Analyze Your Strategy With a 2×2 Matrix

TL;DR

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 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!

Enter the Matrix

Products and Markets: The Ansoff Matrix

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.

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

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

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.

One More Matrix and Conclusion

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!


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