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12 September 2008

Enduring ideas: The GEMcKinsey nine-box matrix

In one of a series of interactive presentations, McKinsey alumnus Kevin Coyne describes the GE
McKinsey nine-box matrix, a framework that offers a systematic approach for the multibusiness
corporation to prioritize its investments among its business units.
September 2008
With the rise of multibusiness enterprises in the 20th century, companies began to struggle with
managing a number of business units profitably. In response, management thinkers developed
frameworks to address this new complexity. One that arose in the early 1970s was the GE
McKinsey nine-box framework, following on the heels of the Boston Consulting Groups wellknown growth share matrix.
The nine-box matrix offers a systematic approach for the decentralized corporation to determine
where best to invest its cash. Rather than rely on each business unit's projections of its future
prospects, the company can judge a unit by two factors that will determine whether it's going to
do well in the future: the attractiveness of the relevant industry and the units competitive
strength within that industry.
Placement of business units within the matrix provides an analytic map for managing them. With
units above the diagonal, a company may pursue strategies of investment and growth; those
along the diagonal may be candidates for selective investment; those below the diagonal might
be best sold, liquidated, or run purely for cash. Sorting units into these three categories is an
essential starting point for the analysis, but judgment is required to weigh the trade-offs
involved. For example, a strong unit in a weak industry is in a very different situation than a
weak unit in a highly attractive industry.
The nine-box matrix is the forerunner of a number of portfolio models, including MACS 1 and the
portfolio of initiatives.2 The criteria for assessing industry attractiveness and competitive strength
have grown more sophisticated over the years. To this day, most large companies with a formal
approach to modeling their businesses refer to the nine-box matrix or some descendant of it.

In one of a series of interactive presentations, McKinsey alumnus Kevin Coyne describes the
GEMcKinsey nine-box matrix, a framework that offers a systematic approach for the
multibusiness corporation to prioritize its investments among its business units. Click here
to explore this framework in a new window.
Notes
Market-activated corporate strategy; see Frederick W. Gluck, Stephen P. Kaufman, A.
Steven Walleck, Ken McLeod, and John Stuckey, Thinking strategically,
mckinseyquarterly.com, June 2000.
1

See Lowell L. Bryan, Just-in-time strategy for a turbulent world, mckinseyquarterly.com,

June 2002.
2