Three critical elements of defining a growth strategy for your business are:
- “Where to go” (i.e. vision)
- “Where to play” (i.e. scope)
- “How to win” (i.e. competitive advantages)
“Where to play” is especially important – and challenging for companies – as it requires prioritizing the key geographies, categories, and end markets that are in scope versus out of scope for the business. In other words, an effective articulation of “Where to play” demands that companies say “no” to specific opportunities so that they can focus on other more promising ones. “Where to play” is about making choices.
The problem is that most companies do not want to remove options from the table when charting the course for future growth. And this resistance makes sense at first blush. However, prioritization of opportunities is a must, since it materially impacts how well a company can operationalize its growth strategy. Because without those clear priorities, everything becomes a priority, which inevitably leads to disjointed, disappointing outcomes.
This article aims to outline a collaborative, data-driven approach to defining a company’s “Where to play” to ensure a more effective and executable growth strategy. Ultimately, this approach should lead to a more informed and decisive discussion of priorities for the business.
The key steps are:
- Determine the addressable “size of prize”
- Consider attractiveness both quantitatively and qualitatively
- Prioritize key opportunities for growth
1) Determine the addressable “size of prize”
The first and fundamental step in a “Where to play” assessment is sizing the current and prospective product categories or end markets under consideration.
Understandably, this step requires that you have a useful dataset for your marketplace on hand. In addition, to ensure the highest-integrity “size of prize” estimates, it is imperative to remove the segments of categories or end markets that are not relevant to your business. Otherwise, you will end up over-sizing and misrepresenting certain market opportunities.
For example, if there are price bands or geographies that are clearly out of scope for your company, then they should be excised from the data to more accurately quantify the addressable “size of prize” for each of the categories or end markets for your business.
2) Consider attractiveness both quantitatively and qualitatively
The next step is to consider and characterize the attractiveness of the relevant categories or end markets from both an external and internal perspective. We conduct this step because “size of prize” estimates alone are not adequate, since they do not reflect a category’s projected growth or strategic “fit” with your company.
For the external view, we are evaluating attractiveness of a category simply based on objective and quantitative market data, such as projected growth rates, average market pricing, and entry barriers. For the internal view, we are considering the attractiveness of a category based on its alignment with our company’s strengths and position. This qualitative internal view brings a much-needed “reality check” to the evaluation, since specific categories or end markets will be more difficult to serve based on our current capabilities and assets.
To make the attractiveness assessments most effective and useful, it is of paramount importance to involve key stakeholders and subject matter experts. By engaging them, you will collect and incorporate the right inputs and perspective, and you will ensure alignment on how opportunities are being judged.
3) Prioritize key opportunities for growth
Finally, it is time to bring these data together to inform and guide a discussion of “Where to play” for the business. The following questions can help guide the “Where to play” discussion and lead to more clear and aligned priorities:
- Which categories or end markets appear most attractive, showing a good relative “size of prize” and good attractiveness both from an external view (e.g. projected growth rate) and internal view (i.e. strategic “fit”)?
- Which categories or end markets should we consider exiting or avoiding, due to limited “size of prize” or low attractiveness from an external or internal perspective?
- Which categories or end markets should be ranked as our top three opportunity areas? Can or will these categories or end markets signify a disproportionate share of our future business growth?
- How might our top three opportunity areas differ from those of our key competitors, if at all?
- What will we need to do differently or better to capitalize on our top three opportunity areas? How might we need to modify our marketing or sales approaches, if at all?
- Do specific opportunity areas signify a sizable financial investment?
- If these top opportunity areas represent a material change in our current business priorities, which groups in our company might object or might benefit from a more in-depth onboarding?
Based on these questions, it should become clear which key categories or end markets represent the most sustainable and defensible growth opportunities for the business. The end goal is to prioritize the few key opportunities that will move the needle for the business. An ineffective output is having “prioritized” numerous opportunities, since that suggests having avoided hard choices and since it will be challenging to implement.
“Where to play” priorities are a key element of defining a business’ growth strategy, because they require that a company makes choices, the very essence of strategy done right. With the collaborative and data-driven approach described, a discussion of “Where to play” priorities can be much more efficient and productive – and less anecdotal. And with more clarity on the “Where to play” priorities for the business, the articulation and execution of a growth strategy become significantly more effective and likely to deliver the desired outcomes for your business.