As a kid, I played tackle football in suburban back yards. Wool hats, boots, gloves, snow pants and coats were our gear. Steely Michigan winter skies hovered above us. Six to eight red cheeked guys, exhaling frozen breath, were divided into teams. Before we’d start, we would define the boundaries. Field contours differed, random variables were considered: trees, hedges, sheds, boat trailers, phone poles, above ground water pipes, sink holes and bird baths were negotiated: are they in or out of play? We called this ritual chalking the field; and it is the starting point in developing a profitable growth strategy.
Here is a context: intensely competitive market, your company is one of five competitors, commodity-like symptoms, insanely demanding customers and limited growth visibility. This feels like a nasty storm is brewing! What happens when the funnel cloud drops? We all become very tactical and internally-focused: seek shelter, hunker down, and get to the basement! That’s what companies do too. Exactly the opposite of what they should do.
When chalking a competitive playing field, your team mindset must be strategic and externally-focused. At first it’s nebulous. An overwhelming gravitational pull to be tactical is normal. Market sizing teams need to chalk the field and collectively fight tactical tendencies. Defining the market is probably the most misunderstood activity in growth strategy development. Why?
A market forms arounds competitive and customer forces. Specifically, similar constituted competitors, (substitutability) serving multiple customer segments. The way to define a market is by product category within a geographic region. For most, this is at the business unit or division-level. Multi-divisional companies serve several markets. A product category in Brazil is a market, the same product category in China, in most cases, is a different market. The key is granularity.
Growth opportunities are identified and quantified at customer segment level. Delving down to a granular structure, from business unit to markets, then to customer segments, and down to buying criteria and downstream sources of influence, is the most effective approach to uncovering profitable growth opportunities. Each can be rolled-up to a consolidated company view. Further, this construct can be viewed across product categories and geographic region. We call this connecting the dots. So, get the team together, take-off the wool hats and gloves and define the boundaries, it’s time for you, to chalk the field.