Strategy is about choices: what to do and what not to do. The 2×2 matrix clarifies choices by forcing the simplification and categorization of information. Some classic matrices are presented, including Ansoff, SWOT, BCG, and GE-McKinsey. A future post will present nonprofit examples.

Highbrow, Lowbrow, Brilliant and Despicable

In a 1920 issue of the magazine Vanity Fair, the humorist and book critic Robert Benchley famously penned “an extremely literary review” of the New York City Telephone Directory. About the plot he wrote, “It lacks coherence. It lacks stability.”

In the same review he remarked, “There may be said to be two classes of people in the world; those who constantly divide the people of the world into two classes, and those who do not.” Something similar might be said about people who use an analytical tool known as the 2×2 matrix.

Beloved by management consultants the world over, the 2×2 matrix is a simple grid where each of the two axes has two values, resulting in four possible quadrants. This requires the neat and possibly unrealistic division of a thing into having one of two attributes – and not just once, but twice!

For example, in 2004 New York Magazine introduced The Approval Matrix. It is a 2×2 matrix with the vertical axis measuring highbrow or lowbrow, and the horizontal axis measuring despicable or brilliant. The format proved so popular that in 2009 it replaced the crossword puzzle on the magazine’s back page.

Enter the Matrix

This is an amusing application of a format that has very serious beginnings. Matrix theory in mathematics dates back thousands of years, including Babylonian and Chinese applications to farming and land use. The invention of game theory in the mid-1900s led to its widespread application in the study of economics, earning practitioners more than a few Nobel prizes in the field.

Qualitatively, grids have an even older application in art and architecture, from ancient Egypt to prehistoric times. More recently, grids became the de facto standard for print layout in the 1900s. With all these matrices and grids flying around it was inevitable they would be co-opted by all the organizational strategy theorists that were emerging at the same time.

Products and Markets: The Ansoff Matrix

The first of these theorists – at least the first to have a matrix named after him – was Igor Ansoff, with his eponymous Ansoff Matrix. Ansoff published his concept in his 1952 Harvard Business Review paper Strategies for Diversification.

The Ansoff Matrix is also called the product/market expansion grid. It classifies products and markets as new or existing, with different strategies and levels of risk for each of the four quadrants.

Here is where we start to see the benefits of the 2×2 matrix format. By having to choose two variables for the axes it places clear boundaries on the strategy solution space. By having to choose two states for each variable – yes/no, high/low, new/existing – it forces solutions into a corner.

The Value of Simplification

It’s worth noting here that whether this is a useful simplification or a useless – or worse, misleading – oversimplification depends on the value you get from it. Strategy is rarely, if ever, an output from a formula. Strategy comes from conversations, continuously iterated and updated with new information about performance and the internal and external factors that affect it.

Models clear away the underbrush of detail to provide better line-of-sight to key elements of interest. A 1:1 scale map is not useful, and the process of representing a very large geography on a very small piece of paper requires choices. In a model, you have to choose what to keep and what to leave out based on the purpose of your model.

Moreover, this simplicity can be deceiving. The Ansoff Matrix, like most any 2×2 matrix, is quite flexible. It can repurposed for services, expanded to 3×3, and linked to additional frameworks for environmental scanning, risk management, and other related analyses.

Another useful feature of the 2×2 matrix is its ability to identify missing quadrants. A saying famous among lawyers illustrates this: “If the facts are against you, argue the law. If the law is against you, argue the facts. If both are against you, pound the table and yell like hell.”

Presented as a 2×2 matrix, what is left is the empty quadrant where both facts and the law are on your side. With such a strong position one could argue that it is not necessary to do anything here. However, you now have an idea what opposing counsel might do – yell and pound the table – and having a strategy to counter that seems advisable. Supporting tactics to rehearse could include objections based on relevance, scope, and badgering the witness.

External and Internal Factors: SWOT Analysis

Core strategy connects purpose to performance in the context of external and internal factors. Strategists have always evaluated those factors in some way, and in the 1960s the SWOT analysis emerged as the first-cut tool of choice to formalize that evaluation.

SWOT makes distinct internal strengths and weaknesses, and external opportunities and threats. A contemporary alternative was SOFT analysis with a slightly different emphasis: present strengths and faults, and future opportunities and threats. Like the Ansoff Matrix, SWOT can be extended with other frameworks. For example, SWOT factors can be arranged as one axis on a grid, with the other axis being factors from PEST, DIME, or god forbid TELESCOPIC OBSERVATIONS.

SWOT has many variations and no shortage of critics, but the need to examine these dimensions of strategy remains. To reiterate: it’s not the tool, it’s how you use it and what you use it to make.

Rise of the Consultants: BCG Growth Share and GE-McKinsey Nine-Box

In 1970 consultants at Boston Consulting Group introduced the BCG growth share matrix. Not to be outdone, rival McKinsey followed in short order with the GE-McKinsey nine-box matrix. These frameworks serve similar purposes in that they both are used for portfolio management: how to prioritize investments between various business units.

They use slightly different variables to do this. The BCG matrix uses growth and market share to identify its four quadrants:

The GE-McKinsey matrix uses industry attractiveness and the competitive strength of the business unit:

The BCG matrix is simpler, while the GE-McKinsey matrix shows us something new. The expansion of the values for each of the two axes from two (low/high) to three (low/medium/high) gives us a 3×3 or nine-box matrix. The extra resolution may or may not be helpful, and both frameworks end up in effectively the same place: an indication to invest, divest, hold, or harvest from a particular product or business unit.

Both models also tie into other frameworks such as the Ansoff matrix discussed above and various organizational change models.

One More Matrix and Conclusion

There are many, many more matrices that are useful to the analysis of strategy and operations. To close with just one example that I’ve found useful recently, I’ll use a 2021 example from Lynda Gratton, in her article How to Do Hybrid Right. She presented a 2×2 matrix for work arrangements where the genius is in the variables she chose: does the work need to be done in the same time, the same place, both, or neither?

This matrix makes it clear that not all roles in an organization are created equal. It may be that some – strategy analysis for example – lend themselves to anytime, anywhere. Others – printing, signing, and mailing checks – may require a traditional office. She goes on to provide guidance for each of the quadrants that will be useful to any post-Covid manager navigating this tricky solution space.

This concludes our brief tour through the wonders of 2×2 matrices, at least for now. In a future installment I’ll take a look at some matrices that are specifically useful for analyzing nonprofit strategy and operations. Until then, have fun dividing the issues of the world into two classes!