Frameworks provide structure for thinking about complex problems. They don’t give answers—they guide analysis toward better questions.
This guide covers essential frameworks across four domains: strategic analysis, operational excellence, innovation, and decision-making.
Strategic Frameworks
Porter’s Five Forces
Origin: Michael E. Porter, Harvard Business School, 1979
Porter’s Five Forces analyzes industry attractiveness by examining competitive pressures.
The Five Forces
1. Threat of New Entrants
What prevents new competitors from entering?
- Capital requirements
- Economies of scale
- Brand loyalty and switching costs
- Regulatory barriers
- Access to distribution channels
2. Bargaining Power of Suppliers
How much leverage do suppliers have?
- Supplier concentration
- Switching costs to alternative suppliers
- Importance of volume to supplier
- Differentiation of supplier inputs
3. Bargaining Power of Buyers
How much leverage do customers have?
- Buyer concentration and volume
- Price sensitivity
- Switching costs
- Availability of substitutes
- Information transparency
4. Threat of Substitutes
What alternatives exist outside the industry?
- Price-performance of substitutes
- Switching costs
- Buyer propensity to substitute
5. Competitive Rivalry
How intense is competition among existing players?
- Number and equality of competitors
- Industry growth rate
- Fixed costs and exit barriers
- Product differentiation
Limitations
- Static snapshot—doesn’t capture dynamic competition
- Assumes clear industry boundaries (challenged by digital disruption)
- Neglects internal resources (combine with Resource-Based View)
- Focuses on competition, not cooperation
Best For
- Analyzing whether to enter an industry
- Understanding competitive dynamics before making major investments
- Identifying where to focus competitive strategy
Blue Ocean Strategy
Origin: W. Chan Kim and Renée Mauborgne, INSEAD, 2005
Blue Ocean Strategy argues that competing in existing markets (“red oceans” bloody with competition) is the wrong focus. Instead, create uncontested market space.
The ERRC Grid (Four Actions Framework)
| Action | Question |
|---|---|
| Eliminate | What factors does the industry compete on that can be removed? |
| Reduce | What factors can be reduced well below industry standard? |
| Raise | What factors should be raised well above industry standard? |
| Create | What factors should be created that the industry has never offered? |
Core Concept: Value Innovation
Blue Ocean requires simultaneous pursuit of differentiation AND low cost—traditionally seen as trade-offs.
By eliminating and reducing factors the industry competes on, you lower costs. By raising and creating factors, you create differentiation.
Classic Example: Cirque du Soleil
| Eliminated | Reduced | Raised | Created |
|---|---|---|---|
| Star performers | Fun and humor | Unique venue | Theme/storyline |
| Animal shows | Thrill and danger | Artistic music/dance | |
| Aisle concessions | Refined environment | ||
| Multiple show arenas | Multiple productions |
Result: A new market space that wasn’t “circus” or “theater” but something new.
Best For
- Markets with commodity competition
- Situations requiring differentiation beyond incremental improvement
- Strategic planning sessions
Ansoff Matrix
Origin: H. Igor Ansoff, 1957
The Ansoff Matrix guides growth strategy by mapping products against markets.
The 2x2 Grid
| Existing Products | New Products | |
|---|---|---|
| Existing Markets | Market Penetration (LOWEST RISK) | Product Development |
| New Markets | Market Development | Diversification (HIGHEST RISK) |
Market Penetration: Sell more of existing products to existing customers. Increase usage, win competitor customers, convert non-users.
Market Development: Sell existing products to new markets. Geographic expansion, new segments, new channels.
Product Development: Create new products for existing customers. Extensions, upgrades, complementary products.
Diversification: New products for new markets. Highest risk—requires new capabilities for unknown customers.
Best For
- Growth planning and strategic options analysis
- Risk assessment for expansion initiatives
- Resource allocation decisions
BCG Matrix
Origin: Boston Consulting Group, 1970s
The BCG Matrix manages product/business unit portfolios based on market position and growth.
Four Quadrants
| High Market Share | Low Market Share | |
|---|---|---|
| High Growth | Stars (invest heavily) | Question Marks (selective investment) |
| Low Growth | Cash Cows (harvest) | Dogs (divest or reposition) |
Stars: Market leaders in growing markets. Require investment to maintain position. Will become Cash Cows as growth slows.
Cash Cows: Market leaders in mature markets. Generate excess cash to fund Stars and Question Marks.
Question Marks: Low share in growing markets. Require investment to become Stars—or accept Dog status.
Dogs: Low share in mature markets. Consume management attention without returns. Divest unless strategic reasons exist.
Limitations
- Market growth and share are simplistic metrics
- Ignores synergies between business units
- Market definition significantly impacts positioning
SWOT Analysis
Origin: Stanford Research Institute, 1960s; used by 80%+ of Fortune 500 companies
SWOT provides foundational strategic analysis through four lenses.
