The McKinsey 9-Box Framework for Product Managers – The McKinsey 9-Box Matrix is a well-known strategic framework used by businesses to analyze their organizational units, product portfolios, and talent. The matrix provides a technique for objectively evaluating elements within a business and determining the best strategic approach.
In recent years, product managers have started leveraging the 9-Box model as a tool for assessing product portfolios. Applying this methodology allows product teams to take a data-driven approach to managing their lineup of products. It provides a means of identifying areas to double down on, those needing adjustment, and ones to potentially eliminate.
In this post, we will examine how product managers can utilize the McKinsey 9-Box Matrix to optimize their product portfolio management.
Key takeaways:
- The 9-Box model evaluates products on market attractiveness and competitive strength. This allows an objective view of portfolio opportunities.
- Applying the matrix provides insights into investment priorities, areas needing adjustment, and divestment candidates.
- For maximum impact, accurate data, organizational alignment, and consistent application of the model are critical.
- The 9-Box is a valuable input into the product strategy process providing an analytical lens on the portfolio.
What is the McKinsey’s 9-Box Matrix?
The McKinsey 9-Box Matrix, created in the 1970s by the management consulting firm McKinsey & Company, provides a visual representation for analyzing a business based on two dimensions:
- Market attractiveness – This axis evaluates factors such as market size, growth rates, competitive landscape, profitability potential, and access to capabilities needed.
- Competitive strength – This axis assesses competitive advantage and position within the market, based on factors like market share, brand recognition, customer loyalty, capabilities, and differentiation.
Elements are plotted on a 3×3 grid, with market attractiveness on the vertical axis and competitive strength on the horizontal. This mapping of the two variables allows quick visualization of items falling into categories:
- Stars – high market attractiveness, high competitive strength
- Cash Cows – high market attractiveness, low competitive strength
- Question Marks – low market attractiveness, high competitive strength
- Dogs – low market attractiveness, low competitive strength
The 9-Box matrix provides a snapshot of the competitive landscape to inform strategic decisions based on objective data. Since its development, the model has been applied to business units, talent assessment, and increasingly product portfolio management.
Using the 9-Box for Product Portfolios
Product managers can leverage the 9-Box analysis to optimize their product portfolio mix and align on strategic priorities. Here’s how:
- Define criteria to assess market attractiveness and competitive strength for the product vertical. This may include metrics like market and revenue potential, growth outlook, competitive landscape, customer demand, and brand equity.
- Collect data and rate each product in the portfolio on the two dimensions. Plot products on the 3×3 grid accordingly.
- Analyze the portfolio balance and strategic implications. Products falling in the high-potential boxes are stars to invest in. Question marks have potential but need strategy adjustment. Cash cows require maintenance. Dogs may be candidates for divestment.
- Develop a plan to shift products between boxes. This may involve adjusting targeting, positioning, pricing, or investments to boost competitive strength.
The end result is an objective view of portfolio opportunities to inform strategic resource allocation and product roadmaps.
Steps to Apply the 9-Box Matrix for Product Portfolios
Here are the key steps for utilizing the 9-Box technique to analyze a product portfolio:
- Determine criteria to assess market attractiveness and competitive strength. Engage stakeholders to align on relevant factors.
- Collect ratings/scores on each product for the defined criteria. Weigh factors as appropriate.
- Plot each product on the 3×3 matrix based on the analysis.
- Review product placement and develop insights into portfolio health and gaps. Identify strategic moves needed.
- Define follow-up actions – invest, maintain, harvest, or divest – for each product box.
- Develop an implementation roadmap and get stakeholder buy-in.
- Periodically re-assess products and refresh the matrix to keep strategies aligned.
The 9-Box model enables continuous, data-driven portfolio management decisions, rather than relying just on opinions or gut feel.
Using 9-Box Matrix to Prioritize Product Investments
The 9-Box framework can further guide product managers in prioritizing investments across the product portfolio.
Products that fall into the “Stars” segment with high market attractiveness and competitive strength are clear areas for investment to drive growth. Additional funding should focus on enhancements, geographical expansion, marketing, and sales.
“Question Marks” have potential but require strategy adjustment to boost competitive standing. Investments here should focus on building capabilities, features, or messaging to capture increased market share.
“Cash Cows”, while commanding a strong market presence, have slower growth outlooks and so do not warrant major investments. Minimum funding to sustain capabilities is advised.
Finally, “Dogs” with low attractiveness and competitive strength are candidates for divestment or minimization of investment. Resources are better allocated elsewhere.
The 9-Box model helps pivot conversations from opinions to a metrics-based approach for investment planning. It provides a defensible rationale for smart resource allocation across the product portfolio.
Benefits of Using the 9-Box for Product Management
Applying the McKinsey 9-Box Matrix offers several benefits for driving more effective product management:
- Provides an objective, data-driven view of the product portfolio based on clear criteria. Minimizes individual bias.
- Easy-to-understand visual format for assessing portfolio strengths, weaknesses, opportunities, and risks.
- Shifts conversations from emotions and opinions to fact-based insights on each product.
- Identifies specific areas for investment, growth, maintenance, or divestment across the portfolio.
- Enables agility by allowing regular re-assessment and optimization of product mix and resource allocation.
- Gets alignment across the organization on product strategies and investment priorities.
- Helps focus leadership discussions and planning on metrics versus gut feel.
The 9-Box Matrix is a simple but powerful framework for taking the guesswork out of product portfolio management.
Limitations and Considerations
While the McKinsey 9-Box presents a compelling methodology, product managers should keep a few considerations in mind:
- The model is only as good as the data used to complete it. Ratings on market attractiveness and competitive strength must be based on robust, defensible criteria.
- There is still room for subjectivity in evaluating some of the rating factors. Assumptions should be validated.
- Strategies for each box must align back to the overarching corporate vision and goals. The 9-Box model alone doesn’t dictate strategy.
- Getting organizational buy-in is key. There may be resistance to objective data that challenges established views. sponsors are needed.
- The model represents a snapshot in time. Assessments should be refreshed periodically as market conditions and products evolve.
- It is one input for roadmap planning, not the only input. Other factors like resources, technology trends, and team capability need incorporation.
With careful application, the 9-Box Matrix can yield valuable, balanced insights on a product portfolio. However, it does not eliminate the need for thoughtful strategy-setting and decision-making.
McKinsey 9-Box Framework for Product Managers
Conclusions and Key Takeaways
The McKinsey 9-Box Matrix provides a straightforward yet powerful way for product managers to objectively assess their portfolio health, potential, and strategic direction. By evaluating market attractiveness and competitive strength, teams can identify areas primed for investment and growth, those needing adjustment, and ones potentially ready for retirement or divestment.
Applied regularly, the 9-Box model gives product leaders an evolving, data-driven perspective to inform planning and resource allocation. It provides a defensible rationale for decision-making across the portfolio. While not a magic wand, incorporating the McKinsey Matrix into a product team’s toolkit can lead to better-informed, analytics-based product strategies.
