Analyses and Publications
Applications: the identification, verification and systematization of potential solutions developed in the process of strategic planning and strategic analyses.
The 4CF Matrix: is a tool which has proven its worth when it comes to the identification, verification and systematization of potential solutions developed in the process of strategic planning and strategic analyses. It has successfully been applied both in short workshops – to assess the potential directions of development for a given area or market – and in complex, weeks-long processes of developing long term strategies.
The 4CF Matrix has proven of value in a wide variety of areas, from corporate applications (including the FMCG and medical industries) to military ones.
Even in its simplified variant, it allows for a quick, introductory systematization of potential solutions and enables one to identify possible controversies.
The first step in developing the matrix is the precise identification of a target group and its needs. Answers to these needs will be the subject of analysis. The next step is to determine key competitive factors which will provide a basis for the evaluation of potential benefits. Subsequently, the solutions which are to be evaluated need to be defined. There are multiple methods for the latter, starting with workshops, through more analytical means, such as desk research or the Delphi Method. With the usage of simple methods, the process can be completed in as short a time as 2-3 hours, but complex strategic analyses may take several weeks. The recommended approach is to combine various types of methods and consult experts from varied environments.
Each solution is evaluated with regard to two criteria:
- Relative Advantage (RA): the degree of improvement that the proposed solutions might bring to the realisation of a particular need. This is contrasted with today’s most popular solutions as well as with hypothetical future ones. The relative advantage is typically evaluated on a scale of 0-10, where 0 means lack of improvement in the realisation of a need, while 10 means major improvement. The relative advantage evaluation should not take into consideration the time needed for implementation or barriers to entry. Both of these are included in the next criterion. When using scenario analysis a modified measure – ARA (Avarage Relative Advantage) is used.
- ETM (Earliest Time to Mainstream): the minimal amount of time needed for the popularisation of a solution. This criterion takes into consideration aspects such as delays caused by technological, financial, social, or legal barriers. The moment of popularisation is defined as the time when a solution is available (in terms of distribution, but also e.g. financially) to the majority of the target group. It should be noted that the key factor is availability rather than the actual use of a solution; mass adoption is dependant on a number of other factors. ETM is typically estimated in years, with an upper limit determined in advance: e.g. if ETM is evaluated on a scale of 0-10, 0 means that a given solution is already available to the target group, while 10 means that another 10 or more years are needed.
A matrix structured with regard to the above criteria shows areas of importance for strategic planning: from an area of solutions which show little promise with regard to relative advantage but which could be implemented quickly, to very distant fields which contain groundbreaking solutions for a given market. Ignoring solutions that have been evaluated as highly advantageous and which are “just around the corner” can potentially be dangerous, as can be investing in low-benefit solutions.
Placing solutions within the matrix in accordance with values resulting from the evaluation is just a preliminary stage in the discussion as to their placement.
The fields of the 4CF Matrix have been named in accordance with the type of solutions characteristic of a given area. These are:
- Coral Reefs – solutions with a short ETM, but also a low relative advantage. Choosing a solution placed within this area is risky, as it may entail the loss of an opportunity for developing a long-term strategic advantage in the name of short-term benefits. Exploring for reefs is therefore a poor choice in the long run, but if the concepts in this area do not have high entry barriers, they may be worth going slightly “off course”. This should, however, be a conscious choice, and the decision to invest time and resources in a solution from this area requires great caution, so as not to lose sight of the search for more future-oriented solutions. An efficient navigator can use the reef to his advantage, shortening the way to long-range targets.
- Squalls – solutions with a short ETM and a high relative advantage. These are solutions that may dramatically change the way a need is met in a short period of time, thus giving the one who implements it a huge advantage, and placing him way ahead of competition. Solutions with a particularly high relative advantage and short ETM, may even be called “White Squalls”, these can sweep out a large number of players from the market.
- Sirens – solutions with a long ETM and low relative advantage. Following a siren’s voice is very dangerous: they tempt sailors with a beautiful song, but woe to those who fall into their hands. Solutions from this area involve the substantial risk of investing time and resources into a solution which might not prove successful and consequently the risk of losing strategic advantage by failing to take advantage of market opportunities.
- Pirate Treasure – solutions with a long ETM but a high relative advantage. Solutions from this area require a bold decision: going for them means setting off on a long journey with no guarantee of success. Not everyone who possesses a treasure map (and these are often enigmatic and incomplete) can actually find treasure. The reward for those who succeed, however, is often worth the risk. It is worth pointing out that it might be equally risky to ignore hidden treasures and seek safer solutions: if someone else finds the treasure, it may give them a huge strategic advantage and leave their competitors far behind.
- Rose of Winds – solutions close to the centre of the Matrix. In the case of solutions that – as a result of the evaluation – have ended up close to the centre of the matrix, caution is advised, as their location may be the result of the experts’ indecisiveness: when in doubt they tend to choose values close to the centre of the scale. This does not mean that no solutions actually belong in this area, but one must be certain what lies at the root of their evaluation. The Rose of Winds has another role as well: its tilt serves to illustrate the fact that a solution of a given level of relative advantage and with a short ETM may be more valuable than a solution with exactly the same level of
relative advantage and longer ETM due to the dynamic nature of the market (as a reminder: relative advantage is assessed independently of ETM). Generally, as time goes on, market players introduce more and more sophisticated solutions, so that the level of advantage that is attractive nowadays may be of little value in a few years. The more dynamically the market is developing, the greater the tilt of the rose. Underestimating the pace of the market’s development may mean that instead of using the Squall we will land end up on the Reef. The abbreviations which stand for directions (N-S; W-E) may also be read as Novelty-Stagnation; Was-Emerging.
The above is a description of the simplest variant of the 4CF Matrix, one which is relatively easy to use independently. More complex variants include, i.a., a more in-depth analysis of how the pre-identified solutions can migrate on the 4CF Matrix, depending on their specific features. It is also valuable, in the course of further study, to confront your opinions with the opinions of other groups, so as to potentially discover hidden assumptions that may distort our vision of the future. One should consider what could change the evaluation, in what way could it be changed and how likely such a change is. It is also important to identify areas on whose development we have little impact, but which should be monitored. Finally, reaching beyond the identified trends of today, you should consider future development scenarios that could change the evaluation independently of other factors. All this to ensure that the choices we make – while planning our actions and responding to our competitor’s actions – are “future-resistant”. It should also be kept in mind that to maximize the effectiveness of the 4CF Matrix in the course of strategic planning, you should periodically update the evaluations and identify new potential solutions. It is also possible, by modifying the evaluation criteria, to use the 4CF Matrix for the early detection and verification of opportunities and threats that go beyond the market, and which concern the internal aspects of the functioning of an organization.
A foresight approach to strategic planning increases the flexibility of an organization, its ability to detect risks early and take advantage of opportunities. Integrating it permanently with strategic management will help you to increase your organisation’s potential to acquire and maintain strategic advantage over time.