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One of the most challenging decisions a company can confront is whether to diversify. The rewards and risks are extraordinary. Success stories such as General Electric, Disney, and 3M abound, but so do stories of failure--consider Quaker Oats'' entry into the fruit juice business with Snapple. There has been much talk about the importance of strategic focus for companies in recent years, so much so that diversification as a corporate strategy has gone out of vogue. In this article, London Business School Professor Costas Markides argues that companies may be overlooking significant growth opportunities by abandoning diversification moves. In order for diversification to work, though, he proposes that companies consider a number of essential questions before they leap into new business: What business am I in? Do I have all of the critical success factors? Can I break up my core competencies? The answers to these and other questions may make the difference between success and failure in the new business. Much has been written about "focusing on core competencies," while diversification has been largely ignored. And yet, diversification can be a powerful way to grow a business.