If you already read this post on LinkedIn, you can download the strategic Ansoff Business Growth Worksheet here.

The Ansoff Growth Matrix is a simple and powerful tool to help you define your product-market growth strategy. To understand the Ansoff Business Growth Matrix, I’ll start with a quick backstory.

The Ansoff Growth Matrix is a simple and powerful tool to help you define your product-market growth strategy. To understand the Ansoff Business Growth Matrix, I’ll start with a quick backstory.

We’ve all been to formal events where we are seated next to someone we don’t know. What’s your opening line when you meet someone new at these events?

Most people open with a “Hi I’m ___, nice to meet you.” And we wait for the response.

That was my intro when a couple sat next to my wife and I at a recent one-year-old “cake smash” birthday party at a local restaurant. The long tables were aligned in a “U-shape” and I was sitting next to another husband named Bill (name changed for post purposes). Bill was animated and I definitely wanted to chat.

I was also tending to my daughter on the left who proclaimed “I’m bored!” So my first mission was to take care of her and talk to Bill next. I got my daughter settled with a coloring book and a buttered roll, contemplated a roll myself (but I remembered I’m cutting carbs), then started to chat with Bill. I had nothing better to break the ice further with so I asked the uncreative “what do you do for a living?” This question led to an hour-long conversation about business strategy.

Bill owned a 30-year old family business that rents and repairs instruments for schools in Manhattan and Long Island. I was stoked because I love to talk business. Business is not only a living for me, but also my passion. I love strategy and growth.

After Bill gave me a brief five-minute backstory about his family business, I asked: “so how has the business changed over the last 30 years?”

Bill replied: “It has changed so much. School budgets are down, and nobody wants to pay for anything anymore. Technology killed our retail business too.” Bill was ready to exit the current business model, and it seems the properties were worth more than the business.

But as we started to talk more, I had a growth model called the Ansoff Growth Matrix in my mind. Igor Ansoff, the father of strategic management, drafted the Ansoff Growth Matrix in a Harvard Business Review Article in 1957 called “Strategies for Diversification.” I refer to this model when looking at growth strategies for technology companies, but it can apply to any business.

The model gives you a simple four-quadrant grid that outlines product-market growth strategies. Each area of growth has differing levels of risk.

Unlike other articles that paraphrase Igor Ansoff’s words, I will include his original words from his 1957 article here to articulate his product-market growth principles. Igor Ansoff specifically uses the word mission, rather than customer.

Customers have many different missions and products serve to meet the objectives of one of a customer’s many missions. In modern terms, solving a customer’s mission is a product’s value proposition.

Igor Ansoff asserts that there are four basic growth alternatives open to a business. A business can grow through market penetration, through market development, through product development or through diversification.

The Ansoff Growth Matrix (in his words)

Market Penetration

Market penetration is an effort to increase company sales without departing from original product-market strategy. The company seeks to improve business performance either by increasing volume of sales to its present customers or by finding new customers to present products.

Market Development

Market development is a strategy in which the company attempts to adapt its present product line (generally with some modification in the product characteristics) to new missions. An airplane company which adapts and sells its passenger transport for the mission of cargo transportation is an example of this strategy.

Product Development

A product development strategy, on the other hand, retains the present mission and develops products that have new and different characteristics such as will improve the mission.

Diversification

Diversification is a final alternative. It calls for a simultaneous departure from the present product line and present market structure.

Application of the Ansoff Growth Matrix

So with this in the back of my mind, I asked: “What else do the band directors buy? Uniforms, hotels, travel arrangements?” My mind shifted towards product development. Bill’s company had school contracts in place for thirty years and was still only renting equipment. There were numerous opportunities to sell more to Bill’s existing customers. Especially when considering offering services through partnerships. Bill was also ready to start a karate company (diversification) a new passion of his.

Bill and I talked for an hour straight about business strategy. We talked about all kinds of businesses. We talked about how his college roommate sold an elevator company and how one of his relatives supplies NYC bodegas high in the supply chain. The Ansoff Growth Matrix was the seed for this great conversation between two entrepreneurs.

Free Downloads

I had my designer create a free worksheet download for you with more contemporary examples of the growth examples tied to the matrix.

You can download the worksheet here and use it as a print out to create your own business growth strategies.

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