We are living in an exciting time… a time where technological changes are booming. And with change comes the opportunity for new products and services, and for new businesses to fulfil new needs.
Digitalization, Artificial Intelligence, machine learning, 3D printing and the Internet of Things are just a few examples of these amazing technologies that are opening up a world of completely new opportunities.
However, in order to turn the technological possibilities into economic success, you need to identify the emerging market opportunities, and to carefully evaluate their future value, to make sure you are betting on a winning option.
So how do you evaluate whether your big business idea could be a gold mine, or a waste of time?
While keeping up with the technological revolutions and uncovering their potential for your business is extremely challenging, screening and prioritizing the new opportunities that stem from these technologies can be just as difficult.
How can one tell which of these new market opportunities is really a winner?
Spotting a market opportunity
Clearly, market opportunities are not ‘born equal’: some are more valuable than others – offering different levels of value creation potential, and some are easier to pursue than others – offering different levels of value capture challenge.
To find the most fertile ground for your business, you will first need to evaluate the attractiveness of your opportunities based on these two aspects:
- The potential of your opportunity, and
- The challenge in capturing it.
The potential of a market opportunity
Assessing the potential of a market opportunity looks at how BIG is this opportunity- Is it at all worth pursuing? And if so, how much value can you create if you choose this path?
The challenge of capturing the market opportunity
Assessing the challenge of a market opportunity 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 latter parameter examines your own ability to succeed in it, given the resources and capabilities that you already possess.
Whether you foresee only one single market opportunity, or have a set of possible opportunities to choose from, you must take the time to carefully evaluate the these aspects, or else you may find yourself running in an inferior direction.
What is an attractive market opportunity?
An attractive market opportunity, as such, has two main characteristics: First, it bears high value creation potential, that is – it offers a compelling reason to buy for a large set of customers, who will be able and willing to pay for it.
Second, it entails a relatively low challenge in capturing this value, that is- the difficulties in developing and delivering your offer and the risks associated with your business environment are manageable and overcoming them is achievable in a reasonable time frame.
A thorough evaluation process begins with setting your assumptions about each market opportunity, and carefully collecting relevant pieces of data to support or refute these hypotheses.
This learning process will reveal the main upsides and downsides of your new business ideas and will enable you to estimate their level of potential and challenge. Yet, comparing and prioritizing may still be challenging.
An Attractiveness Map
A visual and intuitive way to distinct between market opportunities and grasp their differences is to map them on a simple 2*2 matrix which we call the Attractiveness Map.
The Y axis represents the overall potential of each market opportunity (ranging from low to super-high), and the X axis represents the overall challenge in capturing it (ranging as well from low to super-high).
This creates 4 quarters, or zones, that represent 4 types of market opportunities:
- Quick Win
- Gold Mine
- Moon Shot and
1. Quick Win
Opportunities that are located in this quarter of the map offer relatively low potential but also entail low challenge for capturing it.
You can choose to focus on such option to increase your sales volume in a relatively safe manner, or simply as a stepping stone towards a larger and more challenging opportunity in the future.
Tesla chose such strategy when focusing first on the high-end electric sports car, as a stepping stone towards an affordable electric car for the mass market.
2. Gold Mine
Gold Mines are rare opportunities that promise high potential with relatively low challenge for you. They are your winners.
Uncovering a Gold Mine is usually a result of identifying a significant need in the market that no one has been aware of before (think about Facebook for example), or of developing an extremely powerful capability that no other company has.
A Gold Mine opportunity is an excellent business option for you.
3. Moon Shot
Just like their name, Moon Shot opportunities promise you tremendous potential, but are extremely challenging.
In the risk-return analogy, these are high risk – high return options. Breakthrough ideas (often based on revolutionary technologies) might fall in this quarter of the map.
Pursuing a Moon Shot means that you accept the entailed risk and that you are ready for the long-term ride, for a hopefully rewarding gain in the future.
Lastly, you may find your opportunity in the Questionable zone. Questionable opportunities offer a challenging climb towards a relatively low reward.
Logically, companies should avoid pursuing questionable opportunities, but yet the #1 reason for start-up failure is putting much sweat in developing an offer that no one really needs.
So if you invest time and effort in researching and validating your business ideas before pursuing them, you just might save yourself from focusing on such questionable option.
Alternatively, you can think how to re-shape your idea so that it becomes more attractive to you.
Identifying your winning opportunities
Mapping your opportunities on the Attractiveness Map will help you to combine your bits of knowledge into one ‘big picture’, and will allow you to visually compare and reveal your most valuable option.
And just as important- it will help you to debate and discuss your opportunities with other team members and stakeholders, as this creates a shared language for discussions.
Overall, while evaluating your opportunities requires a great deal of attention, and often a considerable amount of time, it will help you to distinct between your options and to find out which one is a real winner for you!
About the author
This guide has been written exclusively for ByteStart by Dr Sharon Tal and Prof Marc Gruber co-authors of Where to Play, 3 steps for discovering your most valuable market opportunities, published by FT publishing, out now on Amazon, priced £16.99. For more information go to www.wheretoplay.co
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