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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
