Vous êtes sur la page 1sur 10

Management Decision

The MCC decision matrix:: a tool for applying strategic logic to everyday activity
John Nicholls,
Article information:
To cite this document:
John Nicholls, (1995) "The MCC decision matrix:: a tool for applying strategic logic to everyday activity", Management
Decision, Vol. 33 Issue: 6,pp. 4-10, doi: 10.1108/00251749510087605
Permanent link to this document:
http://dx.doi.org/10.1108/00251749510087605
Downloaded on: 30 March 2017, At: 01:01 (PT)
References: this document contains references to 14 other documents.
To copy this document: permissions@emeraldinsight.com
The fulltext of this document has been downloaded 5227 times since 2006*
Users who downloaded this article also downloaded:
(1998),"Ansoffs Matrix, pain and gain: Growth strategies and adaptive learning among small food producers",
International Journal of Entrepreneurial Behaviour & Research, Vol. 4 Iss 2 pp. 101-111 http://
Downloaded by Universitas Gadjah Mada At 01:01 30 March 2017 (PT)

dx.doi.org/10.1108/13552559810224567
(2007),"A new competitive analysis tool: the relative profitability and growth matrix", Strategy & Leadership, Vol. 35 Iss 2
pp. 30-38 http://dx.doi.org/10.1108/10878570710734516

Access to this document was granted through an Emerald subscription provided by emerald-srm:273599 []
For Authors
If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service
information about how to choose which publication to write for and submission guidelines are available for all. Please
visit www.emeraldinsight.com/authors for more information.
About Emerald www.emeraldinsight.com
Emerald is a global publisher linking research and practice to the benefit of society. The company manages a portfolio of
more than 290 journals and over 2,350 books and book series volumes, as well as providing an extensive range of online
products and additional customer resources and services.
Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee on Publication
Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation.

*Related content and download information correct at time of download.


4 MANAGEMENT DECISION 33,6

The MCC decision matrix:


a tool for applying strategic logic to everyday activity
John Nicholls
After the death of the BCG portfolio matrix the search is on for a new strategic theory

Introduction Organizations still have to decide how to allocate their


In his latest book[1], Mintzberg has pronounced the death scarce resources among a number of competing claims.
of strategy. Or, more precisely, the death of formalistic, They have to decide where to concentrate their efforts; to
top-down, regimented strategy making the sort decide what is important and what is not.
Downloaded by Universitas Gadjah Mada At 01:01 30 March 2017 (PT)

represented by that archetypical grand panacea, the


Boston Consulting Group (BCG) portfolio matrix. No The BCG matrix attempted to answer this question by
doubt he is right about that. But strategic theory has looking at the fruits of the organizational tree at its
moved on since then. Would it not be better to up-date our products and the markets to which they are directed.
tools rather than throw away the whole tool box? In spite Product/market considerations were also the primary
of its limitations and failures, the search for strategic basis for identifying strategic business units (SBUs)
theory over the last 30 years has been a noble quest, representing branches of the tree.
driven by a belief that it is better to understand what you
are doing than fly by the seat of your pants. We now recognize that this was too narrow a perspective.
Modern strategic theory suggests we look at the whole
Occasionally, it is indeed possible for firms to hit a tree, rather than at its fruits alone. We then get, as shown
spectacular jackpot without really knowing what they in Figure 1, a much richer picture. Supporting the
are doing or having any idea how to achieve long-term branches, which bear the fruit, is a trunk of core
success in their industry. Alan Sugars trading instincts, processes which are, in turn, fed by the roots of core
for example, took him from flogging car aerials to the competences[3]. It is this underlying technical and
bonanza of word processors for the masses. But then the organizational expertise which feeds the organizations
seat of his pants began to lose its magic! For all its initial, ability to be fruitful with attractive products.
opportunistic success, the instinctive exploiting of
opportunities inevitably runs out of steam. Openings This holistic way of thinking carries strategic theory past
become less obvious; the dynamics of the industry more many of its former deficiencies. Rather than being dead,
complex; competition more intense. In the long run, it is strategy is in the process of rebirth at a more
the organizations that know the most about their fundamental level of understanding. Mintzberg, himself,
business and act on the knowledge which do the best. recognizes this when he writes:
The outcome of strategic thinking is an integrated
This belief in the superiority of fundamental perspective of the enterprisestrategy making is a process
understanding over the instinctive exploiting of interwoven with all that it takes to manage an
opportunities has driven efforts to develop strategic organization[3, p. 108].
theory since Ansoff[2] started it off in the 1960s. The path
has been rocky, full of false dawns and exaggerated This integrated perspective of the enterprise is
expectations. We now realize that understanding can obtained by looking at the whole tree from its roots up,
never be perfect; the world is too fast-changing and messy. rather than at its fruits alone. Looking at the organization
What is more, thinking can never be allowed to become as a tree helps us to see the importance of the roots in
too far divorced from acting. Strategy formulation and feeding the fruit i.e. the importance of core competences
strategy implementation must be closely interwoven. in producing goods and services.

