BCG's Adaptive Advantage Matrix Model Template

Description
In January 2010, BCG (The Boston Consulting Group), the renowned strategy consulting firm published a paper called "Adaptive Advantage" (Martin Reeves, Michael Deimler, Yves Morieux, and Ron Nicol).

Reference to full paper: https://www.bcg.com/publications/2010/strategy-business-unit-adaptive-advantage

The paper advocates that the increasingly higher levels of "turbulence" on markets is progressively shortening the life span of classical business strategy frameworks, therefore opening up new conceptualisations to navigate in this new business environment, where forecasting is becoming tougher to apply.

To be successful at implementing action plans in this new business environment, BCG identified four key success factors or "The Four Rs of Adaptive Strategy":

→ Readiness (anticipation): Environmental sensing, Scenarios / megatrends, External networks and openness, system shaping
→ Responsiveness (agility): Short cycle times (continuousness), modularity, decentralization, signal transduction, fast mobilization, rough plans
→ Resilience (robustness): Redundancy, Diversity, Loose coupling, reserves and buffers, insurance and hedging, environment shaping
→ Recursion (evolution): Experimentation, Learning, Mobilization, Iteration, Modulation based on experience. Effective "Recursion" takes place using the VSAM Loop: Variation (V), Selection (S), Amplification (A), Modulation (M) (see BCG Paper for more details).

BCG highlights that companies are going to execute this VSAM loop in various ways according to mainly four factors:
- Degree of Proactivity
- Degree of Modification
- Degree of Exploration
- Degree of Intentionality
(see BCG Paper for more details on each "Degree").

Furthermore, BCG argues that the optimal choice of adaptive style (of a given company or Business Unit) depends on the Environment, and essentially two dimensions:

✅ Degree of Change Required
✅ Turbulence (rate of change and unpredictability): Depends on 3 main parameters 1/ Volatility in market positions, 2/ unpredictability of outcomes, 3/ widening gap in performance between winners and losers

The combination of the two axis leads to a 2x2 matrix with 4 distinct quadrants, where one can position an individual company, or it's various business units serving various markets/industries:

1️⃣ The MIGRATOR 🦆 (High Degree of Change, Low Turbulence) -> in this category, companies or BUs have to focus on leaving their old & obsolescent business models behind and focus towards more promising ones, using specific and voluntarily deliberate processes (i.e. scaling fast potential winners, and killing or divesting losers). Example: Virgin Group

2️⃣ The VOYAGER 🚀 (High Degree of Change, High Turbulence) -> The focus here is on deploying a spirit of constant exploration mindset on business models, processes and systems. For BUs in this category, making sure to keep a vast number of "live experimentations", often competing or contradicting against one another. Example: P&G (Procter & Gamble) with beauty & shower products competing and innovating next and on-top of each other.

3️⃣ The SPRINTER 🏃 (Low Degree of Change, Low Turbulence) -> Companies or BUs in this category have to place a strong emphasis on current business model exploitation and optimization, to stay up to pace with an environment becoming increasingly volatile. Example: Zara, who built quick feedback loops between store Sales Data and its design and manufacturing units for new products. Immediate consequence: staying at the forefronts of the fashion market, with limited risk-taking.

4️⃣ The EXPERIMENTER 🔬 (Low Degree of Change, High Turbulence) -> In this turbulent category, companies or BUs have to enter a state of current innovation and experimentation to adjust on the margin some aspects of the business (e.g. low-level layers or product mix). McDonalds is probably the best example as its organizational structure enables the world renowned restaurant chain to rapidly introduce new menus or recipes without changing the underlying business model & structures. Immediate consequence: keeping up with changing customer tastes, while keeping the same Kitchen processes, supply-chain, real-estate, teams etc.

Other pertinent readings on BCG's Adaptive Advantage and corollary concepts:
- The 2012 book by BCG (The Boston Consulting Group), on Adaptive Advantage or "Winning Strategies for Uncertain Times" available on Amazon: https://www.amazon.fr/Adaptive-Advantage-Winning-Strategies-Uncertain-ebook/dp/B007OUTNV6
- The 2011 HBR (Harvard Business Review) article "Adaptability: The New Competitive Advantage", bu Martin Reeves and Mike Deimler: https://hbr.org/2011/07/adaptability-the-new-competitive-advantage
- Keogh Consulting's article "Is your business and management ready for an adaptive strategy approach" (8 min read): https://www.keoghconsulting.com.au/business-management-ready-for-adaptive-strategy-approach/

Given the originality and pertinence of this competitive advantage framework, I could not resist the temptation to see how it could be made applicable for companies and their Business Units (BUs) in a slightly more "hands-on plug&play" approach. Thus, I re-created the matrix on PowerPoint and added the possibility for strategists and leaders to identify on the matrix their company and/or individual Business Units to get a flavour of their "Adaptive Style".

This slide can be useful to present in board rooms to take a helicopter view 🚁 of a company's business units adaptive styles, when talking about navigating in uncertain times requiring various degrees of change. By looking at the categories of "Adaptive Styles" it has Business Units (BUs) in, various action plans and strategies can be put in place to create value for the company's various stakeholders. 💰

The Best Practice is composed of:
- 1 editable Microsoft PowerPoint Template Slide
- an associated underlying Excel Model to plot the Matrix graph
- with an online & offline 12 step-by-step methodology, with pedagogical illustrations for each step.

Should you have any questions on using this top tier "BCG (The Boston Consulting Group) Adaptive Advantage Styles" Matrix slide, you're welcome to reach out to me via Private Message.

Good luck!
Tim

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