Is Your Company Growing? Your company and the 2 x 2 Matrix. Source: Charan, R., & Tichy, N. M....

Is Your Company Growing?

Your company and the 2 x 2

Matrix.Source: Charan, R., & Tichy, N. M. 1998. Every Business Is a Growth Business. Random House, New York.

Business Growth Needs

Look From Outside In

Segment Your Market

Enlarge Your Pond

Look From the Outside IN

Understanding Customers Needs Will Secure Your Future

Continuous Reinvention

Eliminates Blinders

Chrysler’s Minivan

Baby Boomers Getting Older (With Growing Families)

Lifestyle changes (Soccer Moms) Space Problems Vans Were Too Large (Commercial) Station Wagon Sales Were Falling Morphed Pickup, Station Wagon, Passenger Car

The Minivan was Born!!!The Minivan was Born!!!

Enlarging Your Pond

Forces Outside Thinking

Market Share, i.e.,10X Rule

Any Related Marketplaces That Can Be Served

Taco BellMexican Fast-Food Business

$80 Billion

Quick-Service Restaurant Business

$800 Billion

Thousands Of New Points of Access

Taco Bell’s Growth

0

50

100

150

200

250

300

1984 1993

Net Income

(in $ millions)

Segmenting The Market

Break the Market Down Into Pieces

Don’t Have To Sell The Entire Market To Make A Profit

Easy Way To Expand Your Pond Umbrella the Market And Specialize

Nike

In 1984 Nike Had 1/3 Of The Athletic footwear Market

REEBOK (women’s footwear, stylish footwear)

Nike’s Market Share Fell By Half In Three Years

Nike Segments The Market

Basketball Tennis Cross-training Aquatic

Footwear Sports Apparel Accessories

1/2 The U.S. Market

Sales Growing At 39%

Profits at 41%

We are in the We are in the sports business, sports business, not the shoe not the shoe business!business!

Nike Re-Segments The Market

Basketball

Michael Jordan His Airness: Air Jordan

Charles Barkley Aggressive Style: Force

Scottie PippenQuick, High-Flying Style: Flight

Creating The Framework Customers -- Existing And New Needs -- Existing And New

Existing Customers With Existing Needs

New Customers With Existing Needs New Customers With New Needs Existing Customers With New Needs

The 2 x 2 Matrix

Existing New

Existing

New

CustomersCustomers

Needs

Needs

AA BB

DD CC

Quadrant A

Existing Needs And Existing Customers

Where Most Companies Operate Less Risky Than Other Quadrants Core Competence, Cost Cutting,

Reengineering, redesign Price Wars, Zero-Sum game Companies Who Have Given Up On

Growth Stay Here

Quadrant BNew Customers And Existing Needs

Geographic Expansion

Coca-Cola Mature Market Coca-Cola Has Been Global For Decades

50% Of World Market 70% Of Revenues From Abroad

Average Coke Consumption

223197

169

69 66

0

50

100

150

200

250 NewOrleans

Houston

Atlanta

Los Angeles

Chicago

8oz per capita per year

Quadrant C New Customers And New Needs

High Risks High Profits New High Tech Players Will Be Here

Company's That Moved Into Quadrant C

Motorola (Cellular phone business: took a huge bet on an unproven need in a market it had never served)

Hewlett-Packard (Instruments for Measuring moved on to printers, computers, fax, multipurpose machines, PDAs and more)

Seagate Technology ---Conner Peripherals 3.5 diskdrive

Quadrant D Existing Customers And New Needs

Develop Ideas about Total Needs

Define and meet new needs for customers

Expand Into Customer Service

New NeedsPolaroid CameraSony WalkmanChrysler Minivan

GE’s Dramatic Change 1/2 Worlds Market In Power Generation Equipment

Acquired Nuovo Pignone Providing Services To Customers

The 2 x 2 Matrix for GE Power Systems in 1995

Existing New

Existing

New

CustomersCustomers

Needs

Needs

$10 Billion

$20 Billion

GE

Large PowerGeneration Equipment

Acquisition of Italy’s Nuovo Pignone Broadened pond to $25-$30 billionAlso $4 billion of complementary business

Existing New

Existing

New

CustomersCustomers

Needs

Needs

AA BB

DD CC

$20 Billion

$5-10 Billion

Moved into Supplying ServicesMoved into supplying equipmentEnlarged pond to $48 billion

Existing New

Existing

New

CustomersCustomers

Needs

Needs

AA BB

DD CC

$20 Billion

$5-10 Billion $18 billion

GE Power Systems 1998 pond is $700 billion37 times as big as the Market defined and served three years previously

Existing New

Existing

New

CustomersCustomers

Needs

Needs

AA BB

DD CC $700 Billion

From the Wellhead to the Consumer