I have rediscovered the BCG matrix. I used it a million years ago in grad school but it became less important with software that would "give" me the answer. But lately I've come to the conclusion that whether I am using it for personal decisions or business strategy the matrix forces me to make difficult choices easier to avoid when data is buried in spreadsheets.
The matrix is pretty simple. Place your products, services or whatever based on their market shares and growth rates. (I did one once on all my friends' boyfriends. Please note: One person's opinion of the appropriate quadrant is not necessarily shared by others. Keep that in mind when doing this as a collaborative effort.)
Here's a brief overview of what each means.
Dogs are low market growth, low market share. I never liked using this designation because it just seems disrespectful. Dogs may be new products or services that arrived too late to take advantage of a market. More commonly, I think, they are products that were once stars or cash cows but the market has changed. Either way someone usually has an emotional connection (our first product, the CEO's favorite, etc.) that keeps them in the mix.
Having said that there can be value in dogs. The Long Tail was first coined by Chris Anderson in an October 2004 Wired magazine article to describe the niche strategy of businesses that sell a large number of unique items, each in relatively small quantities. If you have a small quantity or not a lot of time this is not for you.
Cash Cows have high market share, low market growth. I love cash cows because these products just make money without a lot of effort. On the other hand there isn't a lot of room to expand the market. It has either moved on or it's saturated. Ever notice how your cell phone supplier is more eager to tell you how appreciated you are? It's because the goal now is not getting new customers, it's keeping them. They talk in terms of retention not new sales. Makes for a lot better customer service.
Stars are fab. They are high market share and high market growth. It's the category that gets people excited. Two things have to happen. One the market has to be ready to embrace the product/service and the market has to be large enough to sustain the embrace for a long enough time to make a profit, sell the company or attract investment. Hold on too long and they become dogs.
Question Marks (also known as Problem Children) keep business owners up at night. They currently have low market share but high market growth. They have great potential but at what cost? If you can get a powerful marketing and sales program they might become stars or cash cows. On the other hand they might just drain resources from other great ideas.
Mind Tools notes on its website pages for the Boston Matrix: Be careful about the lines - there's nothing magical about them or their position. There may be very little real difference between a "Problem Child" with a market share of 49% and a "Star" with a market share of 51%. It's also not necessarily true that the line should run through the 50% position. As ever, use your common sense.
Take the time to make a chart. Get out a pencil and put your products or services or professional skills in each slot. Ask a trusted friend or mentor to do one separately. Compare them. Decide what you will do with each entry. Invest more, invest less, do nothing, say good-bye? Regardless of how you handle each one you will emerge with a better of idea of who you are and what you do.
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