Mintzberg has a point. There is a lot we have done wrong. Incidentally, there is some debate at the moment about the
However, the need for tools to aid strategic decisions will relative importance of core competences as distinguished
always exist. For all its faults, the BCG portfolio matrix from capabilities[4]. This distinction between capability
attempted to answer a problem that is still with us. and the core competences that underlie processes is a fine
one and difficult to pin down. However, since capabilities
have been defined as a set of business processes
Management Decision, Vol. 33 No. 6, 1995, pp. 4-10. MCB University Press strategically understood (Stalk et al.[4]), they can be
Limited, 0025-1747 equated to the core processes of the trunk of the tree.
THE MCC DECISION MATRIX: A TOOL FOR APPLYING STRATEGIC LOGIC TO EVERYDAY ACTIVITY 5

Figure 1. The organization viewed as a tree Using these two dimensions as axes, a modern portfolio
decision matrix can be devised as a tool for allocating
D U resources strategically. The two axes serve both to define
O C
the matrix and give it its name the mission and core
R T competences (MCC) portfolio decision matrix. As can be
seen in Figure 2, the MCC decision matrix has mission on
P
the vertical axis and core competences on the horizontal.
Once defined, each axis is simply divided into two halves,
Strategic representing good and poor fit.
business
units
Unlike the BCG matrix, the MCC matrix can give
guidance on the relative merits of any claim on resources,
not only those associated with competing product/market
CP segments or SBUs. These claims might, for example, be
OR
RO investments in research, the development of new
EC technology or some training initiatives. For convenience,
E such claims on resources will be referred to here, simply,
S
Downloaded by Universitas Gadjah Mada At 01:01 30 March 2017 (PT)

S as projects as distinguished from products.


E
S
Any claim on resources, be it a product or project, is
located on the MCC matrix by answering two questions:
(1) How well does it fit with, and help achieve, the
firms mission?
Core competences (2) How well does it use and further develop the firms
core competences?
Since both axes depend on subjective thinking and
analysis, the construction of the MCC matrix for a given
Still unexplained, however, is what makes the tree grow organization depends on the way it sees itself how it
in the first place. This is to do with the richness of the soil defines its mission and how it analyses its core
the values that feed the organization. It is to do with the competences. This provides a two-way benefit in using
life force that animates the growth and shapes it as the matrix. Not only is the suitability of products and/or
expressed in the vision or mission statement[5]. The projects assessed against the matrix, but also the
importance of vision and values, as expressed in the assessment can challenge the validity of the matrix itself.
mission statement, is an essential part of our modern Thus, use of the matrix stimulates an in-depth
view of strategy. assessment of strategy by simultaneously assessing
products and projects, while verifying the validity of the
Both mission and core competences appear as two of the basic assumptions against which they are tested.
five points of the strategic leadership star, described
elsewhere[6]. The star is an overall guide to the Perhaps the biggest advantage of the MCC matrix is that
management of any organization in achieving its it can be used for strategic assessment at any level within
fundamental purpose of delivering value to the
customer[7]. Although it is only part of the star, however,
the tree analogy is sufficient for our purposes here. The Figure 2. The MCC portfolio decision matrix
tree analogy emphasizes the importance of the roots (core
competences) and soil (the vision and values of the
mission) in sustaining the proliferation of fruit (products
and markets).
Good

