Use the Opportunity Acid Test to Grow Your Business

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We choose to go to the moon and do the other things not because they are easy but because they are hard.

                            - President Kennedy’s “Moon Speech” September 12, 1962

A fundamental executive leadership challenge is finding the right balance between focusing on what is "core" to one's business and investing time and resources into pursuing adjacent and complementary opportunities to it.

Examples of this include:

  • Traditional services business, web design and IT consulting for example, trying to build and sell software.
  • Restaurateurs trying to package and market their own line of food items - i.e. CPK selling frozen pizzas at the supermarket.
  • Traditional retailers, like flooring, boutique clothing stores etc., trying to build ecommerce businesses.
  • Businesses that develop a work process expertise, like a law firm that is particularly good at attracting new clients, in turn trying to sell that expertise as a service to other law firms.

On the surface, all of these “adjacent” opportunity pursuits seem worthwhile.

They build on business assets and trade secrets, they often leverage "remnant" organizational resources, and diversification of revenues and customers is a sought after business goal is it not?

It can be, and yes effective executives should always default to a positive and optimistic mindset toward opportunities but...

...they obviously 
must be the right opportunities to pursue.  

A simple “Acid Test” way to rate opportunities is to ask two questions:

One, is the opportunity one in which my business can truly be best-in-class?

And two only if the answer to the above is yes, are
the market dynamics for the opportunity favorable for its pursuit? 

I call these the internal and external opportunity acid test questions.

Internal in their inward look at the real strengths of a business and its people.

And external in their evaluation of the market landscape in which that business competes.

The internal acid test is easily performed by listing the business’ key strengths, like:

  • Marketing Strengths: Our brand is well-respected and well-known.
  • Sales Strengths:Our marketing-to-sales to conversion is excellent, perhaps driven by a great sales culture, CRM technology, etc.
  • Operations Strengths: Our operational systems allow us to deliver high quality at low cost.
  • Financial Strengths: Our balance sheet is strong and our cash flow is predictable.

As we list these strengths what will arise will be “non obvious” wisdoms as to the likelihood of a successful pursuit of the considered opportunity and perhaps more valuably...

...“aha” moments as to other, more appropriate opportunities for the business to potentially pursue.

“Potentially” is the important word here, because in addition to the opportunity passing an internal acid test, it must also pass an “external” one too, with questions like:

Market. How big is the market for the opportunity? How expensive will it be to pursue?

Customer. Who are its customers? How pressing is their need? How hard are they to reach?

Competition.  In our global age, by far the most important question - and not coincidentally the one that most executives do the worst job in asking - how strong and formidable is the competition?

What advantages - first-to-market, brand, relationship, cost structure, etc. - does the competition have that we will need to match and beat?

What points of differentiation must we build and emphasize to successfully compete and win?

As we honestly ask these competitive questions, very often discouragement can set in.

Everything can just seem really hard.

But this sad feeling is actually a good thing.

Because as we work through the discouragement we really learn if we have an opportunity worth pursuing or just a passing fancy.

If it is just a passing fancy, then we will quickly move on to the next bright shining object that passes our way.

But if it is an actual opportunity, then the internal and external challenges that present themselves to pursue it will embolden us to roll up our sleeves and go for it.

For sure, successfully pursuing any new business opportunity is hard.

But let's never confuse hard with impossible.

By properly performing these internal and external acid tests, we can distinguish between hard and impossible...

...and then relentlessly put forward our best energy toward going for it, crushing the competition, and winning! 

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