2 by 2's, 3 by 3's, and other Frameworks for Analysis

A note by Sam Mishra, MBA (MIT Sloan)

A picture is worth a thousand words. To hang a picture, you need a frame. To craft strategy, you need frameworks. Frameworks provide structural direction in crafting business strategies. Some of the frameworks discussed herein will be familiar, and some might be new. Please feel free to bookmark this site, so that you can return to these for reference. Also, please check our advanced frameworks section, which covers areas like Game Theory, Double Marginalization, NPV, CAPM, Pareto Frontier, VALS-2 Segmentation, and Porter Diamond.

A 2 x 2 or a 3 x 3 matrix can provide direction and structure to any strategic analysis. Any business process / problem to be analyzed will have multiple attributes, which can be listed in the order of importance. Then, the two most important attributes can be chosen to be plotted on X and Y axes. For example, in the Ansoff Matrix, "Products" and "Markets" are plotted on the X and Y axes, respectively. So,  the two most important attributes for the business process / problem the Ansoff Matrix is designed to solve are "Products" and "Markets."

If two distinct values emerge for each axis, the result is a 2 x 2 matrix. For example, in the Ansoff Matrix, the values for the "Markets" parameter / attribute plotted on the Y- axis are "Existing Market" and "New Market"; and the values for the "Products" parameter / attribute plotted on the X- axis are "Existing Products" and "New Products."

Similarly, if both axes can accommodate three distinct values, such as "high", "medium", and "low", or "tall, "grande", and "venti", a 3 x 3 matrix framework can emerge to provide the needed initial structure for subsequent strategic analysis. For an example of a 3 x 3 matrix, please check our GE Portfolio Matrix framework.

However, strategy is complex, for which an established 2 x 2 framework such as the BCG or the Ansoff matrix; or other elementary frameworks, such as Porter's 5 Forces, the Five C's, and the Four P's can only be starting points. Beyond these, advanced frameworks like NPV, CAPM, double marginalization, the Porter diamond, VAL-2 customer segmentation system etc. can be very useful in providing the needed structure for business strategy formulations; so please free to check this section as well.