The Framework
| Internal | Strengths | Weaknesses |
|---|---|---|
| External | Opportunities | Threats |
Strengths: Internal capabilities that provide competitive advantage
Weaknesses: Internal limitations that create competitive disadvantage
Opportunities: External conditions that could be exploited
Threats: External conditions that could cause harm
Limitations
- Oversimplifies complex issues
- Doesn’t prioritize factors
- Lists without analysis
- Porter criticized it for lack of analytical rigor
Best Use
Use SWOT as a starting point, not an ending point. Combine with PESTLE (external analysis) and other frameworks for depth.
Operational Frameworks
Lean Manufacturing
Origin: Toyota Production System, 1950s-1980s; term “lean” coined by MIT researchers (1990)
Lean focuses on eliminating waste to deliver maximum value to customers.
The 8 Wastes (DOWNTIME)
| Waste | Description |
|---|---|
| Defects | Products/services that don’t meet specifications |
| Overproduction | Making more than needed or before needed |
| Waiting | Idle time between process steps |
| Non-utilized talent | Underusing people’s skills and knowledge |
| Transportation | Unnecessary movement of materials |
| Inventory | Excess materials, work-in-progress, or finished goods |
| Motion | Unnecessary movement of people |
| Extra-processing | More work than required by customer |
Core Principles
- Value: Define value from customer perspective
- Value Stream: Map all steps and eliminate waste
- Flow: Make remaining steps flow smoothly
- Pull: Produce only what customers demand
- Perfection: Continuously improve (Kaizen)
Six Sigma
Origin: Bill Smith at Motorola, 1986
Six Sigma reduces variation and defects through rigorous measurement and process control.
DMAIC Methodology
| Phase | Focus | Key Activities |
|---|---|---|
| Define | Problem statement | Charter, scope, stakeholders |
| Measure | Baseline data | Current performance, process mapping |
| Analyze | Root cause | Statistical analysis, hypothesis testing |
| Improve | Solution development | Pilot testing, optimization |
| Control | Standardization | Monitoring, documentation |
Certification Levels
White Belt → Yellow Belt → Green Belt → Black Belt → Master Black Belt
OKRs
Origin: Andy Grove at Intel (1970s); popularized by John Doerr at Google (1999)
OKRs (Objectives and Key Results) align goals across organizations through ambitious targets and measurable outcomes.
Components
Objectives: Qualitative, inspirational goals
- What we want to achieve
- Memorable and motivating
- Aligned with strategy
Key Results: Quantitative metrics (typically 3-5 per objective)
- How we measure progress
- Specific and measurable
- Time-bound (usually quarterly)
Characteristics
- Quarterly cadence
- Ambitious/stretch goals (70% achievement often equals success)
- Transparent across organization
- Separate from compensation (to encourage ambition)
Example
Objective: Become the most trusted name in customer support
Key Results:
- Achieve Net Promoter Score of 70
- Reduce average response time to under 2 hours
- Maintain 95% first-contact resolution rate
Balanced Scorecard
Origin: Robert Kaplan and David Norton, Harvard Business School, 1992
The Balanced Scorecard measures organizational performance beyond financials.
Four Perspectives
| Perspective | Focus | Example Metrics |
|---|---|---|
| Financial | Shareholder value | Revenue, ROI, profit margin |
| Customer | Customer satisfaction | NPS, retention, market share |
| Internal Process | Operational excellence | Efficiency, quality, cycle time |
| Learning & Growth | Future capability | Employee skills, technology, culture |
The insight: Financial metrics are lagging indicators. Leading indicators from other perspectives predict future financial performance.
Innovation Frameworks
Jobs-to-be-Done
Origin: Tony Ulwick (1990s); popularized by Clayton Christensen (2003)
Jobs-to-be-Done (JTBD) focuses on what customers are trying to accomplish, not who they are.
Core Premise
“People don’t want a quarter-inch drill, they want a quarter-inch hole.”
Customers “hire” products to get jobs done. Understanding the job—not the customer demographics—unlocks innovation.
Three Job Types
| Type | Description | Example |
|---|---|---|
| Functional | Practical tasks to accomplish | ”Help me get to work on time” |
| Emotional | How customers want to feel | ”Make me feel safe” |
| Social | How customers want to be perceived | ”Make me look successful” |
Famous Example: McDonald’s Milkshake
Research discovered people “hired” milkshakes for boring morning commutes—not as desserts or treats. The job: “Give me something to do during my commute that’s not messy and lasts a while.”
This insight led to different improvements than demographic analysis would suggest.
Design Thinking
Origin: IDEO/Tim Brown; Stanford d.school
Design Thinking applies designer methodology to business problems through empathy and iteration.
