Doing business in the Matrix

The holiday season is upon us again, and with it comes cold weather outings, family meals, and other festive traditions.

One tradition I always look forward to is watching the Theodor Geisel masterpiece How the Grinch Stole Christmas! Geisel, a.k.a. illustrator and rhyme-writer Dr. Seuss, introduced the world to Max the dog and Cindy Lou Who way back in 1957, and since then it’s been a hit book, animated television show, and live-action movie (which is by far the worst of the bunch).

In other words, the owners of the Grinch undertook some product development.

Product development takes an existing product and, well, develops it. The product can be evolved either for its current market or introduced to an entirely new market. Along with market development, market penetration, and diversification, it makes up the four elements of the Ansoff Matrix, which coincidentally was also released in 1957.

Of the four elements, diversification is the most difficult to undertake.

Diversification is a business strategy used to enter a new market, usually while simultaneously creating a new product for that new market. Or more simply put: making money doing something different.

According to Igor Ansoff, diversification differs from its matrix cohorts because the others can be achieved using the corporate and technical resources that are already in place. True diversification requires new skills and resources, as well as new market knowledge. It means investing in these skills and likely entails the allocation of dollars for new equipment and maybe even new facilities.

One way to alleviate some of the financial burden diversification entails is by accessing federal grant money.

The Canada Job Grant (CJG) is one example. The CJG is one of the most commonly used government support programs because it is both flexible and easily accessible. It provides money for employers to offset the cost of direct training as well as learning resources.

Diversification is scary. It’s also necessary.

Any shop that relies solely on one customer likely knows how perilous a lack of diversification can be. Cyclical industries, such as those based around natural resources, ebb and flow -- and sometimes boom and bust. This volatility makes diversification a must for most 21st century manufacturers.

Shop owners that diversify create a more stable business platform … and this hopefully keeps the Grinch away from the door. Happy holidays.