Evaluating your product or service portfolio strategically can be a complicated task, so it’s useful to summarise your findings in a single diagram. The ADL Matrix is one potential option, often used in a Product Strategy or a Company Strategy. You may have heard of it under another name - the Strategic Condition Matrix
The ADL Matrix (or Strategic Condition Matrix) allows you to manage your portfolio by making judgements around the overall market lifecycle and your own placement within that market. It can be a quick tool for creating a list of your products.
The industry is classified as:
The competitive position is classified as:
When combined, these two classifications provide you with 20 possible positions for you to place your current or future products and services.
There are 5 business strengths in the ADL matrix called Dominant, Strong, Favourable, Tenable, and Weak. Deciding which you are for each product or service depends on a few factors…
You are market leader and have a strong position, there’s little competition that can reach you at the moment.
You have a good market share, perhaps you’re leader or number 2, and you have a number of trends in your favour (eg customer loyalty). Competition may be present but is not a huge concern.
You have some market share but there may be many competitors with equal or similar shares, it’s much harder to be unique or you’re struggling to establish your position, but the industry can sustain you.
You’re in a niche or small market, perhaps geographical or defined by the product and service itself.
Things aren’t going well – it’s not profitable, you’re losing market share, or you’re struggling to operate within the market.
There are 4 industry lifecycle stages in the ADL called Embryonic, Growth, Mature and Ageing.
Very early in the market development, you’re seeing rapid growth and there’s likely not much competition.
The market is maturing but still growing at a good rate, you may find more competitors than before but it still has substantial development for you.
Everything is stable and there may be some growth, but you’re no longer seeing the rapid rise of the previous stages. There are established competitors now playing in the market and the barrier to entry is higher than beforehand.
Your market is in decline, there’s less need for the product or service and price is being reduced. Competitors may diversify or exit the market.
There are a number of advantages to the ADL Matrix:
The ADL has a few limitations such as:
It is required to have knowledge of:
It’ll help if you also have information on:
If in a group, these can be shared via an email beforehand or presented on the day.
The ADL Matrix was invented by the firm Arthur D Little in the 1970s.
Nothing - these are two names for the same matrix!
You’ll get better results if you work as a team, either physically or virtually, but it’s not a requirement. The subjective nature of deciding where products and services sit within the matrix lends itself to being a model that causes debate.
It is best practise to review your ADL Matrix on a quarterly basis, as it can be impacted by external forces out of your control. Sales trends, consumer behaviour and competitor activity can alter the placement of products and services within the matrix. A regular review ensures you take into account of your changing landscape.
Get the latest strategy insights and tips from Lucidity twice a month. We never spam and you can unsubscribe any time.