Business scope (Abell)

Derek Abell’s business-definition model describes a company through three dimensions: the customer groups it serves, the customer needs or functions it satisfies, and the technologies and capabilities it uses to do so. Framed as who, what and how, the model makes the current scope of a business visible and exposes possible directions for expansion, focus or reinvention.

When to use it

Use the model when leaders need a customer-centred answer to “What business are we in?” It supports strategic planning by:

• defining the organisation’s current position without relying only on products or industry labels;
• comparing the scope of business units or competitors;
• identifying adjacent customer groups, unmet needs and alternative ways of satisfying them;
• deciding where the organisation should expand or deliberately narrow its scope; and
• translating a broad ambition into explicit choices about where the firm will and will not compete.

Origins

Derek F. Abell introduced the three-dimensional approach in Defining the Business: The Starting Point of Strategic Planning (1980). He argued that conventional product-and-market descriptions were too narrow because products and technologies change while customer functions may persist. Defining a business through customer groups, customer functions and alternative technologies offered a more durable basis for strategic choice.

What it is

The model creates a three-dimensional space. Any current business occupies only part of that space: a selected group of customers, a selected set of needs and a selected collection of technologies or competencies. Mapping that occupied area clarifies the existing definition; considering other combinations reveals potential strategic moves.