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1254 : STEP TWO – GENERATING NEW IDEAS

The matrix helps structure your thinking by identifying four different
growth strategies for an existing operation or launch opportunities for
new entrants:

G Achieve additional sales of existing product concepts in existing
markets

G Extend existing product concepts to new markets

G Develop new product concepts for existing markets

G Develop new product concepts for new markets.

Each box in the matrix has a different significance, which will also vary
depending on whether you are already in business or are seeking to enter.
From a new business perspective, there is a particular risk in focusing on
the existing combination of product concept and market if you do not
give sufficient thought to how you will differentiate your offering.

no differentiation, no future The previous chapter highlighted the
recently published study of three decades of enterprise policy in the
Tees Valley. This study identified the danger of confusing the quantity
of new business start-ups with the differentiated quality of those start-
ups. It noted the law of unintended consequences at play with
government initiatives targeted at relatively poor areas to subsidise
enterprise. The new businesses which resulted from this government
pump-priming were often clustered in low entry-cost activities, focused
on the immediate locality.

The study found that in the 1980s almost 25 per cent of new business
start-ups in Cleveland, excluding retail, were in motor vehicle repairs,
hairdressing and beauty salons. The subsidised start-ups often undercut
existing companies to the point of putting them out of business, only to
go out of business themselves once the pump-priming has been
exhausted. The killed-off competitor resuscitated itself, giving an
illusion of real economic activity to what was actually just zero-sum
‘churn’.96

the death of the ‘butt-crack’ plumber Occasionally, there is such a
shortage in the market that the aspect of differentiation becomes less
important. Plumbing is currently just such a market, characterised by
huge waiting times for getting hold of a plumber and abundant stories
of white-collar professionals retraining in order to participate in a
highly lucrative and allegedly fiscally efficient market sector. Recent