Your Business Case: Go Big or Go Home

Product managers create business cases and business plans all the time. I've created and seen a bazillion of them in my day. Lots.

But, alas, so many of them are weak. In particular, many use a device that is one of my pet peeves.

It's the "one percent of the market" argument. It goes something like this: "The total market is $X. If we manage to garner just 1% of that total market, we will have $Z in revenue per year. $Z is a lot of money! Ergo, fund my project."

Gack.

This argument seems wise and safe... conservative even. After all, it is no major achievement to acquire a paltry 1% of a market... OR IS IT?

It is. Trust me, this argument is WICKED WEAK. It ignores the dynamics of how competitive markets work, especially in the software industry.

In the beginning of a new market's life, sure, there are lots and lots of competitors. Enough that many players might achieve 1% of a very small, early-stage market. That's what markets look like when they are immature and stupid. But soon enough, the market's childhood is over and you have an adolescent market on your hands.

And in an adolescent market, a 1% position is completely unsustainable. Because as that market starts sprouting the accouterments of puberty -- the appearance of chest hair, voluptuous hips, or the first contrarian articles in the press (a la "this technology is not quite the awesomeness that was promised") -- the number of players shrinks big-time, as the small-time players -- the ONE PERCENT players -- all die or get acquired. And voila! You end up with about 5 players. And you better believe they all have more than one percent of the market.

And then, our frisky little teenager of a market grows up more and becomes a fuddy-duddy adult, with only 2 or 3 players -- the smallest of which will almost certainly have at least a 15% market share. And that is likely that way it will stay until the market is wheeled off in a casket, or at least put into an assisted living facility.

Anyway, all this rambling about puberty is my way of saying that aiming for 1% market share is basically aiming for failure. You can't sustain that. You'll either be a success and have a MUCH bigger market share, or you will fail and not exist.

Don't show anyone business cases where you are aiming for failure, okay? And don't show business plans that only apply to the market's childhood years. Show your plan to become one of the top two or three players in the market's adulthood -- preferably the NUMBER ONE PLAYER -- with a hell of a lot more market share than 1%.

Sue Raisty

Product management geek, born-again engineer, adoptive mother of boys, coach & mentor, mountain trail runner, tinkerer, no-bull communicator, wannabe writer, room mother & compulsive researcher.

Silicon Valley, California http://blog.sueraisty.com