The Baseball Diamond Model of Innovation & the Ansoff Matrix

PHOTO: Seattle Mariners

No, this is not another Field of Dreams piece. (In my market research career I've had to tell countless clients that "build it and they will come" was from a work of fiction. About ghosts. Not a viable business strategy.)

I learned this practical model in a long-forgotten book, at least a decade ago (and my apologies to the author, wherever you are). I've used it in sales planning and new product development. It's simple and comprehensive.

The four sequential steps are like rounding the bases:

1. Maximize revenue & profit from existing products among existing customers.

2. Sell existing products (profitably) to new customers.

3. Develop new products with/for the known customer base.

4. Sell these new products (profitably) to new customers.

This “baseball diamond” model ensures that new areas (customers, products) are not entered until existing areas are secured. With new customers costing 5 to 10 times as much to acquire as existing customers cost to retain, and with 80% of new products and businesses failing, conservatism is a virtue. We start with existing customers and existing products, and ensure we squeeze maximum life out of those before heading into new pastures.

Note that “existing” customers includes referrals. Note also that “new product” is a relative term: packaging existing services or solutions in a “new” way is a low-risk #innovation route.

The best part about this model is that it's self-financing, too. Focusing on customers and sales might lack excitement, but a string of singles will win a baseball game more likely than a grand slam can.

The Ansoff Matrix has four strategies match the baseball diamond:

1. Market Penetration: KPI's include market share growth, customer loyalty improvement, customer value improvement

2. Market Development: Tactics include online channels, new customer personas/segments, geographic expansion

3. Product Development: Use the web to add value to or extend existing products or services. Music and book publishing companies now deliver products through subscription and pay-per-use.

4. Diversification: Consider related business partners, unrelated businesses, upstream integration with suppliers, downstream integration with intermediaries.

This article first appeared in LinkedIn