CLP Beacon - Business Issues and Solutions

Tuesday, March 7, 2017

4 Tools for the StreeSavvy Business Executive to Manage Growth

As the third and final installment on tools that the StreetSavvy℠ Business executive can use, these four tools focus on ones that can help manage growth while ensuring the right resources are dedicated to the initiatives and risk impact is managed.

The tools that follow include: The Ansoff Matrix, Ishikawa Diagrams, Risk/Impact Analysis, and RACI.

Ansoff Matrix
The Ansoff Matrix is used to help companies determine which products are to be developed and which markets are to be pursued.   Some of the tools we shared in  a prior blog e.g. the analytical hierarchical process, can be used to set priorities relative to budget constraints.
We love the Ansoff matrix because it is a very easy model to understand the product portfolio. 

The diagram above is a modification of the Ansoff Matrix which was developed by H. Igor Ansoff and first published in the Harvard Business Review in 1957 (Harvard Business Review, 35 (5) 1957, pp.113-124), in an article entitled Strategy and Diversification.   It provides a great framework for considering paths to growth and the associated risks of attaining that growth.  
Yet, it is sometimes difficult to use because it required solid analysis and planning. The idea is that, each time you move into a new quadrant (horizontally or vertically), risk increases.  These are called adjacencies and moving to an adjacency is less risky than moving along a diagonal toward the “diversify” box. 
If one uses the Ansoff matrix, we would like to see companies use the following risk/impact model as a complement.
RACI is a cool tool that is also called a responsibility matrix.   It lays out a project or a task and shows the intersection of that project or task with those people and/or functions that have a part in the decision.   

R stands for responsible part and is the person who actually carries out the process or assignment.  There can be several R’s on a project.   
A stands for accountable and is the person who has the ultimate accountability and leadership of a task or project.  
C means that people or functions who are not directly involved with carrying out the task or project yet are consulted prior to the task being completed.  This person could be a subject matter expert or other stakeholder. 
I stands for those who are informed of the decision as they may have a part in receiving the output of the work.  For example, customer service may be informed of the decision on a new price or promotion that the marketing department conceives for a new product.

Ishikawa (Fishbone) diagram

Fishbone or Ishikawa diagrams enable an individual or preferably a group of individuals todetermine the cause and effect of a specific action.  

The goal is to ask questions several times in different ways to fill out the “fishbones” and come to a common root cause.  Therefore, if you say that revenues are low, you might want to fill out the “fish bones” by listing 3 main causes such as 1) Lack of Channel Partners, 2) Price too high, and 3) Product not correct fit.  Then for each main cause you delve deeper into the reasons why for each perception in order to determine that there is a root cause.  I recall doing this for one of my tech companies and the answer came out that the training for our sales reps and the channels was incorrect.  So after adjusting the training and requiring that the sales people became certified by their managers, revenues improved dramatically.

Risk/Impact Analysis
In many ways, risk impact analysis seems simple and something everyone should do.  But it isn’t performed on a regular basis.  At many companies risk impact analysis is performed on major projects and by so doing the analysis StreetSavvy business executives prevent surprises.

Here’s an example of the risk impact matrix on the left coded in terms of RED (high risk and impact), YELLOW (medium risk and impact) and GREEN (low risk and impact.   

On the right side of the figure, the executive and/or team specify the risk, the initial placement on the chart, and then plan to move it to less risk or less impact by a combination of strategies and tactics.   The information shown is an actual assessment for a client but is cloaked to protect the confidentiality of the work.

We would be glad to talk about how these tools can be used in your business.  Feel free to contact me at to see if you qualify for a complementary one hour analysis.  

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