Your Growth Opportunities

The Ansoff Matrix is a framework for mapping out the risks and returns of growth opportunities. 

As you move along the four quadrants, your risk and reward profiles increase.

1. Market Penetration - Growth within the same market with the same products.

   • Example: adidas executing a push marketing campaign. Spending heavy around the already popular Sambas to beat out the Onitsuka Tiger Mexicos. 

2. Market Development - Growth within new markets with the same products.

   • Example: Apple’s expansion into China. The company’s products are legendarily desirable, and its supply chain already existed in China, so it found a relatively low risk way to grow. 

3. Product Development - Growth within the same market but with a brand new product.

   • Example: Rivian’s development of the R2 and R3 vehicles. The automaker is developing smaller, cheaper vehicles to increase appeal with midmarket consumers.

4. Diversification - Growth within a new market with a new product.

   • Example: Amazon’s acquisition of Whole Foods. Prior to the acquisition, Amazon had few brick and mortar locations. The acquisition proved to provide synergies for Amazon Prime and Whole Foods, offering discounts to Amazon’s most loyal users and distribution centers in wealthy neighborhoods. 

You too can apply the Ansoff Matrix to your own life to assess risk and reward for growth strategies: 

1. Role Penetration - Continuing at your current firm, with an emphasis of improving the skills you use every day. This is low risk, but relatively low reward as you’re improving your position but it may be a while before you see monetary gains.

   • Example: If you’re a marketer at a startup SAAS firm, learning how best to leverage new platforms and refining your brand’s digital strategy. 

2. Firm Development - Moving to a new company with a higher pay structure, but staying in the same role. There is a bit more risk, but your reward is commensurate. You may not have the same clout at this new company, but you’ll expand your network and your compensation will increase. 

   • Example: If you’re an Account Manager at a small business, and you take on an Account Manager position at a tech company. 

3. Role Development - Continuing at your current firm, but changing your role/organization entirely. This will require you learning an entirely new set of skills, but you will retain the relative safety of staying at the same company. The benefit here is that you can use skills from your current discipline to develop unique strategies in your new role.

   • Example: If you’re a marketer at a startup SAAS firm, but you take a coding bootcamp and pivot over to software development at the same company. Now, you know exactly what consumers love about your product and can build it from the ground up. 

4. Diversification - Going to a brand new company in a brand new role. This will require extensive training on your part, but just as with Product Development, you will be able to draw insights from two distinct disciplines — differentiating you in the job market. 

   • Example: Working as a startup SAAS marketer for a few years out of undergrad, getting your MBA part time and then pivoting to a big tech firm and working in corporate strategy. You’ll draw insights from your time on the ground and be able to inform how the big tech firm should position itself in the SAAS market. 

Just as with companies, your risk and reward structure increases as you move from simple market penetration to true diversification. Risks come via changing jobs, investing in new skills, and betting on yourself. Rewards come via increases in compensation, expansion of network, and the ability to draw insights from multitudes of disciplines. 

There are always opportunities for growth, which path will you chose?

PK