A good strategic framework provides focus by limiting the number of directions the organization runs. You’d be foolish to try to extend all your products while simultaneously expanding all your markets while also ramping up capacity or shifting your business model to include new types of production, sourcing, sales, delivery, and partnerships. This isn’t just an issue of capacity. It is also an issue of risk, learning, complexity, and credibility.
Creating Strategic Focus
For example (see graphic), offering an existing product to an adjacent market (A) would involve relatively little risk and complexity and require limited learning. Credibility would likely be the biggest obstacle. Contrast that with offering a new product to a new market (B). In that case, you are embarking on significant risk, complexity, and learning with zero credibility. This grid provides an easy way to demonstrate the scope, magnitude, and synergy of the initiatives you are considering.
While working with a recent client, I had the senior team list all their current initiatives–full bore, half-baked, and under serious consideration–on individual post-it notes. We then stuck them on a big grid like the one above. The visual impact was immediate. And, I might add, totally typical! They were trying to shift their core capabilities from custom products to high volume standardized products while also developing completely new products and trying to penetrate completely new markets. All with an incredibly lean staff. No wonder they were struggling!
A recipe for chaos, risk, complexity, and no time to learn
Create synergy and minimize complexity by moving horizontally into new products OR vertically into new markets OR straight up to strengthen or shift the core. Diagonal moves and multiple moves in different directions will leave you spread too thin, without synergies, and unable to make the best use of your resources or existing capabilities.
Nothing beats strategic clarity and focus! Don’t bite off more than you can chew. Choose. Focus. Make great progress. And then tackle a new direction. You need to sequence your efforts to maximize impact and synergy while minimizing chaos, complexity, and risk.
This article first appeared on Forbes, November 12th, 2017.