This article was authored by Jeanne Heydecker and originally published on the Woomentum network.
Companies need to always be growing or they’re stagnating and allowing new competitors to arise or technology disrupts their industry making your organization irrelevant. One methodology that allows companies to create potential growth strategies is the Product/Market Expansion Grid.
This matrix clearly identifies the options available for growing your organization. NOTE: Clean your house first. This does not address any internal issues that may be causing your growth challenges such as out-of-date equipment, poor execution or quality, poor employee management or morale, etc. Those issues should be clearly identified and addressed prior to moving towards this proc
The four strategies are:
Market Penetration
This quadrant focuses on selling more of your existing products or services to existing markets. To increase market share, you may have to cut pricing or add more features, improve distribution or customer service, or rejuvenate your brand and messaging to attract new clients or develop new sales channels.
Market Development
This quadrant focuses on selling more of your existing products to new markets. This can be as simple as looking at who else you can sell to. It may also mean expansion into other locations, either going national or global. This has higher risk, but it can be minimized by acquiring companies already established in those areas or partnering with established companies that offer symbiotic products or services that could also sell your products and services to their existing customers. It’s a total win-win when negotiated and managed effectively.
Product Development
This quadrant focuses on identifying a new problem your existing clients have that you may be able to solve for them. One process that I found extremely powerful was having a feedback loop between sales, marketing and R&D so that whenever clients complained about an issue or wanted features we did not have, those calls were logged and every quarter we revisited all the feature requests and complaints as a team, prioritized them and selected the most critical issues to be worked on in the coming months. With a built-in feedback loop between marketing, sales and R&D, we were able to more quickly respond to our customers and offer new solutions more quickly than our competitors.
Diversification
This quadrant focuses on understanding your market, your company’s core competencies, and brainstorming new products and/or services that are related or completely unrelated to your current offering. There are many options when looking at diversification:
- Related Diversification is entering a new market with a new product that is related to your current offering. Consumers who trust your regular offering would be more willing to try your new services because there is not much of a change for the consumer.
- Unrelated Diversification is entering a new market with a new product that is completely unrelated to your current offering.
Get all of your “A” players in a room on a regular basis to discuss growth strategies. These employees should come from all levels and departments within your firm. Develop a formal process to quickly brainstorm a number of ideas in each of these quadrants and then prioritize them for further evaluation. Set up small teams to present on each idea and their recommendation on whether to move forward with it, scrap it, or reserve it for a later date. Select the best of the ideas and move forward by investing in a small prototype or Minimally Viable Product (MVP) to test with your customer base. Generally speaking, all companies should do this on a regular basis and most don’t. They are typically surprised when they suddenly find themselves obsolete.
How do you create growth within your organization? Are there other ways which you manage innovation? Please share in the comments.