Module 8•Unit 4 of 7•13 min

The Seven Pathways

The three value groups break down into seven distinct Growth Pathways, numbered 0 to 6. Together they form a spectrum from squeezing the last value out of a declining foundation, through capturing more from existing foundations, to creating entirely new ones. Which markets each pathway targets - core, adjacent, existing but new to you, or new to the world - is the other key dimension.

Value Extraction

Pathway 0 - Market Exploitation

Harvest maximum value from a declining foundation, without investing for further growth.

Value Capture (stretching current S-curves)

Pathway 1 - Market Perpetuation

Keep the current offering vital in current markets - sustaining relevance.

Pathway 2 - Market Penetration

Win more share within current markets with the current foundation of value.

Pathway 3 - Market Broadening

Apply the current foundation to adjacent markets and new segments.

Value Creation (building new S-curves)

Pathway 4 - Market Escalation

Build a new foundation of value to serve current/core markets at a higher level.

Pathway 5 - Market Expansion

Build a new foundation of value to enter markets that are new to the business.

Pathway 6 - Market Creation

Build a new foundation of value to create markets that are new to the world (a "blue ocean").

Pathway 0 does not invest for additional growth - it harvests. Pathways 1-6 all invest for growth, but in different ways: the Value Capture group (1-3) is smaller investment / lower risk / smaller payback, while the Value Creation group (4-6) is larger investment / higher risk / bigger payback. Both can grow the business - creation just does it by building the future.

Which markets?

Cutting across the pathways is the question of which markets you aim at: your existing core markets; adjacent markets (often new segments); markets that are existing but new to the business; or markets that are new to the world (which you must create). The further from your core you go, the more you shift from capture toward creation - and the higher the risk and reward.

Discuss

Map your current initiatives onto the seven pathways. Are you clustered in the safe 0-3 range, or do you have genuine Value Creation (4-6) bets?

Try this at work this week

Assign each current innovation initiative a pathway number (0-6). The spread tells you your real growth strategy - and a gap in the 4-6 range is a clear signal that your long-term resilience is under-funded.

Sources

Global Innovation Institute (GInI), Foundations of Innovation - the seven Growth Pathways.
Ansoff, H., "Strategies for Diversification", HBR, 1957.
Kim, W.C. & Mauborgne, R., Blue Ocean Strategy, 2005 (Pathway 6).

The Three Value Groups

Portfolio Thinking