The Grid: The Decision-making Tool for Every Business (Including Yours) (Matt Watkinson, 2017)

• Desirability x customer = Wants & needs
• Values & beliefs
• How do customers describe or identify themselves?
• What values do your customers want to express through their product choices?
• What beliefs need to change for your offering to succeed? How will you do this?
• Goals
• What are your customers’ super objectives?
• What hidden goals or subtext does your customer have?
• How do you know if your customer has achieved their goals successfully? What are their success criteria?
• Barriers
• What equipment does your customer already have that you must work with? Does this make a barrier? What ways of working might your offering impact?
• Can you reduce the effort required to get customers started with your product or service?
• What financial barriers stand in your target customer’s way? Can you find a way to dismantle them?
• Operational barriers
• Installation
• Compatibility
• Competing technologies
• Functional risk
• Distribution and network effect
• Experiential barrier
• Trialability
• Training and expertise
• Fallback options
• Learned behaviours, mental models/MAYA (most advanced yet acceptable)
• Financial barriers
• Upfront cost
• Switching cost
• Financial risk
• Desirability x market = Rivalry
• Category
• Premium: more for more
• Aspirational: more for the same
• Value for money: more for less
• Bargain: same for less
• Budget: less for less
• Middle ground
• Overpriced: same for more
• Sub standard: less for same
• Rip off: less for more
• What categories do your products or services belong to? Are they clear to the customer?
• Is demand for the category growing or shrinking?
• What entry and exit barriers exist for the category? Are they changing?
• Territory
• Is your territory large enough to support the business you want to run?
• Which territory would offer the greatest demand for your offerings?
• If you were to change or expand your territory, how might it affect the rest of the grid?
• Alternatives & substitutes
• What are the direct alternatives your customers will choose between? What are their strengths and weaknesses?
• What substitutes do customers have? Are they a growing concern?
• Is your own a range a problem? Can customers easily choose between your offerings?
• Desirability x organisation = Offerings
• Proposition
• What aspects of existing alternatives can you improve upon, and will the target customer care?
• Is your combination of rationales sufficiently distinctive from those of your rivals?
• Where can you surpass industry norms? Where can you outperform alternatives?
• Brand appeal
• What associations do you want people to have with your brand? What associations have they formed independently?
• Do you express your brand values consistently?
• Where are the gaps between your brand image and brand reality?
• Customer experience
• Memorable (bad) → adequate service → forgettable interactions (zone of tolerance) → desired service → memorable (good)
• Do your customers’ journeys end on a high?
• How might setting better expectations improve customer satisfaction?
• If your customers were in charge for a day, what one thing would they change?
• Profitability x customer = Revenue
• Revenue model
• Auction
• Fixed price
• Pay as you go
• Licensing
• Performance-based
• Razor and blade
• Subscription
• Which revenue model is best suited to monetising your offering?
• What restrictions does your current revenue model put on your offering?
• How might your revenue model be limiting the desirability of your products or services?
• Price
• Are you selling your product or service at the optimum price? How do you know?
• Do you manage prices on an ongoing basis, or set them and forget about them?
• How might discounting be impacting your profitability?
• Volume
• Do your volume targets reflect your brand position?
• Which elements of the grid offer the greatest potential to increase your volumes?
• Do you have a broad enough range of metrics to identify the real opportunity areas?
• Profitability x market = Bargaining power
• With customers
• Might your decisions be creating resentment amongst your buyers or suppliers?
• What might the long-term consequences be?
• Is the risk worth the reward?
• What factors are affecting your customers’ bargaining power?
• With suppliers
• The more you buy the more power you have.
• The harder it is for you to switch, the less power you have.
• The more important your product, the more power you have.
• The more rivals you have, the less power you have.
• The more easily they could do your job, the less power you have.
• Do you choose suppliers with bargaining power in mind?
• How might changing rivalry affect your bargaining power?
• Rules and regulations
• How does the regulatory landscape impact each of the nine boxes of your grid?
• Are there any upcoming regulatory changes?
• How might they affect each of the boxes on the grid?
