A business relying on a single type of product or services can be highly risky. Any change in the market place – a change of customer behavior, a new competitor – might have a high impact on the business results. Diversification is an opportunity to spread and reduce the potential risks.
The mathematical concept of diversity has many applications, ranging from ecology over demography to information science. In the context of business performance diversity indices can be used as key performance indicators (KPIs) to analyze markets, define targets for diversification, and track the success of derived business actions.
Download Presentation Slides (pdf)
Video: Diversity as Business KPI – Alpha and Beta Diversity
Diversity Calculation in Excel – Diversity Indices and True Diversity
5 thoughts on “Diversity Index as Busines Performance Indicator – The Concept of Diversity”
An outstanding share! I have just forwarded this onto a coworker who was conducting a little homework
on this. And he in fact bought me dinner due to the fact that I stumbled upon it for him…
lol. So allow me to reword this…. Thank YOU for the meal!!
But yeah, thanx for spending the time to talk about this issue here
on your blog.
Thanks, appreciate. Buy me a coffee!
PLEASE MAIL THESE CALICULATION SOFT WEAR performance indicator, richness, Shannon Index, Simpson Index
You can download a simple excel template for a couple of diversity indices from here. A more sophisticated version, calculating Shannon alpha and beta diversity, from here.
Although not explicitly mentioned in the presentation, the Berger Parker index equals the maximum proportional abundance in the dataset pmax. Simply look for the highest value of pi. In the two examples given it is either 75% or 14%. The Berger Parker Index equals the inverse of true diversity of order infinity.