Brainstorming growth with the Ansoff matrix
A profoundly simple tool for mapping growth is called the Ansoff matrix. You can read about it here: https://en.wikipedia.org/wiki/Ansoff_Matrix. Entrepreneurs in government and industry use this model to map out potential growth paths. It is also an excellent team brainstorming tool.
The Ansoff model has an x and a y axis. On the x axis is a range of products from existing to new. On the y axis is the range of customer from existing to new.
The box in the lower left hand corner represents existing products sold to existing customers. Growth in this box means that you sell more of existing products to existing markets. For instance, an Army laboratory developed a large area surface sampling device that is used by soldiers on sampling missions. Expansion in this quadrant would be to sell this device to other military services for use in sampling missions. This kind of growth is the “lowest hanging fruit” because you are selling an established product to a market that has already adopted the technology.
The upper left quadrant represents existing products adopted by new markets. Here, you are selling an existing product to a new market, relying on the product’s track record in its original customer base to break into new markets. The surface sampler, for instance, could be sold to civilian first responders for use in local emergencies that includes a substance that is unknown. Or the sampler is adopted by foreign markets. Entrepreneurs find this the “second-best lowest hanging fruit because the product is established and client testimonials are available. Most technology transfer and patent licensing falls in this quadrant.
The lower right quadrant embodies new products sold to existing customers. For instance, I deliver training on government entrepreneurship. If I grow using the criteria of the “product development” quadrant, it would be by offering a new product to my existing customers, such as coaching, or a subscription-based web site. An example of growth, using our surface sampler illustration, could be adding a virus detector to the suite of capability. In this case, you are relying on the trust you’ve developed with your customer base in the quality of your products.
And last the “Diversification” box. This is the long shot box, but a worthy target. For many entrepreneurs, this is the box that gets the juices flowing. Risk is highest in this quadrant. Here we are introducing a new product to a new market. In the case of our sampler, the inventors worked in this quadrant when they redesigned the sampler to operate in zero gravity and then marketed it to NASA.
A simple way to use this tool is to print it out once a quarter or as part of your business/strategic planning process and brainstorm with a team. Ask yourself: What are new ways our capabilities can be applied? And what else does our customer need?
Let the matrix guide your thinking. Get all of your ideas on paper. Of course, not all ideas will be good ideas. Next time we’ll talk about ways to prioritize and choose among growth options.
Here is a pdf for you to print and start your brainstorm: Ansoff Model Worksheet