The MCC portfolio matrix


As we have seen above, thinking of an organization as a
tree helps wean us from looking at strategy solely in Fit with mission
terms of products and markets using them as the sole
guide to resource allocation. Going beyond the BCG
portfolio, modern strategic thinking, as represented by Poor
the tree analogy, suggests that scarce resources should
support the life force of the organization by feeding the
roots and enriching the soil. In other words, they should
be allocated to activities which strengthen the core Poor Good
competences and help to achieve the mission. Fit with core competences
6 MANAGEMENT DECISION 33,6

an organization. Unlike the BCG matrix, it is not confined Figure 3. The four quadrants of the MCC decision matrix
to assessing claims on resources at the overall enterprise
or SBU level, but can be a useful decision-making tool for
divisions, departments or even smaller units. As long as a
distinct mission can be determined and core competences
recognized, an MCC matrix can be constructed. This Good Dilution Drive
means it can find a use in virtually any organizational
sub-unit.
Fit with mission
This makes it a powerful tool for transforming leadership
in depth[8]. Any sub-unit that has defined its mission and
identified its core competences can use the MCC matrix as
a practical tool to guide its development efforts. In Poor Drain Distraction
this way, strategic thinking can be brought to bear
throughout an organization.

In summary, the MCC decision matrix has three merits as Poor Good
Downloaded by Universitas Gadjah Mada At 01:01 30 March 2017 (PT)

a strategic tool when allocating resources: Fit with core competences


(1) It looks at the fundamental health of the entire
organizational tree by linking the organizations proper drives. Their names have been chosen to indicate
mission and its core competences when making the potential damage that they do by being strategically
strategic decisions. sub-optimal.
(2) Its very use helps to challenge and refine the Products or projects in the bottom right quadrant are
assumptions behind the definition of mission and
called distractions they depend on the core
identification of core competences.
competences but do not fit the mission. They are
(3) It can be used for strategic assessment by any attractive because they use current skills but, if the
organizational sub-unit that is able to define its mission is correctly defined, are dangerously distracting
mission and identify its core competences. from the central purpose.
Thus, the regular use of the MCC matrix as a diagnostic
and decision-making tool will, simultaneously, help apply Products or projects in the top left quadrant are called
strategic thinking to resource-allocation decisions, dilutions they fit the mission but do not draw on, or
continuously refine the quality of the strategic thinking further develop, the core competences as currently
and make sure that it is applied, as appropriate, at every defined. They are attractive because they help fulfil the
level within the organization. mission but, if retained, they dilute the necessary
concentration on the core competences.
The four quadrants of the MCC matrix
To make the MCC matrix a useful working tool, the
implications for claims falling in each of the four
quadrants must be identified. To do this, the four Using the MCC matrix to assess specific claims
quadrants are named and defined as shown in Figure 3. on resources
When using the MCC decision matrix, a product or project
Products or projects which fall in the upper right is assessed for its degree of fit, good or poor, with the
quadrant of the matrix are called drives their fit is mission and the core competences. It is then placed in the
high with both the mission and the core competences. In appropriate quadrant of the matrix. If it is a drive, it is to
this quadrant, resources are being devoted to things that be cherished. If it is a drain, it is to be discarded. The
have strategic synergy in driving the organization appropriate action in these cases is clear and, subject to
forward. They should be cherished. some caveats examined later, there is no problem.
By contrast, products or projects which fall in the lower Distractions and dilutions are more problematic. At first
left quadrant meet neither criterion and are called sight, they ought to be discarded/rejected on principle,
drains. Although they may often produce attractive Their lack of fit on one dimension means they are
short-term results, they are a drain on the organizations
strategically sub-optimal and, thus, a potential source of
long-term strategic strength. They are candidates for
long-term damage. To keep them is, in fact, a deadly trap.
elimination.
There are, however, three powerful sources of temptation
Products or projects which fall into the other two to do nothing and just accept a distraction/dilution. These
quadrants are not so clear cut; they meet one criterion but sources of temptation are:
not the other. Their potential in meeting one criterion (1) Although not perfect as drives, distractions/
stops them being straight drains. Nor, however, are they dilutions help on the one dimension where they do
THE MCC DECISION MATRIX: A TOOL FOR APPLYING STRATEGIC LOGIC TO EVERYDAY ACTIVITY 7

