerating and Madison Avenue advertisers were the stuff that today’s show, “Mad Men,” is patterned after. ITT, Litton Industries, Gulf & Western--blue-chip alphabet soup names were merging and acquiring a basket of unrelated companies with the goals of growth, increasing share holder value, and diversifying corporate risk. In many cases, conglomerates were a management nightmare. The characteristics of being big and running unrelated companies were the ruin of some conglomerates and the sell offs of others.

Today, we are seeing a trend in big companies that are primarily focused on a particular industry, splitting themselves apart yet somehow being tied to each other. They recognize that being a more focused entity, leaves opportunity for growth, innovation and increased value--in other words, the sum of the parts are potentially greater than the sum of the whole. Of recent note are Motorola, Kraft Foods, and Sara Lee.

So, is it a fair question to ask which type of corporate structuring is better? Is big and diversified better than being big and allied? Frankly, I like the latter. I like carving out a niche in a specialty field and being good at what you do. I don’t like resting on laurels and being complacent, that’s a recipe for being pounced on by your competition. And as for diversifying corporate risk by being a conglomerate, in my view it is mitigated by being a specialist. For it affords you great knowledge of your business and your customer and with that expertise comes the ability to see opportunity for growth--be it through innovation and or expanding synergistically to your core business. Of course, if Warren Buffet, the consummate CEO of today’s stellar conglomerate, Berkshire Hathaway, were reading this blog, he just might be laughing at me all the way to the bank...but, may be not.