Is This Market Opportunity Reachable?
Not all opportunities are equal… in fact, understanding how valuable and attractive your strategic options are, is crucial for setting a winning strategy and choosing where to play.
But what is an attractive market opportunity for you?
Research on motivation and goal-setting clearly emphasizes the importance of setting goals which are both desirable and achievable at the same time. Hence, an attractive market opportunity for you to focus on is one that will likely produce significant potential for value creation (i.e. desirable) and that poses relatively few challenges in capturing that value (i.e. achievable).
In a previous post, we discussed how you can systematically evaluate the potential inherent in a market opportunity and find out if it is worth pursuing. In this post, we will deal with how you can uncover the main challenges associated with each market opportunity, by looking at three key questions.
Assessing the challenge of a market opportunity is critical to your evaluation process. It looks at which obstacles lie ahead if you decide to pursue it, what will be your main risks, and how difficult will it be for you to overcome them and conquer this opportunity. While the potential of a market opportunity is assessed in and of itself, this parameter examines your own capacity to succeed in it, given the resources and capabilities that you already possess.
To evaluate the challenge of any market opportunity, you will actually need to assess three key factors:
- Implementation Obstacles
On your way to a successful market launch, you will face challenges in creating and delivering the product. Assessing these difficulties, and the additional resources that you will need to develop or acquire in order to face them, is critical for your evaluation.
In order to assess this, you need to consider three main questions:
- How difficult will it be for you to develop the product?
- How difficult will it be for you to access the market?
- How challenging will it be for you to raise funding for this option?
The answers to these questions offer key insights on the challenges that you will face during implementation.
Remember that while innovators often give much thought to the challenges of creating the offering, they often tend to neglect the challenges of bringing it to the market, which may sometimes be much more difficult. So, give it careful attention.
- Time to Revenues
Your clock is ticking and money is usually burned quickly, so the speed in which you can generate cash flow through sales is definitely a major consideration.
To estimate this, you need to consider the three main questions once again:
- What is the estimated time for development?
- Will we need to wait until the market is ready for our offer?
- How long is the sales cycle expected to be?
Based on the answers to these questions, you will have a better understanding of the time element associated with your market opportunity.
Of course, this time element is tightly related to your implementation. However, they emphasize two different perspectives that are both important when seeking to understand the underlying challenges of a market opportunity.
- External Risks
Lastly, your success can be put at risk by many companies and players in your business environment. While you most probably cannot control this risk, it still has to be taken into account when assessing how difficult it will be to succeed in any specific market.
To assess these risks, consider three important questions:
- How threatened are you by competition?
- How dependent are you on other companies or players?
- How susceptive are you to adoption barriers?
Objective answers will help you to get important insights on the risk level inherent in your opportunity.
Once you have thoroughly gone through these three key factors, the overall challenge of a market opportunity becomes more apparent. You can adopt a quantitative approach or a qualitative approach for summarizing your analysis and estimating how reachable it is for you.
In any case, using such a structured checklist will help you to perform a comprehensive evaluation, and to make sure that you have not missed any important consideration. It will also enable you to compare different market opportunities, and set your strategic goals to be desirable and achievable.