Paradox of Enrichment
Adding more products, divisions, or initiatives doesn't automatically make a company more stable.
Adding resources or components doesn't automatically create stability. The architecture of diversity matters - how components interact, which feedback loops exist.
Diversity doesn't always stabilize. Under specific conditions, adding species or resources can destabilize ecosystems. In simple predator-prey systems, adding nutrients increases prey productivity, which should support more predators and stabilize the system. Instead, the opposite occurs - higher productivity amplifies predator-prey oscillations, often to the point of extinction. The architecture of diversity matters: how components interact, which feedback loops exist, whether the system has stabilizing or destabilizing connections. Diversity stabilizes when components are complementary and asynchronous; diversity destabilizes when components compete for the same resources or create tightly coupled positive feedback loops.
Business Application of Paradox of Enrichment
Adding more products, divisions, or initiatives doesn't automatically make a company more stable. If additions create destabilizing feedback loops - resource competition, cannibalization, management overload - they increase fragility. GE's conglomerate structure added complexity without adding resilience because businesses were unrelated with no complementarity. A portfolio of identical stocks is not stable even if it contains 100 stocks - they all crash together.