How do you identify growth opportunities for your business? Sometimes it serendipitous – you are presented with it. Other times, it emerges from conversations, reflections and insights. Is there a systematic way to explore growth opportunities?
Believe it or not, one of the best tools to use is still Ansoff’s Growth Matrix… but with a twist – combining it with deep dive analyses, decision criteria and the horizon planning.
In the 1960’s Igor Ansoff identified four growth strategies that businesses can pursue: market penetration to increase your share of the available market with existing products/services; market development to open up new markets for your products/services; product development to introduce new products/services to existing customers; and diversification to enter new markets with new products/services.
Although different variations of the Growth Matrix have been created, the power of the matrix lies in how you use it to deep dive into potential growth opportunity areas. For example, if you look at how to increase market share with existing products, how do you determine the potential increased market share. This can be done by analysing customer demand and preferences, competitor behaviour, and switching costs. Then you can assess the relative attractiveness of this growth strategy compared to other growth strategies.
But which criteria should you use to evaluate growth opportunities. Is it just return on investment? Or are there other considerations, such as alignment with your purpose, vision, capabilities and culture. Developing a set of criteria that you can use to objectively assess opportunities is critical. Ironically, the criteria also become the basis for how other business decisions are made.
Once you’ve identified the most attractive opportunities for growth, then you need to prioritise the level of investment and resources needed, and timeframe required to realize it. That’s where horizon planning kicks in – ensuring resources are properly allocated to improving your existing business while investing enough time and effort into realizing new opportunities that could innovate your business.
#strategy #growth #innovation