fit. At least, either they help to fulfil the mission or So what is to be done if the financial benefit of the
they use and strengthen the core competences. distraction/dilution is very great or the arguments in
(2) Many of them also make a significant contribution favour by the vested interests are very strong? Or what if,
to turnover and/or profit. as touched on above, the loss of potential strength by
discarding/rejecting is significant and ought to be
(3) Regardless of everything else, they very often avoided? The pressure to do nothing can be almost
receive substantial support from people who have irresistible, in spite of the long-term penalties.
a vested interest in their continuation.
Taking the first temptation, what harm is there in doing Rather than yielding to the temptation, however, the
nothing and just accepting the benefit that comes from a correct response to this pressure is to answer a much
fit on one of the dimensions only? Let us look at the two more basic and challenging question: How can a
cases. distraction/dilution be converted into a drive? If this could
be done, there would be no loss of potential strength by
discarding/rejecting it, vested interests could be satisfied
The argument in favour of accepting a distraction would and the short-term financial benefit could be reaped
be that, since it builds on the core competences, why without any long-term strategic damage.
worry that it does not help fulfil the mission? The danger
lies, of course, in the distraction of management effort
Downloaded by Universitas Gadjah Mada At 01:01 30 March 2017 (PT)

from the central purpose. By losing concentration, the


focus becomes blurred, with the inevitable loss of
Converting a distraction or dilution into a drive
competitive edge. A distraction or a dilution can be converted into a drive in
one of two ways:
Similarly, a dilution makes a contribution to fulfilment of (1) the product or project could be developed in some
the mission. So, what is the harm in retaining it even if it way that overcomes its lack of fit on the missing
uses non-core competences? The damage comes, of dimension;
course, in the dilution of effort, as resources are (2) the framework of the matrix could be modified to
misapplied to building the non-core competence. But eliminate the lack of fit on the missing dimension.
what if one avoids the mistake of building up a non-core The first of the two ways is somehow to overcome the
competence? Then, the likelihood is that the effectiveness lack of fit so as to avoid distraction from the mission or
of the dilution will decay from neglect of the required dilution of concentration on the core competences.
competence and it will cease to make a contribution to the
mission. How might this be done for a distraction products or
projects that depend on the core competences but do not
So, we see that doing nothing and just accepting fit the mission? How can they be allowed to continue
distractions/dilutions has clear strategic penalties. But without a fatal distraction from the central mission? One
what of the other two temptations? way might be to separate them off into a clearly distinct
subsidiary. This could then have its own mission without
Distractions often receive strong support from those distracting from the parents. This half-way house gives
within the organization who are experts in the core time for the position to clarify. If the subsidiary prospers
competence. They revel in exercising it and savour the and grows in importance, it may lead to an eventual
esteem that its possession brings, losing sight of the redefinition of the mission. If, on the other hand, it
ultimate mission being served. By virtue of their vital remains a minor distraction it may be sold off in a
expertise, they also tend to have a strong voice in the rationalization.
decision making of the organization.
For innovative ideas that do not fit the mission,
Dilutions, of course, often seem attractive simply because organizations are experimenting with the idea of
intrapreneurs[9]. The opportunity is created for people to
they are contributing to fulfilment of the mission. They
pursue a passionate but unorthodox interest without
may be filling a gap or completing a range of cover. These having to leave the organization and set up in
arguments will be reinforced by those who have a vested competition.
interest in the non-core competence used by the dilution
since it would otherwise not be valued. What could be done for dilutions products or
projects that fit the mission but do not strengthen the
These vested interests can be very powerful, especially if core competences? How can they be allowed to
backed by the second temptation. If the distraction/ continue without diluting the organizations essential
dilution is making a significant contribution to turnover strength by misapplying resources to the development
and/or profit, it is tempting to ask the question, Does the of non-core competences? One way would be to gain
financial benefit that might be lost if it were access to the non-core competence via a joint venture
discarded/rejected outweigh the damage it might do if or other co-operative agreement. By this means, the
kept? It is often difficult to say no. competence of a joint venture partner is used to help
8 MANAGEMENT DECISION 33,6

