The Securable Market™
The first step in Outcome-Driven Innovation® is to select the right market to target. This is absolutely critical because no matter how great you think your idea is, if there isn’t a market need, your product will fail. So what is a market? And how do you know when there is market opportunity big enough to justify an investment?
Entrepreneurs, venture investors, private equity firms, and companies try to size market opportunities all the time. They use TAM/SAM, “potential” market, and “available” market analysis to calculate the size of the opportunity. In the words of Philip Kotler, the traditional “size of a market hinges on the number of buyers who might exist for a particular market offer.” But this is a highly flawed definition. Here’s why: we know that market offers (i.e., products) are merely point-in-time solutions that help customers get jobs done. In any market there are an infinite number of possible products but only a finite number of customer needs. This is why traditional market sizing analysis is flawed: because it uses a variable (the product) rather then a constant (the job) to calculate the size of the opportunity.
For example, in order to execute the job of storing music, customers have used pen and paper, piano rolls, Victrolas, LPs, eight-track tapes, reel-to-reel tapes, cassettes, CDs, and MP3 players with software. So while the solutions (the products and business models) have changed dramatically, the job of storing music has never changed, and it will never change. The job is a constant.
We define and size markets very differently. Markets should be defined based on the job rather than the solution. For example, cardiovascular surgeons need to open an artery, IT managers need to manage software licenses, and carpenters need to make a straight cut.
Using the job as our unit of analysis, we can accurately calculate the size of a market opportunity and the market share that can be captured by a new product. We call the resulting number the Securable Market™ to distinguish it from traditional market definitions. We’ve built powerful and patent pending Securable Market™ tools that correct the flaws with traditional market sizing.
So what is a Securable Market™? A Securable Market™ is the revenue a company can generate by helping customers get a job done better. It is the percentage of the total market that represents an opportunity from the perspective of the customer and independent of any solution. Securable-market analysis enables us to determine which markets to pursue (including new markets) and which markets to exit. It is exceptionally accurate because it is based on a stable unit of analysis. We have a proven definition of a market. But how do we know when we have identified all the customer needs?
