Last version published: 12/10/2022 08:15
Publication number: ELQ-86916-14
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ADL (Arthur D Little) Strategic Condition Matrix Framework Template
A PowerPoint Template of the ADL Matrix or Arthur D. Little Strategic Condition Matrix, Portfolio Management Framework.
The ADL Matrix, or also known as the Arthur D. Little Strategic Condition Matrix, is a Framework for Portfolio Management, built upon the Product Life Cycle (PLC), concept. It was created in the late 1970s by the oldest consulting firm in the world (1886), Arthur D. Little Inc. The objective of the framework is to assist companies in managing its strategic business units (alias SBUs), as a portfolio. It is hence a useful model framework in Strategic Planning.
Like many other portfolio planning matrix, it is built upon a two dimensional matrix. Various strategic actions arise from the combination of the stage of maturity of the industry the SBU is in, as well as its competitive position.
COMPETITIVE POSITION (5 levels):
1. Dominant: There are not usually many actors (with their pertinent product/service line) that dominate their market, and when it is the case, it tends not to last long. In most cases, these markets are monopolies or duopoles, or leaders protected by a leadership in technology.
2. Strong: SBUs have strong and stable market share, which they can defend through time against competition. This offers them degrees of freedom in their tactics and strategies, well protected agains competitors.
3. Favorable: These SBUs tend to have a good success on market but compete strongly agains competition and it's usually tough for a leader to emerge. The degree of freedom to act is relatively interesting but limited.
4. Tenable: This is typically for SBUs targeting niche markets (defined by geography, product or legislation) or who have a small relatively protected position in a larger market. Competition tends to increase strongly.
5. Weak: SBUs tend to loose market share. The assets and perspectives available are insufficient to maintain a profitable business.
INDUSTRY LIFE CYCLE STAGE (4 levels):
1. Embryonic: This is the stage at which product & services are introduced on market. Growth is quick, competition is scarce, the technology is generally new, investments and risks are high and premium prices can be applied.
2. Growth: SBUs in this stage are in a growing market strengthening day by day. Sales are increasing and competition starts to creep in. At this stage the SBU is reaping benefits and positions for bringing novel products/services on market.
3. Mature: At this stage, the market is stabilising, and the customer base is deeply rooted. SBU's market share is stable, competition is intense and most of the capital is invested to differentiate from competition.
4. Aging: Demand starts to wear out and plumet. Progressively, actors are leaving the market as the struggle to keep an interesting enough market share is highly capital intensive. Consolidations happen to serve the diminishing demand until it goes below long term interest for an actor to serve with a product/service.
The combination of both axis leads to 20 possible Strategic Actions, detailed below:
✅ Embryonic x Dominant: All pout push for share. Hold Position.
✅ Embryonic x Strong: Attempt to improve position. All out push for share.
✅ Embryonic x Favorable: Selective or all out push for share. Selectively attempt to improve position.
✅ Embryonic x Tenable: Selectively push for position.
✅ Embryonic x Weak: Up or Out.
✅ Growth x Dominant: Hold Position. Hold Share.
✅ Growth x Strong: Attempt to improve position. Push for share.
✅ Growth x Favorable :Attempt to improve position. Push for share.
✅ Growth x Tenable: Find niche and protect it.
✅ Growth x Weak: Turnaround or abandon.
✅ Mature x Dominant: Hold Position. Grow with Industry.
✅ Mature x Strong: Hold Position. Grow with Industry.
✅ Mature x Favorable: Custodial or maintenance. Find niche and protect it.
✅ Mature x Tenable: Find niche and hang on, or phased out withdrawal.
✅ Mature x Weak: Turnaround, orphaned out withdrawal.
✅ Aging x Dominant: Hold Position.
✅ Aging x Strong: Hold Position or Harvest.
✅ Aging x Favorable: Harvest, or phase out withdrawal.
✅ Aging x Tenable: Phased out withdrawal, or abandon.
✅ Aging x Weak: Abandon.
ADVANTAGES OF THE ADL MATRIX:
- Detailed enabling specific strategic actions
- Lots of information in single framework
- Conclusions are quite clear
- It's a great way to visualise a portfolio in one single graph
- Quite easy to create and use
- Prompts conversations and debates that often lead to valuable strategic decisions
LIMITATIONS OF THE ADL MATRIX:
- The Industry Maturity Life Cycle staging varies from market to market so comparing SBUs that don't move at the same rate from stage to stage can be misleading + it can be heavily influenced by competitors (extending the industry's life cycle with innovation, or creating alternative industries, killing pre-existing industries: e.g. VHS and DVD...).
- Knowing at what stage an industry is at can be challenging (especially in the early stages, when quite some uncertainty remains).
Given the success of this matrix in the theoretical strategy literature, I decided to take a shot to make it an easy hands-on strategic planning tool for any executive or consultant to use in the business world, backed by objective data points and thinking. My assumptions can be edited and challenged if need be.
The file is one editable Microsoft PowerPoint Template Slides and the accompanying Excel Model, with an online or offline 14 step-by-step methodology, with pedagogical illustrations for each step.
Should you have any questions on using this top tier Portfolio management Framework Template slide, you're welcome to reach out to me via Private Message.
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