fulfil the mission. In the very early stages of an core competences. The mission becomes stated with
innovative idea that fits the mission, the missing more clarity and the core competences are analysed
competence to pursue it may come by resorting to more precisely. Over time, the stimulation from such
contract research or using the expertise of consultants. challenges helps to ensure that the matrix has been
properly constructed. Only after thoroughly checking
The second way of converting a distraction or a the framework should drives be accepted for
dilution into a drive is to modify the framework to cherishing; only at this point should action be taken to
eliminate the lack of fit on the missing dimension i.e. discard drains.
distort the framework. This may sound like cheating
if something does not fit a framework, simply distort Using the matrix in this way would help in cherishing drives
the framework until it does fit! But what if the that are truly worthy and avoiding the discard/rejection of
framework has been poorly constructed in the first products/projects that might, superficially, appear to be
place? This, in fact, is very likely to be the case. Let us drains. This might avoid the unwise sacrifice by many major
think about it. firms of their core competences. Because they have not
properly understood their core competences, many firms
Consider something that seems to be a distraction. This have allowed vital skills to be subcontracted or yielded up to
could be a product that depends on what are deemed to be joint venture partners.
Downloaded by Universitas Gadjah Mada At 01:01 30 March 2017 (PT)

the core competences, and is making a profitable


contribution to the business, but does not fit the mission, As noted by Prahalad and Hamel:
as defined. Is it not worth taking a look at the mission Too many companies have unwittingly surrendered core
statement to see why the product does not seem to fit? If, competencies when they cut internal investment in what
on reflection, it really does not fit, what does that tell us they mistakenly thought were just cost centres
about our identification of the core competences? Surely, Outsourcing can provide a short-cut to a more competitive
if the competence is truly core, a product which depends product, but it typically contributes little to building the
on it ought to fit the mission. people-embodied skills that are needed to sustain product
leadershipWhen it comes to core competencies, it is
Similarly, consider something that seems to be a difficult to get off the train, walk to the next station, and then
dilution. This could be a product that is making a reboard[3, pp. 84/5].
profitable contribution, helping to fulfil the mission, but In this respect, can it be right for GTE Sylvania no longer
is not tapping into the core competences. Is it not worth to make semiconductors or for K-mart to contract out all
looking at the definition of core competence? Almost by its distribution? Certainly, their major competitors have
definition, the competences must be core if they permit a done the opposite. Wal-Mart regards distribution as a
product to contribute profitably to fulfilling the mission. core competence and NEC has cherished semiconductors
If they really are not, then have we got the mission right? while steadily overhauling GTE. Perhaps other decisions
would have been made if GTE and K-mart had used the
These challenges to the framework illustrate the value principles behind the MCC matrix to focus their strategic
of the MCC matrix in making us examine our thinking on the synergy between mission and core
definitions of mission and core competences. If they are competences, thus giving a deeper understanding of
properly defined and analysed, there is a natural both.
synergy between these two. Any deficiencies in
definition and/or analysis will quickly be revealed At a deeper level, the clarification of mission and core
when using the matrix. This is the second of the three competences which comes from use of the MCC decision
benefits mentioned earlier. In addition to the primary matrix as an everyday tool should assist in effecting the
