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ArticleFive questions to test any growth option
Growth ideas multiply faster than the capacity to pursue them. Five consistent questions help leaders compare new markets, products and channels on fair terms.
Growth ideas multiply faster than the capacity to pursue them. A new region, an adjacent product line, a different customer segment, an online channel, a partnership that a supplier has proposed: in most leadership teams, there are more plausible options on the table than people, cash and attention to pursue them.
The usual way of choosing is uneven. Some options arrive with a polished business case and an enthusiastic sponsor. Others arrive as a line in a meeting. The best-presented option often wins, which is not the same as the best option.
A few consistent questions help leaders compare options fairly. Asking every idea the same five questions, in the same order, puts them on equal terms and exposes weak spots early, before money is committed.
1. Is the market real?
Look for evidence of demand from customers, not only from analysts. A few paying customers beat a large forecast.
Market reports are useful for understanding scale and trends, but they describe a category, not your opportunity within it. The stronger evidence is closer to home: customers who have asked for the product, prospects who have agreed to a trial, orders taken before the offer is fully built, or existing customers who already buy the item from someone else and would switch.
- Strong evidence: signed orders, paid pilots, repeat enquiries from customers you already serve.
- Moderate evidence: interviews where buyers describe the problem in their own words and say what they pay today.
- Weak evidence: industry forecasts, competitor activity, or internal enthusiasm without customer contact.
If an option rests entirely on weak evidence, that does not rule it out. It means the first step should be to gather stronger evidence cheaply, through conversations or a small pilot, before a larger commitment.
2. Can we win?
Name the advantage you hold: cost, quality, access, speed or relationships. If you cannot name it, you may be a follower.
Being a follower is not always wrong. Some markets are growing fast enough that a competent new entrant can do well. But followers usually compete on price, and price competition erodes margins. Before committing, leaders should be able to say in one sentence why a customer in the new market would choose them over the existing alternatives.
Consider a typical regional food distributor weighing a move into supplying hospitals. Its advantage might be reliable cold-chain delivery and existing relationships with local producers. That advantage is real if hospital buyers value it and incumbents do not already offer it. If the incumbents are equally reliable and the buyers choose mainly on contract price, the distributor’s advantage may not travel.
A quick test of advantage
Ask three potential customers in the new market who they buy from today and what would make them switch. If their answers do not touch your advantage, it may matter less to them than it does to you.
3. Can we deliver?
Check people, systems, supply and cash. Many growth plans fail on delivery, not demand.
Delivery problems are rarely visible in the business case. The sales forecast is carefully built; the assumption that the existing operations team can absorb a new product line alongside its current work is not. Growth then arrives, service slips for existing customers, and the organisation finds itself defending its core while trying to build something new.
- People: who will lead the option, and what are they stopping to make time? Are the skills available, or must they be hired?
- Systems: can current ordering, invoicing and reporting handle the new product, channel or region without heavy workarounds?
- Supply: are suppliers, capacity and logistics in place, and what happens if volumes are double or half the forecast?
- Cash: how much working capital does growth absorb before it pays back, and can the business carry it through a slow start?
4. Does it pay?
Revenue growth is not the goal; profitable growth is. A new segment that brings volume at thin margins, or that requires heavy service, may reduce overall returns even as sales rise.
Be wary of options whose economics depend on reaching scale before they make money. Scale assumptions are the hardest to test in advance and the easiest to get wrong. Where possible, find a version of the option that pays its way at a small size, even if the margin improves later. That version is also the cheapest to stop if the evidence turns.
Look at the economics of a single unit, whether that is a customer, an order or a site. What does it cost to win a customer, what does each order earn after direct costs, and how long before the investment is recovered? Then build a low case, with slower uptake and higher costs, and check that the option still makes sense. An option that only works in the best case is a bet, and should be sized like one.
5. What do we give up?
Every option uses the same scarce resources: leadership attention, capable people, capital and the patience of the existing customer base. Pursuing one growth idea means not pursuing another, and sometimes means doing less for the core business.
Making that trade-off explicit changes the conversation. Instead of asking whether an option is attractive in isolation, leaders ask whether it is more attractive than the alternatives, including the option of investing more in what the business already does well. In many organisations, deepening share with existing customers is the least glamorous and most profitable option on the list.
We had six growth ideas and a team that could handle two. Putting all six through the same questions made the choice obvious within an afternoon.
Managing director, industrial distribution client
Putting the questions to work
Write the five questions on a single page and ask each option’s sponsor to answer them in a paragraph each, with the evidence behind every answer. Score each answer as strong, partial or weak. Discuss the options side by side in one meeting rather than one at a time over several months. Then pick no more than two to pursue, set a cheap first test for each, and agree what you would need to see to continue.
Revisit the scores after the first test. Options that looked strong on paper sometimes weaken on contact with customers, and options that looked marginal sometimes surprise. The questions are most useful when they are asked again with better evidence, not treated as a one-off gate.
Source: Intelliversal analysis.