Five Stages
| Stage | Focus | Methods |
|---|---|---|
| Empathize | Understand users deeply | Observation, interviews, immersion |
| Define | Articulate the problem clearly | Point-of-view statements, “How might we…” |
| Ideate | Generate solution possibilities | Brainstorming, worst idea, analogies |
| Prototype | Create quick representations | Paper prototypes, mockups, role-play |
| Test | Gather feedback and iterate | User testing, observation, refinement |
Key Principles
- Human-centered (start with user needs)
- Bias toward action (prototype over plan)
- Embrace iteration (fail fast, learn fast)
- Cross-functional collaboration
Lean Startup
Origin: Eric Ries, 2008/2011
Lean Startup applies scientific method to entrepreneurship through rapid experimentation.
Build-Measure-Learn Loop
- Build: Create Minimum Viable Product (MVP)
- Measure: Gather data on customer response
- Learn: Validate or invalidate hypotheses
The goal: Minimize time through the loop to maximize learning before resources run out.
Key Concepts
MVP (Minimum Viable Product): The smallest thing you can build to test a hypothesis. Not a stripped-down product—a learning vehicle.
Pivot: A structured course correction based on validated learning. Not failure—strategic adjustment.
Validated Learning: Learning backed by empirical data from real customers, not opinions or projections.
Business Model Canvas
Origin: Alexander Osterwalder, 2004-2010
The Business Model Canvas visualizes business strategy on a single page through nine building blocks.
Nine Building Blocks
| Block | Question |
|---|---|
| Customer Segments | Who are we creating value for? |
| Value Propositions | What value do we deliver? |
| Channels | How do we reach customers? |
| Customer Relationships | How do we acquire/retain/grow? |
| Revenue Streams | How do we capture value? |
| Key Resources | What do we need to deliver? |
| Key Activities | What must we do well? |
| Key Partnerships | Who helps us? |
| Cost Structure | What does it cost? |
Best For
- Visualizing current business model
- Exploring new business model options
- Communicating strategy across teams
- Startup pitch development
Decision-Making Frameworks
Eisenhower Matrix
Origin: Attributed to President Dwight Eisenhower
The Eisenhower Matrix prioritizes tasks by urgency and importance.
Four Quadrants
| Urgent | Not Urgent | |
|---|---|---|
| Important | Q1: DO FIRST (Crises, deadlines) | Q2: SCHEDULE (Strategy, relationships) |
| Not Important | Q3: DELEGATE (Interruptions, some meetings) | Q4: ELIMINATE (Time wasters) |
Key insight: Leaders should spend most time in Q2 (important but not urgent)—strategy, relationships, prevention. Q1 dominates when Q2 is neglected.
OODA Loop
Origin: Colonel John Boyd, U.S. Air Force
The OODA Loop (Observe, Orient, Decide, Act) enables rapid adaptation in dynamic environments.
Four Stages
- Observe: Gather information from environment
- Orient: Analyze and synthesize observations
- Decide: Determine course of action
- Act: Execute decision
Key Insight: Orientation is central—your mental models and biases shape how you perceive reality. Acting faster than opponents “gets inside their OODA Loop,” creating confusion and disadvantage.
First Principles Thinking
First principles thinking breaks problems down to fundamental truths and reconstructs solutions from the ground up.
Process
- Identify current assumptions
- Break down to fundamental truths
- Reconstruct solution from ground up
Famous Example: Elon Musk on Batteries
Instead of accepting “$600/kWh is how batteries cost,” Musk asked: “What are batteries made of? What do those raw materials cost?”
Analysis revealed raw material costs around $80/kWh. The conclusion: There must be a path to dramatically lower battery costs by rethinking manufacturing.
Framework Selection Guide
| Need | Framework |
|---|---|
| Industry analysis | Porter’s Five Forces |
| Competitive differentiation | Blue Ocean Strategy |
| Growth options | Ansoff Matrix |
| Portfolio management | BCG Matrix |
| Quick strategic overview | SWOT Analysis |
| Waste elimination | Lean Manufacturing |
| Quality improvement | Six Sigma |
| Goal alignment | OKRs |
| Balanced measurement | Balanced Scorecard |
| Customer insight | Jobs-to-be-Done |
| Human-centered innovation | Design Thinking |
| Rapid experimentation | Lean Startup |
| Business model visualization | Business Model Canvas |
| Task prioritization | Eisenhower Matrix |
| Rapid adaptation | OODA Loop |
| Fundamental rethinking | First Principles |
The Bottom Line
Frameworks are thinking tools, not answers. They structure analysis, reveal blind spots, and provide common language for teams.
No single framework captures all of reality. Combine them strategically:
- Porter’s Five Forces for industry analysis
- SWOT for quick strategic overview
- Blue Ocean for differentiation strategy
- OKRs for goal alignment
- Lean Startup for validation
The best strategists have a toolkit of frameworks and judgment about which to apply when.