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What’s the Gift for Deep Thinkers from Russians?

Does the product-market matrix sounds anyhow familiar to you?

If so, it means you pay attention to strategy development and “Old-Good-One-Ansoff” may be the tool you will find supportive when thinking on the point of focus with the concept you develop and resources you have.

 

What’s so special about the “Ansoff matrix” we are talking? It’s inventor – Harry Igor Ansoff was born in Vladivostok in Russia and is the godfather of the term “corporate strategy”. Maybe it’s because of the book he wrote in1960’s, which thoughts have been successfully adapted in strategy writing coming afterwards?

 

“Ansoff matrix” is one of the framework s supporting your analyses enabling you to assess, which approach would be the most effective one with the product or service you develop and want to enter the market with.

 

Among all Ansoff’s product-market combinations, which are market penetration, product development, market development and diversification, the first is the cheapest in terms of resources you need and with biggest chances for success, whereas the last is the most expensive and the most risky.

 

Looking the chances for success reflected by these product-market combinations you may find that in market penetration approach you’ll face existing, product and services aware customers, but also more competitors than in the other combinations. So it’s not the first choice strategy entering the market with “something new” and leapfrogging potential rivals.

 

In “Start-Up Nation by D. Senor and S. Singer” you’ll how the product development and market development approaches have been used by Israeli start-ups. In a nutshell they were “inventing” the products and services for challenges defined by already existing corporates, which these corporates identified as important for their business in 3 years of time. As part of such challenges materialized the start-ups had were able to present ready solutions for the market take-up and to capitalize on them. These approaches are either about developing something new for existing customers or stimulating the need for existing product segment of customers no one thought before.

 

When negotiating investment decisions with VCs you need to be ready to answer the question what market share your new product or service will have in 4-6 years of time. In terms of making the calculations, market development and product development approaches will lead you to convincing numbers much easier than with diversification approach, which is about offering new product or service to the segment of customers, which you also have to “invent”.

 

But hey, no one told it would be easy, and what investors find more convincing should determine what you are really up to. So which matrix are you in?
 
                            Source: http://www.mindtools.com
 

Dzida !