There are many ways to assess a new business opportunity, be it EBITDA ,NPV, ROI etc, with the majority of formal measures being based on financial metrics. I learned an alternative approach as I was presenting a business case to the Vodafone Group CEO Vittorio Colao and he had a refreshing way of quickly assessing the opportunity at a macro level. He used to look at the opportunity through three lenses, Customer, Commercial and Competition.
Customer: what are we asking the customer to do, what is the customer insight, what segment away after, what is the customer doing today and why was be different and better for the customer?
Commercial: what are the commercials of the business case, what is the commercial model, how do we make money, are we asking the customer for new spend or are we taking spend from another category or competitor, what does the margin look like compared to our other offerings, what is the cost of acquisition, what is the cost of service compared to our other offerings?
Competition: who is the competition, is our product or service the same or doesn’t offer differentiation, why is offering 10x better, how will the competition react?
I have used these lenses a number of times and when assessing opportunities. They are a good external view of the opportunity. I found equally as important is assessing the internal capability to deliver and have added another couple of C’s to the questioning to really the understanding and ask, namely Capability and Capacity.
Capability and Capacity: Does the organisation have the capability and capacity to be other deliver the opportunity, what capability does it need to buy in to win in this market, how do we free up resources to free up capacity.
I found these two equally important as on a number of occasions a seemingly strong business case is not delivered as the organisation was moving into a new area or adjacent market and don’t have the right skills to deliver opportunity (as a side note your team will try to convince you that they have the skills), and once you get past that hurdle the business did not give the appropriate resource or priority adequately prioritised.
Bonus C: Content: in the media space and more so and the brand marketing space an additional question can be what content do we have that well, compel, engage and grow an audience on a daily weekly or monthly basis.
Next time you are presenting or reviewing a business case ask and answer these questions and beneath the answers. It will give you a simple framework to judge chance of success.
KS.
