The Ansoff Matrix
Feeling stuck with a PnC of alternatives where every route looks great making it one hell of a job to pick? Here's something that could help...
Start-ups stand as the most popular & preferred places for employees to work as opposed to the big MNCs, although this paradigm shift omnipresent today may have kicked-off over a decade & a half ago. There has also been a long-standing debate about whether an org. would even qualify as a start-up given their presence spanning decades sans translating into significant & worthwhile growth over the product(s) they may have built & released.
The fast-paced environment & the open culture sans power distances demands one to be a self-starter, responsible & willing to take up a fair degree of ownership. When that could be the root of excitement for many, that could also be one of the toughest bits for cofounders to navigate & balance. proving to be more than enough to lose sleep over.
The word “complication” could pair well with the phrase “start-up” given how cofounders could feel like they are dabbling with so many things right from competition, hiring, investment, costs, revenues & they can’t help but feel attacked by all these elements & at once, which could get pretty overwhelming & might as well be the reason why so many choose to pack-up & leave just as quick as they dive in.
When it is possible that some of these struggles could hit first-time founders pretty hard, the others happen to be a recurring phenomenon as correlative to the phases of the PLC making them feel like there’s no escape.
As much as I have personally seen this over my stint with product management & start-ups when I started out, I also have seen the others experiencing similar kind of difficulties over theirs, as recently as this week. When some misconceive it to be a tactical problem, not being able to decide which feature to build RIGHT NOW & NEXT, that is still classified as a strategic problem in my standpoint. The main reason behind this is the FOCUS / partial focus / the total lack of it.
There’s a whole lot of difference between focusing on the problem as opposed to focusing on the solution. I’m sure you would remember the good old narrative of how someone used up a lot of money, time, effort researching & building a pen that could write at ZERO-gravity (solution bias) when the others just managed the very job merely sticking to pencils. If you focus on the solution it is very possible you may hit multiple & alternate solution routes, each of them looking better than the other. But focusing on the problem gives you a better grip over the whole situation given how your vision isn’t myopic & you aren’t looking for quick fix solutions there. Not only would you understand the market better, but possessing an elaborate & descriptive understanding of their beliefs could help you spawn better ideas leading to much better solutions that are entirely relevant & tend to stick for a longer period of time.
So, how would you move from that state of clutter / confusion to a state of absolute clarity?
Amongst other trivial methods, one of the very basic tools that standsout is the ANSOFF matrix.
As evident, the matrix is divided into 4 quadrants, each spelling out the overall strategy that one ought to employ given the drift of the situational parameters - markets & products. Let’s take a closer look at this.
1) Strategy - Market Penetration
[Constraints: Evolved Market, Evolved Product]
Supposing one is looking to target a market that’s pretty evolved which simply means that there could be quite a number of players who have launched products & could be doing pretty well. It is also very possible that some of those products may have gone through many an iteration of feedback making them more suited to the needs of the user groups representing those individual market segments.
When having a product that categorically fits in to the same bracket as the others in the market offering nothing majorly different may not be really be that smart a move strategically, it could still work in some cases but that calls for a fair degree of aggressiveness over marketing or may be tweaking the price point. And to be able to make in-roads into such a market one ought to resort to a fresh & rather aggressive brand of marketing.
Common initiatives towards fruitful execution of the strategy here include:
attracting new users from other (usually lower) segments by tweaking the price making it look more affordable thus attractive
focusing on straightening out few distribution channels towards reaching out to newer market segments
targeting & acquiring new users from a totally new geography altogether
acquiring an existing competitor who’s already riding high
For example:
a new airline being launched could look to attract customers by announcing flights between 2 popular destinations with stops at a few non-popular routes
(OR)
a new airline may look to acquire another popular airline with a clear strategic demarcation over which segment of the markets each of them would cater to
2) Strategy – New Product Development
[Constraints: Evolved Market, New Product]
There’s a long-standing belief that one ought to be a first entrant so as to tap into the early mover advantage. When that could largely be advantageous it could also have its pitfalls as described over one of recent articles (Fast Follower). In such situations where one’s looking to enter an already evolved market with a new product, one ought to rely on a brand of extensive research & glean enough insight towards ideating, envisioning, designing, building & launching new products.
Of course, it is a given that the products being built ought to solve problems for the users but it is also true that one usually goes on to target problems / needs that remain untouched thus far & happen to be underserved, the key to which is a brand of extensive research leading to innovation.
Few initiatives towards successful execution would demand:
allotting enough budgets towards research
conducting extensive research leading to a string of bankable discoveries
choosing a brand of solutioning that’s superior to the competition
For example:
an electronics major decides to manufacture a mouse that’s totally sleek matching the contours of the human hand by pinning on ergonomic design & offering supreme comfort even over really long hours of usage
3) Strategy – Market Development
[Constraints: New Market, Evolved Product]
Although perceived the less risky option as opposed to the others, this could come with a significantly large amount of hidden risk given how it involves one to replicate a product strategy across an entirely new market segment.
One of the main reasons for it to turn supremely risky is how an org. may earmark & splurge on initiatives looking to repeat the execution of all those EPICs on a roadmap built for another market losing sight over the fine details that typify & differentiate markets in the first place, which is why it becomes mandatory to get into descriptive / immersive research.
Successful execution here would be on the back of:
conducting extensive research to establish the underserved needs of the new markets
relying on iteratively testing the product over small sample spaces before taking it ahead in a major way
For example:
an automobile maker invests properly into understanding the users before launching a model of a car (that’s received rave reviews world over) into an entirely new geography
4) Strategy – Diversification
[Constraints: New Market, New Product]
In spite of the perception of an “alien territory” where one is stepping in to the “unknown” given how the market is still inexistent / nascent & launching a product there is nothing short of high-risk, this still could be one of the most lucrative routes owing to how orgs. could get to ride on the early mover advantage provided one successfully navigates through the labyrinth of initiatives & straightens out those priorities first-up.
Venturing out towards capturing newer market segments with an entirely new product could come with quite a number of troubles. To begin with, the strategy ought to define the scope of diversification which would obviously have a significant bearing on the initiatives undertaken thereof. Would the new product effectively employ all the current knowhow, expertise, inventory towards targeting / catering to a new market segment (OR) would it demand an acquisition of some extra knowledge, expertise, inventory? Either way, one ought to be absolutely clearly about the rationale behind choosing one of them.
Successful execution here would be on the back of:
conducting descriptive research over how new products could be produced for new markets using up the existing resources
hypothesizing, analysing, validating ideas for new products across other markets
enumerating & prioritizing the low-hanging-fruits
analysing whether the resources on hand would suffice to penetrate into new markets & acquiring ones that are lacking
For example:
a retail aggregator who has covered some pretty solid ground over the years stepping out of their comfort zone to venture into cloud kitchens
a well-established automobile maker venturing into social media via an acquisition & taking giant strides in space travel
Do remember:
The 4 strategies listed here are in no way are to be pitted against each other (OR) perceived as being better than the other. It’s the situation that an org. is in, their goals leading into their vision, the maturity of the markets & the willingness of the users to pay / adopt the solution as befitting that ought to act as a basis for this selection.