Oy. Product managers create business cases and business plans all the time. The Cranky PM has created and seen a bajillion of them in her day. Lots.
But, cripes, so many of them suck. In particular, so many business cases use a device that is a major peeve of the Cranky Product Manager. Oh yes, you know it. You’ve probably done it yourself. It’s the “one percent of the market” argument. It usually 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.”
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 the Cranky Product Manager, 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 the 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 shizz 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 was the Cranky Product Manager’s 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. And do the Cranky PM a solid….DON’T show her any business cases where you are aiming for failure, okay? And don’t show a business plan that only applies during the market’s childhood years. Show her 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%. Either that, or GO HOME.
OK, don’t go home. Your spouse doesn’t want you there either. Go take up residence in the local Starbucks while you work on the next draft of your oh-so awesome business plan. Get back to the Cranky Product Manager after you fix it.