The ADL model
from Arthur D. Little is a portfolio management method that
is based on product
life cycle thinking.
The ADL portfolio management approach
uses the dimensions of environmental assessment and business strength
assessment. The environmental measure is an identification of the
industry's life cycle. The business strengths measure is a
categorization of the corporation's SBU's into one of five (6) competitive
positions: dominant, strong, favorable, tenable, weak (and non-viable).
This yields a 5 (competitive positions) by 4 (life cycle stages) matrix.
Positioning in the matrix identifies a general strategy.
In the ADL approach, the
line of business or SBU is not especially defined by a product or
organizational unit. The strategist must identify discrete businesses
finding commonalties among products and business lines using the
following criteria as guidelines:
This assessment of the industry life cycle stage of each business
is made on the basis of:
The competitive position of a firm is based on an assessment
of the following criteria:
Dominant: Rare. Often results from a near
monopoly or protected leadership.
Strong: A strong business can usually follow a
strategy without too much consideration of moves from rivals.
Favorable: Industry is fragmented. No clear
leader among stronger rivals.
Tenable: Business has a niche, either
geographical or defined by the product.
Weak: Business is too small to be profitable or
survive over the long term. Critical weaknesses.
Known limitations of the ADL framework
There is no standard
length of life cycles,
current industry life cycle phase is awkward,
influence the length of the life cycle.
Compare with the ADL Matrix:
BCG Matrix |
GE / McKinsey Matrix |
Product Life Cycle | Bass Diffusion
Innovation Adoption Curve |
Four Trajectories of Industry Change
More management models