19 May, 2015

Dimensions of change

You’re probably familiar with the old Boston Consulting Group 4-quadrant grid of business extension strategies:

Develop new markets
Challenging
Very difficult
Develop current markets
Straightforward
Challenging
Invest in current product areas
Invest in new product areas

You can compare any two attributes of your business, e.g. products, technologies, geographies, customer segments, skills, operational processes, channels, etc. The message is usually the same - it’s easiest to deepen your current position, but if you are going to extend your business, the more dimensions you change, the bigger the challenge.

It doesn’t matter whether you’re extending organically (i.e. doing it yourself) or by acquisition. However, if you’ve got a sound reason to grow in one or more dimensions, then acquisition can be a faster and lower risk route than trying to do it all yourself, if you can plan well, buy well, and execute well.

Of course, you could acquire a business you don’t really want, in order to divest it and acquire other businesses that you do, but that’s a whole different game. I still shake my head when I think of how brick and crockery maker Ceramco was acquired and turned into underwear maker Bendon. That changed just about every dimension possible.

First posted March 11, 2008

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