Small and mid-sized businesses reliant on DoD contracts find it extremely difficult to plan for and react to unpredictable defense budgets. Budget cuts, appropriation reprogramming, continuing resolutions, and long procurement cycles are particularly hard on small businesses dependent on DoD contracts.  

Companies experiencing these issues indicate a strong interest in diversification to offset DoD market unpredictability. For these companies, their DoD market success is often attributable to having specialized techniques, capabilities, and patents that cannot be easily or legally imitated: their core competencies. 

Photo by  Michael Afonso  on  Unsplash

A diversification strategy based on core competencies leverages a company’s unique competitive advantages. We’ve compiled a non-exhaustive list of recommendations to consider when your company is contemplating a diversification strategy:  

  • Focus on business and operating models that leverage core competencies  
  • Establish Objectives & Key Results (OKR) to measure progress, make mid-course corrections 
  • Consider business models that provide adaptability for B2B|B2C markets 
  • Avoid taking more than one “step” outside your company’s core capabilities  
  • Broaden focus to include more new technology in products and services  
  • Invest in technical training and certifications to address skill gaps  
  • Fully explore international market challenges  

The cornerstone of a successful diversification strategy is a flexible business and operation model based on core competencies. Key business functions like finance, marketing, engineering, even changes to accounting systems must be aligned with your company’s diversification strategy.  

Establishing a strategic plan is the foundational activity to begin the diversification journey. Once established, leaders and their teams must work together to achieve the intended objectives and outcomes.  


Michael Brookey
Founder & CEO  
Brookey & Company, Inc. 
1+ 858.568.7788