use of the matrix in making resource-allocation paradigm shifts that are required to achieve
decisions, it is valuable as a tool for overall strategic transformations. In this regard, Pascale[10] says that
review and refinement. strategic thinking:
...involves understanding the basic economics of a business:
identifying ones sources of competitive advantage, and
Discarding drains and cherishing drives allocating resources to insure that ones distinctive
Earlier, it was stated rather categorically that drives capabilities remain strong. But these are the tactical aspects
should be cherished and drains should be discarded. This of strategy...strategys most important contribution is
is true if we can be sure that the drives and drains have searching for, and redefining, context (i.e. the business
been properly classified in a sound framework. Our paradigm). (italics in the original)
comfort that this is the case might be increased if we first Relating the MCC decision matrix to this quote, one
used the matrix to assess some distractions and dilutions might consider it to be purely tactical since the matrix
to see if this stimulated any challenge to the framework. concentrates on applying the current understanding of
mission and core competences. As we have seen,
Such challenges to the framework deepen the however, its regular use helps to relate a broad range of
understanding of the synergy between mission and daily decisions to the fundamental strategic parameters
THE MCC DECISION MATRIX: A TOOL FOR APPLYING STRATEGIC LOGIC TO EVERYDAY ACTIVITY 9

of the matrix. This constantly challenges the defined and core competences recognized, a unit can use
parameters, requiring their revision and formenting the matrix to assess claims made on its resources. Thus,
shifts in the paradigm. the MCC decision matrix is a powerful tool of
transforming leadership, facilitating the daily use of
It is interesting to note that others are exploring the strategic thinking at depth within the organization.
strategic significance of relating mission to core
competences. In a recent article, Verdin and When using the matrix, products or projects are located
Williamson[11] advocate basing strategy on a in one of four quadrants. Those which fit both the mission
combination of an inward look at core competences with and the core competences are called drives and are to be
an outward look at the market. Although the MCC cherished. Those which fit neither are called drains and
decision matrix uses the mission to provide the outward are to be discarded. Distractions fit the core competences
look, rather than using the market, the approaches are but distract from a sharp competitive focus because they
clearly compatible. do not fit the mission. Dilutions fit the mission but dilute
concentration on the core competences because they do
More specifically, Tampoe[12] maintains that, in not use or develop them.
assessing opportunities, one should put core
competences in context, particularly, with regard to the Distractions and dilutions are to be avoided. As their
Downloaded by Universitas Gadjah Mada At 01:01 30 March 2017 (PT)

strategic intent of the firm. He goes on to say, the ability names imply, they either distract management attention
of an organization to sustain profitable growth is derived from the mission or dilute the strength of the core
from converting its vision into reality by combining its competences. This long-term strategic damage outweighs
shared goals, its organizational motivation and its core any financial contribution they may make and whatever
competence. These dimensions are, of course, precisely potential strength they may bring on the one dimension
those of the MCC matrix. Tampoe, in fact, cites core of the matrix where there is a fit. These temptations to do
competence of company and shared strategic direction nothing and simply accept them are often supplemented
as the first two components of an equation for a firms by pressure from those who have a vested interest in the
capacity for sustained profitable growth. distractions or dilutions.