• Profitability x organisation = Costs
• Fixed costs
• What are the biggest fixed costs within the business and could they be reduced?
• Are headcount costs under strict control?
• Variable costs
• Do you hold people accountable for cost reduction?
• Where could you eliminate waste from your operations?
• Where is the optimum cost structure for your business, considering your offerings, price point and volumes? How might that change over time?
• How does your cost structure impact the other elements of the grid, like rivalry, imitability or adaptability?
• How might your current cost structure be limiting your strategic options?
• Capital expenditure
• Waste: overproduction, staff waiting, overprocessing or incorrect processing, defects.
• Are your management accounts good enough for you to make informed decisions about costs?
• How might a decision to reduce costs impact the rest of the grid?
• What is the key constraint in your business? How would your investment impact it?
• What is the benefit of the expenditure? How does this translate into cash over the lifetime of the investment?
• What would the return on investment be?
• Longevity x customer = Customer base
• Awareness
• Have a clear objective and measurable success criteria.
• Have a clear audience in mind.
• Create distinctive assets.
• Remind them of you.
• Manage expectations.
• Craft a simple message.
• Identify your triggers.
• Appeal to the emotions.
• Maintain a consistent, continuous presence.
• Would you pass the logo swap test? If your product is easy to recognise?
• Can you clearly explain your product in a couple of sentences?
• Does your communication reinforce your rationales?
• Do your communications have an emotional appeal?
• Acquisition
• Should acquiring new customers be a stronger priority for you?
• What proportion of your sales comes from light or infrequent buyers?
• Retention
• Retention/loyalty schemes.
• Contractual terms.
• Personalisation.
• Cross and upsell.
• Ecosystems and reduce interoperability.
• Habit-forming.
• Increase satisfaction, or is it desirability.
• What techniques will have the greatest impact on retention?
• Can you improve satisfaction enough to create true loyalty?
• Metrics: customers, retention (and churn) rate, customer profitability, customer lifetime value, acquisition and retention costs, net promoter score and word of mouth index.
• Are you measuring the right things?
• What are the metrics telling you?
• Where do the greatest opportunities lie for your business?
• Longevity x market = Imitability
• Legal protection
• What intellectual property do you own?
• What policies or procedures protect your intellectual property? Do people follow them?
• Which IP strategy best serves your current goals? Full exclusion, licensing or open access?
• Durable advantages
• Do you have a competitive advantage? If so, how durable is it?
• How might you combine the sources within the chapter to create a durable advantage over rivals?
• Network effect: the more providers will attract more users while there are more users it will attract more providers.
• Is the desirability of your offering impacted by network effect?
• How could existing customers help drive the growth of the business?
• Which communities should you target to generate early interest?
• Competitor lag
• How can you avoid going head to head with market leaders, so they will ignore you?
• Would bundling or unbundling make it harder for rivals to copy you?
• What problems are current popular products creating? How might you solve those?
• Longevity x organisation = Adaptability
• Cash position
• Extending payment terms to suppliers might upset them, decrease in service or increase in pricing.
• Carpet-bomb approach to create many products might create decision fatigue and consumer move to rival (e.g. Lego).
• Factories are set to produce stock even if demand is low.
• How might you improve your cash position?
• How can you reduce working capital?
• Are employees aware of how their decisions impact your cash position?
• Scalability or capacity
• How easily can your business scale up or down?
• Is there enough slack in your operations to allow you to respond to change?
• Complexity and rigidity
• Stages: outburst → steady growth → conservation → high noon → decline → reorganisation
• What stage of the adaptive cycle is your business in?
• Does it look like you’re heading to the next?
• Craftsmen become tinkerers where they are obsessed with incremental improvements.
• Builders become imperialists where they overreach into unfamiliar areas.
• Pioneers become escapists where they turn off difficult customers.
• Salesmen become drifters where they think they can sell anything and have a jumbled portfolio.
• Are you falling prey to one of the 4 dangerous trajectories of the Icarus Paradox? If so, which one?
• Have you fallen into the trap of the 1st version - dismissing new alternatives because they lack the polish of your own?
• Should you be working on the next big thing already? If not now, when?