Ansoff matrix
What it is for
Use it when ten growth ideas are on the table and nobody can say which are comparable. Ansoff puts them on just two axes, product and market, and what shows at once is that the four boxes do not cost the same: selling more to existing customers and launching a new product in a new market are two different trades.
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Ansoff reckoned risk roughly doubles with each step away from the known, and that diversification is the only box where product and market change at the same time: it is also the only one where everything is learned from scratch. That does not mean avoiding it, it means not putting it in the same list as the other three when the budget is set.
Frequently asked questions
How to use this model
Why is diversification the riskiest box?
Because it is the only one where both variables change. In the other three something known is always there to lean on: customers who already know you, or a product you know how to build. In diversification there is neither, and every mistake surfaces late.
Can a freelancer or small business use it?
Yes, and it may be where it pays off most: with few resources the question is not which idea is better but which one costs least to get wrong. Filling in the four boxes usually reveals a penetration move already available, which nobody considered because it did not look new enough.
Should all of it be filled in, or is one box enough?
It is worth trying to fill all four, even with one idea each. The boxes that stay empty say something: if no way of selling more to existing customers comes to mind, the problem is probably not a shortage of new ideas.
What are the four Ansoff quadrants?
Market penetration, selling more of what you have to people who already buy; market development, the same product to new customers; product development, something new to today customers; diversification, new product and new market at once.
Why is diversification the riskiest?
Because it is the only one where both variables change. In the other three something known is always left to lean on, the customers who know you or a product you can build. In diversification there is neither, and mistakes surface late.
Is it any use to a freelancer?
Yes, and perhaps that is where it pays most: with few resources the question is not which idea is better but which is cheapest to get wrong. Filling in the four quadrants almost always turns up a penetration move already available.