Finally, Wilson[13], when reporting on a survey of 50 Whatever the temptation or pressure to do nothing and
corporations, notes a shift in planning responsibility tolerate distractions and/or dilutions, it should be
from staff to line managers and from corporate level to resisted. The correct way to deal with them, to preserve
business unit level. The MCC matrix is an ideal tool to their potential contribution with none of the penalty, is to
assist in this. Especially as its incorporation of mission find some way to convert them into drives. This may be
on one axis matches his finding that there is a growing achieved by developing them in some respect to provide
emphasis on organization and culture as critical the fit on the missing dimension; or by adjusting the
ingredients in the execution of strategy, while the other matrix through redefinition of the mission or re-analysis
axis matches his finding that core competences analysis of the core competences.
is the most mentioned strategic planning methodology.
The challenges to the matrix framework that may arise
when converting attractive distractions/dilutions into
Conclusion drives are an important secondary benefit of using the
Inspired by the BCG portfolio matrix, the MCC decision MCC decision matrix. Used regularly, it can greatly
matrix has been devised to help firms answer the same strengthen the quality of strategic thinking in depth.
basic question: How should we allocate scarce resources While making sure the current strategy is implemented
between competing claims? The axes of the matrix reflect properly, it also causes a rethink and challenge to what
the modern emphasis in strategic thinking on mission Pascale calls the context paradigm: how has the
and core competences rather than on products/markets. mission been defined and the core competences
Viewing the organization as a tree focuses on the life force identified?
(mission) that feeds its roots (core competences) rather
than on the fruit alone (products/markets). From a didactic point of view, the four quadrants of the
matrix are named with evocative words all beginning with
The matrix classifies any claim on resources (products or D: drive, drain, distraction, dilution. What is more, the
projects) as a drive, drain, distraction or dilution. An treatment of distractions/dilutions is characterized by four
organization is strongest when all its resources are words also beginning with D: rather than doing nothing,
devoted to drives and none to drains; in other words, distractions and dilutions should be discarded, unless they
when everything it does helps to fulfil its mission while can be developed in some way or the framework distorted
using and strengthening the core competences. so that the claim qualifies as a drive.

The use of the MCC decision matrix is not confined to the For those who find the two-by-two matrix too stark, a
organization as a whole; it can be applied to any three-by-three directional policy matrix can be used as a
recognizable sub-unit. As long as a mission can be guide to action (see Figure A1 (Appendix)).
10 MANAGEMENT DECISION 33,6

Overall, the MCC decision matrix is a powerful tool for Appendix: an MCC directional policy matrix
applying strategic logic to all types of resource-allocation For some tastes, the original BCG portfolio matrix was too
decisions throughout an organization. Its regular use mechanistic and prescriptive. To overcome this the concept was
ensures that strategic thinking is applied to activity at modified to a more qualitative, three-by-three, directional
every level. What is more, the quality of that thinking is policy matrix. The version developed by Shell[14] is one of the
continually improved as the matrix forces a constant earliest and best known.
testing and revision of the strategic parameters on which
it is based. It is easy to present the MCC matrix in the form of a directional
policy matrix. This has been done in Figure A1 using the ideas
developed above from use of the two-by two matrix. On each
References axis, the degree of fit is determined as high, medium or low
1. Mintzberg, H., The fall and rise of strategic planning, permitting any claim on resources (product or project) to be
Harvard Business Review, January-February 1994. placed in one of the nine cells.
2. Ansoff, H.I., Corporate Strategy, McGraw-Hill, New York,
Locating a product or project in the directional policy matrix
NY, 1965.
gives a guide to the appropriate action. Every cell has an action.
3. Prahalad, C.K. and Hamel, G., The core competence of The do-nothing option does not occur, for all the reasons
the corporation, Harvard Business Review, May-June advanced earlier. Discarding is the action in the extreme only.
Downloaded by Universitas Gadjah Mada At 01:01 30 March 2017 (PT)

