It is well known in the consultancy business as the Ansoff Matrix and assesses the risk factors in marketing products and changing markets.
In essence it says:
The lowest risk activity is existing products into existing markets. The business is known to the markets, it has a reputation, hopefully for good service and quality and represents and the products are accepted and well known.
This is allocated a notional effort factor of 10
The next level is that of marketing new products into existing markets. The advantage of this method is that the company is known in the market place and hence has credibility when promoting new products to its existing customers.
Although the company and its activities are known in the market, even so there will be extra effort required in order to maximise the activity with the new product range and it is estimated that this will require four times the effort demanded in section 1, or an effort factor of 40.
An even more difficult exercise is the marketing of existing products into new markets. The problem here is that the company, being generally unknown, does not have any credibility in the market place. The company has wide experience of its own product or service range and can hope to encourage new markets to do business but in this case, the effort required to match section 1 would be estimated at 80, or eight times the effort.
Finally it is new products into new markets which is, in effect, starting a new business and that would need en effort factor of around 140 or fourteen times section 1.
This is not to say that none of these should be attempted even though significant effort will be needed in order to maximise the results.
What will be needed and must be understood is that any diversification of either product/service or markets will need extra effort on the part of someone in the company and crucially, not at the expense of the core business.
Any decision to implement growth through innovation is to be welcomed but it is essential that it should be done in a carefully considered and thoughtful way so that the implementation of the process is seamless.
Members of my Vistage groups use several techniques to make sure that this happens and one of the most effective is to set up a diversification or innovation group within the company with members drawn from all parts.
In true brainstorming manner, no idea is knocked back; everything is given equal consideration and only at that stage would selection of the most valid of the new ideas be developed.
Another great idea is to allow all the members of the team to have a day away from the business every quarter so that they can simply think about new innovative ideas. Again everything is considered by the innovation group right up to the final selection of what they feel to be the best.
All of this demands effort and considered effort at that. However ensuring that care is devoted to ensuring that every possible factor has been taken into account will make eventual success much more likely.
The key is to make your innovation process as exciting as possible so that it will enthuse the people and demonstrate that the business can be made to grow to the benefit of everyone.
If you would like to learn more about the Ansoff Matrix try this link
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