Boston Matrix - Good or Bad?

I've been very fortunate over the years to have attended a wide range of different training courses. And without exception, I have taken valuable information from each and every one of them. However, there have also been times where I have felt a significant amount of the training has either been impractical or unusable. I remember one management training course started off with singing in the morning, a conga dance after lunch and visualising ourselves as snow leopards just before we finished for the day. The course was actually a lot of fun, and although I still remember it ten years later, I don't think I gained much from my time pretending to be a leopard.

All that being said, the most common problem I find with many courses is the absence of realism, and lack of practical application. The worst example of this was the Prince2 project management methodology.

During the training the techniques and processes all made sense, but back in the reality of a busy office with busy people, the principles we had been taught were completely unusable. They were admin heavy, required a lot of input and analysis from the project stakeholders, and needed constant review.

And this unrealistic approach can be found in a lot of training courses. The established ideas and frameworks being taught often have no practical use in everyday working life. However, it feels very unlikely that these techniques cannot offer any guidance if they are being taught at so many different courses. So I have decided to review many of these frameworks and offer some practical uses for them.

Boston Matrix

The first model I am going to look at is the Boston Matrix.

The Boston Matrix was originally conceived as a method for reviewing all the products and services a business offers, and deciding on the growth opportunities of each one. This analysis can then help decide how much time, resources and financial investment to assign to each one, which ultimately helps to shape the company strategy and drive the business forward.


The way the Boston Matrix works is you start with an empty box divided into four equal quadrants. The quadrant in the bottom left represents a product or service with high market share but low market growth. This would indicate something that brings in lots of money, but with little future opportunity for growth.



If we move round the Boston Matrix in an anti-clockwise direction the next quadrant we get to is low market share and low market growth. This fundamentally means something with low revenue and low opportunity for growth; a poor performer.



The third quadrant in the Boston Matrix moves towards low market share but high market growth. This would indicate a product or service that currently generates high levels of revenue but has low chances of future growth.



And the final quadrant in the Boston Matrix is top right. This is reserved for high market share and high growth products and services. This is really the place you would want most of your products and services to be in a perfect world.





To help visualise the different sections of the Boston Matrix, each one has been given a name that helps to describe what they represent. Products with low revenue and low growth opportunities are known as Working Dogs. High revenue and low growth opportunities are Cash Cows, low revenue high growth opportunities are the Question Marks. And finally the high revenue and high growth opportunities are called Star Performers.


Products and services will often cycle through the different sections of the Boston Matrix. At the start they may begin as a Question Mark, slowly become a Star Performer before developing into a Cash Cow and finally end as a Working Dog.

Once you have understood the principles of the Boston Matrix you can move onto the analysis stage. This will require you to place each product or service in the appropriate section of the Matrix. When doing this it is important to place them on the matrix based on their market share and growth opportunities. You have to be careful you don't do this the other way round and decide the category of the product (Star Performer, Cash Cow etc) and then give them scores to fit in with the category.

If you complete the Boston Matrix correctly it will give you a very nice high-level overview of all your products and services, along with their position within the business. This then gives you an easy way to evaluate how much resource, investment and energy to put into each one. Generally the working dogs would be allocated the least amount of resources, and the new opportunities would receive the most. You may also decide to withdraw Working Dogs from market, which would generally make sense if the effort and investment to continue managing it is not worth the reward.

Once you have your Boston Matrix plotted out, you will be able to see how your products are spread across the different categories. In order to have a balanced portfolio of products It is recommended that a business should have products spread equally across the four different quadrants in the Boston Matrix (perhaps with the exception of the Woking Dog category).

The one criticism I would have of this way of thinking is that in an ideal situation all your products would be Star Performers; you don't really want a spread of products across all categories, you should be aiming for all products to be Star Performers.

How Useful Is the Boston Matrix ?

For me personally, the most extraordinary thing about the Boston Matrix is that I must have been taught it four or five times at different courses, but I'd never seen it actually being used, until very recently. I have worked at a number of large international companies, and to my knowledge, the Boston Matrix was not a tool that was ever used. If a company is properly monitoring its sales and revenue, the position of any one product or service in the overall portfolio should be understood without having to go through the process of plotting everything out on a Boston Matrix.




If you are a very big company with a lot of different products e.g. Coca-Cola, then a Boston Matrix could give you a good overview, but it may end up being very cluttered and complicated.

How Can You Use The Boston Matrix?

That being said, one way the Boston Matrix can be used very effectively is to incorporate it into your client or customer strategy. It would be much more common to do this for external clients but it works just as well for different teams or


departments within your organisation.

The aim is to take your list of clients, and place them on the Boston Matrix according to two metrics of your choice. These two metrics can be whatever you value in your client relationship, or the qualities you want to build up. If the client is external, one metric could be how much revenue they generate for you, and the other metric could be the strength of your relationship with them.



If you need to, you could split each metric into sub-metrics which will give you more flexibility with your parameters. It will also produce additional precision in your results. For example, you could split the relationship metric into willingness to try new products, open to change and client stability. You'll then assign a score to each of these sub-metrics and add them up to create the overall relationship score.



Once you have assigned all your scores, there's no real need to actually plot these on a Boston matrix. You can simply sort them in overall score order and those with the highest scores would be your most important clients and those with the lowest scores are either your least important customers or those that you need to spend more time with. The great thing about this is that if you refresh it on a regular basis you can easily compare the scores over time and see which clients are improving and which are declining.


You can of course plot the scores on the Boston Matrix which will give you a better visual overview and that can be useful when presenting the results to other people. But this, of course, is more time consuming to maintain.

Conclusion

I hope this has demonstrated how a simple and straightforward approach to the Boston Matrix can be an effective way to use it. This method is flexible enough to be used in a variety of different scenarios but also precise and scientific enough to deliver meaningful insight into your business.

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