1990.
Everywhere else, some sort of development is suggested.
4. Stalk, G., Evans, P. and Schulman, L.E., Competing on
capabilities: the new rules of corporate strategy, The directional policy matrix, being less either/or, does not so
Harvard Business Review, March-April 1992. strongly provoke a challenge to the framework, inviting it to be
5. Campbell, A., Devine, M. and Young, D., A Sense of distorted to make a fit.
Mission, Financial Times/Pitman, London 1990.
6. Nicholls, J.R., The strategic leadership star: a guiding
light in delivering value to the customer, Strategic Figure A1. The MCC directional policy matrix
Direction, No. 105, July/August 1994.
7. Nicholls, J.R., Value to the customer, The TQM
Magazine, April 1990.
Look for a Develop by
8. Nicholls, J.R., The heart, head and hands of High
joint venture building the Cherish
transforming leadership, Leadership & Organization competence
Development Journal, Vol. 15 No. 6, 1994.
9. Pinchot, G.I., Intrapreneuring, Harper & Row, New York,
NY, 1985.
Fit with
10. Pascale, R.T., Managing on the Edge, Simon & Schuster, the Medium
Watch closely, Maintain but Allow pursuit
New York, NY, 1990. mission do not delay not by an
decision indefinitely "intrapreneur"
11. Verdin, P. and Williamson, P., Successful strategy: star-
gazing or self-examination?, European Management
Journal, Vol. 12 No. 1, March 1994.
12. Tampoe, M., Exploiting the core competencies of your Watch closely,
organization, Long Range Planning, Vol. 27 No. 4, Low Discard Separate into
do not delay a subsidiary
August 1994. decision
13. Wilson, I., Strategic planning isnt dead it changed,
Long Range Planning, Vol. 27 No. 4, August 1994.
Low Medium High
14. Hussey, D., Portfolio analysis: practical experience with
the DPM, Long Range Planning, Vol. 11 No. 4, 1978. Fit with core competences

John Nicholls is Senior Partner of John Nicholls Associates, Islip, Northamptonshire, UK.

Application questions
(1) Evaluate two or three present or past directional decisions for your organization using the MCC matrix.
(2) Is top-down, formalized strategy making dead?
(3) Map your organizations current portfolio of products/projects/business units using the directional policy matrix,
as shown in Figure A1. What indications can you draw?
Downloaded by Universitas Gadjah Mada At 01:01 30 March 2017 (PT)

11
MANAGEMENT DECISION 33,6
This article has been cited by:

1. Mustafa Sahban Al-Tekreeti American University of Sharjah, Sharjah, United Arab Emirates Salwa Mamoun Beheiry
Department of Civil Engineering, American University of Sharjah, Sharjah, United Arab Emirates . 2016. A decision matrix
approach to green project management processes. World Journal of Science, Technology and Sustainable Development 13:3,
174-189. [Abstract] [Full Text] [PDF]
2. David J. Burns Professor, based at Department of Marketing, Xavier University, Cincinnati, Ohio, USA . 2014. Succeeding
at new businesses: a matrix to measure flexibility. Journal of Business Strategy 35:5, 23-30. [Abstract] [Full Text] [PDF]
3. John K. Ross, Sherry K. Ross, Bruce A. McClung. 2006. Ethical Decision Making and Organizational Behavior: A Case of
Life and Death. HEC Forum 18:3, 193-206. [CrossRef]
4. Claudio VignaliThe Arnold Ziff Chair in Retailing, Leeds Metropolitan University, Leeds, UK Mike ZundelIBM, Germany.
2003. The marketing management process and heuristic devices: an action research investigation. Marketing Intelligence &
Planning 21:4, 205-219. [Abstract] [Full Text] [PDF]
5. Patricia Knowles, Roger Gomes. 1997. Use of the Customer Value/Mission (CV/M) Matrix in Strategic Nonprofit Marketing
Analysis. Journal of Nonprofit & Public Sector Marketing 5:2, 43-63. [CrossRef]
Downloaded by Universitas Gadjah Mada At 01:01 30 March 2017 (PT)