Portfolio Effect
Business portfolios benefit from the same mathematics.
As long as species (or businesses) aren't perfectly correlated, adding diversity reduces volatility.
The simplest stability mechanism is pure statistics. If each species' abundance fluctuates randomly and independently, the total biomass fluctuates less than any individual population. Species A might have a bad year while Species B has a good year - when added together, the bad and good years partially cancel out. This is identical mathematics to portfolio theory in finance: when asset returns are imperfectly correlated, portfolio variance decreases as the number of components increases. At Cedar Creek, plots with 16 species varied 15% year-to-year while monoculture plots varied 60%.
Business Application of Portfolio Effect
Business portfolios benefit from the same mathematics. When business units have imperfect correlation - responding differently to economic conditions - the aggregate organization is more stable than any individual unit. This is why Berkshire Hathaway's diverse holdings outperform single-industry competitors in volatility-adjusted returns.
Discovery
Harry Markowitz (1952)
Won Nobel Prize in Economics for modern portfolio theory demonstrating that diversification reduces risk through imperfect correlation