What We Are and What Customers Want 2×2
Focus strategy by mapping core identity against present and future demand.
- Difficulty
- Moderate
- Time to result
- ~weeks to results
- Steps
- 5
- Confidence
- 97%
This 2×2 clarifies focus using two dimensions: what the company is versus what it is not, and what customers want now versus what they do not yet know they will want. Leaders first define the capabilities or differentiation that make the company genuinely distinctive. They then eliminate opportunities outside that identity before separating present customer demand from plausible future demand. The resulting map distinguishes immediate, competency-aligned work from longer-term bets that may fit the company but require the market to develop. Its primary output is not a crowded portfolio; it is a short list of coherent bets and an explicit set of activities the company will refuse. That clarity limits empire building, protects resources, and lets teams develop greater depth of thought.
Origin
Kipp Bodnar introduced the 2×2 while discussing how Yahoo’s lack of focus allowed investments and internal projects to spread across too many priorities. Extracted from Marketing Against The Grain.
Core principles
- 01Define what the company uniquely does better or differently.
- 02Reject activities outside the company’s identity and competencies.
- 03Balance current customer needs with credible future demand.
- 04Use strategic boundaries to prevent every opportunity becoming a priority.
How to run it
- 1
Define What You Are
Identify the capabilities, differentiation, and customer value the company can credibly claim as its core identity. Look for areas where the organization is not merely competent but meaningfully better or different.
Pro tip Use demonstrated customer outcomes and distinctive capabilities rather than an aspirational brand statement.
Watch out Do not define the company so broadly that every possible project appears to fit.
- 2
Define What You Are Not
Name adjacent activities, markets, and capabilities that fall outside the company’s identity. Treat this boundary as permission to reject otherwise attractive opportunities.
Pro tip Include tempting projects that influential internal advocates are likely to champion.
Watch out A boundary that never forces a difficult refusal is probably too vague.
- 3
Map Present Demand
List what customers demonstrably want today and locate the needs that overlap with the company’s core identity. Prioritize the strongest intersections.
Pro tip Ground present demand in customer behavior, purchases, retention, and direct research.
Watch out Do not mistake the loudest internal voice for validated customer demand.
- 4
Map Future Demand
Identify needs customers cannot fully articulate today but are likely to develop as technology or markets change. Keep only future bets that fit a plausible future core competency.
Pro tip State the assumptions and time horizon behind every future-demand bet.
Watch out Do not use speculative demand to justify unrelated experiments.
- 5
Concentrate the Portfolio
Exit projects outside the relevant intersections and select a short list of current and future bets. Repeat these priorities until teams can recognize and discuss them consistently.
Pro tip Limit the active strategic list to roughly three to five memorable priorities.
Watch out Retaining every existing project undermines the focus the matrix is meant to create.
In the wild
The hosts describe Google as uniquely strong at enabling discovery of the world’s information and scaling technical talent. Maps fits that identity clearly, while some connectivity and drone projects have a weaker relationship to those distinctive competencies. Applying the matrix would retain products aligned with information discovery and scrutinize projects justified mainly by available cash or internal advocacy.
→ A more coherent portfolio centered on capabilities where Google has a distinctive advantage.
A growing analytics company defines itself as the easiest way for small retailers to understand repeat purchases. It rejects custom enterprise consulting, prioritizes a requested retention dashboard, and keeps an AI forecasting assistant as a future-demand experiment. It closes unrelated projects even though individual executives support them.
→ Resources shift to one immediate customer need and one identity-aligned future bet.
Common mistakes
Defining Identity as Everything
A company that describes itself with broad terms such as innovation or technology creates no usable boundary and cannot reject projects.
Letting Advocates Substitute for Evidence
Projects can balloon because their sponsors sell well and gather resources, not because they fit customer demand or the company’s strengths.
Treating Every Future Idea as Strategic
Speculative demand should not excuse investments that lack a credible connection to the organization’s future competency.
Is it for you?
Best for
It is best for leadership teams choosing priorities during a new phase of growth.
Not ideal for
It is not ideal when the organization lacks basic customer evidence or has not identified any credible differentiator.
From the transcript
“It's what you said, the horizontal axis, what we are and what we're not, right?”
“The other vertical axis is what our customers want and what our customers don't yet know they want.”
“I think it comes back down to the better or different framework. Like, I think the thing that you truly are is the thing that…”
From the episode
This Leaked Memo From Yahoo Explains Why Big Businesses Fail