Cracking the Nut (Part 3) – Heart of the Analysis

Carrying forward from part 1 and part 2, we’ve gotten the foundations laid down, so let’s keep powering ahead.

Context

This is the quadrant where we focus on two areas: what we need to know that is knowable and what’s blocking us.

Know What Is Knowable

As we saw in Part 2 (link), there is a big debate within Slimy Inc about the potential size of the kid’s slime market and our ability to generate revenue in the commercial slime market against the dominance of BigSludge.  While these are both predictions about the future and hence cannot be perfectly known, they are subject to analysis.  By bringing some data into the conversation, we can help reduce the uncertainty around the value to assign to these criteria for our various options.

Figuring out the potential kid market is probably the hardest problem.  There is always a lot of risk in any new kind of product, but we can do many kinds of analysis to get insight: look at comparable products that we would be competing with/displacing, consider which channels we could use to go to market and how hard it will be to break into them, look at the historical ramp of comparable products, and so forth.  Beyond analysis, we need to actually get into the market and mix it up in the real world with some customers and partners.  We could sell samples through a handful of selected toy stores, or give some away to kids and get their reactions, or do a limited advertising campaign and see what kind of response we get.  The key thing here is, as Steve Blank says, to get out of the building.  All of these tests will give us some data about how much our target audience will actually want our product, what market size we could aspire to, how to build our sales at what cost, and how quickly we could expect it to grow under best/average/worst case.

The other question should be easier to answer – we probably have a lot of insight into our ability to compete with BigSludge, because we have products in market and have been selling them.  There is always the possibility of some brilliant new stroke that changes the game, but in the absence of that kind of insight, we probably know the channels, the costs, the margins, and the levers that exist in the current business.  So we can estimate with some degree of accuracy how much revenue/margin we can generate doing the kinds of things that are conventionally done.  If somebody has a clever idea for disruption, we should do some analysis/investigation to get a sense of how much to expect from it.

The net of these exercises should be some real data on what we can expect under a variety of different assumptions.  That helps assign a value to each criterion for the proposal under consideration.  Think about each one and ask whether you are ready to assess the proposals against it, or if you need more information to do it as well as possible.

Know What’s Blocking the Decision

Many things can block the ability to make a decision aside from the inherent uncertainty about what to do.  In our case, after thinking it through, we realize that there are three:

  1. This decision is supposedly owned by the VP of marketing, but everyone knows that he doesn’t have the authority to make it stick.
  2. One of the original founders of Slimy Inc., who is very influential, is hell-bent on going into the kid slime market.  He’s going to reject any plan that doesn’t focus on that.
  3. The possibly acquisition of Slimy by BigSludge is really distracting senior management.  They aren’t sure how aggressively they want to go after BigSludge until that’s landed, so they will be reluctant to rock the boat.

Any of these three things could torpedo our whole effort.  There is no point in beavering away and coming up with a great answer, if nobody is going to pay attention or act on it.  So we have to get all three resolved in some fashion, or we need to reconsider if there is any point to the whole project.

Meta

That leads us to the “housekeeping” quadrant – all the scaffolding we need to drive the project.  There are a series of important questions we need to think through:

  • Who are the stakeholders and what is their role?  Who can make the decision and make it stick?  Who needs to be consulted before the decision is landed?  Who can veto it?  Who needs to know after we’ve landed it?
  • What are we delivering?  A deck?  A presentation?  A document?  To whom?  When is it due?
  • Workback/milestones – are there any needed steps along the way?  Maybe an early review where we present progress and get feedback?
  • Key open issues – from our analysis so far, we should have a pretty good idea of the open issues – list them, get them owned and driven and landed.
  • Workstreams – are there any sub-projects that have a life of their own and need to be owned/driven?  Maybe that analysis of the kid market, which might involve finding stores and doing trial sales and evaluating results and doing mini-ad campaigns.
  • Next actions – what specific actions need to happen next?  Who will do them?

That’s the heart of the analysis.  In the next post, we’ll wrap it up and land the decision.

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