Concept 2 of 4

The business case and the Product Canvas

4 questions test this

The Focus course calls this proposing to the business. The framework calls it Business Plan and puts it at the head of the Business category. The output is a proposal that a funding decision can be made against, and its main quality is that it could reasonably conclude no.

What the case has to answer

Which market problem this addresses, carried forward from the validated set rather than restated. If the problem cannot be traced to evidence, nothing after it is worth reading.

Who has the problem and how many of them there are, with the method shown.

What we would build and what we would deliberately not build. Scope stated as a boundary rather than as a list of everything anyone asked for.

Why this company, which is the distinctive competency argument. Without it the case describes an opportunity rather than an opportunity for us.

The financial model. Revenue, cost to build, cost to serve, and the shape of the curve over time. The assumptions matter more than the totals, because they are the part that can be checked later.

The risks, quantified. Not a list of things that could go wrong but the two or three that would change the decision, with what it would cost to reduce each one.

What happens if we do nothing. Frequently the strongest section and the most often omitted.

Bottom up market sizing

Focus teaches the estimate as arithmetic that can be argued with. Count the organisations or people in the defined segment. Estimate the proportion with the problem, using the pervasiveness evidence rather than a guess. Apply a reachable share given the channel that exists. Apply a price supported by the willingness to pay evidence. Show each step.

A number produced this way is almost certainly wrong and is usefully wrong, because a reviewer can point at the step they disagree with. A top down number taken from an analyst report can only be accepted or dismissed.

The Product Canvas

The Focus course uses a Product Canvas as the container. Its value is that it constrains the case to one page and forces the market problem, the target segment, the competitive alternative, the distinctive competency and the financial shape to sit next to each other. Contradictions that survive a twenty page document rarely survive a single page.

Presenting it

The audience is deciding between this and other uses of the same money. Lead with the recommendation and the number, then the evidence, then the risks. Executives who have to extract the ask from the appendix will supply their own conclusion, and it will be the one they arrived with.

Common misconceptions

A business case is a document you write to get approval.

It is an analysis that can conclude against the investment. A case written to reach a decision already made is a sales document, and the giveaway is that no risk in it is large enough to change the answer.

Market size can be estimated top down from an industry report.

A top down figure gives a ceiling and no route to it. A bottom up estimate, built from segment count, reachable share and price, is arguable and can therefore be corrected.

The financial model is finance's job.

The assumptions in it are product decisions. Price, adoption rate, cost to serve and churn all come from the market work, and handing the model over without them produces a spreadsheet that is internally consistent and wrong.

4 questions test this concept

A product manager is told to write a business case to get approval for a decision the executive team has already made. What is the issue?

  • ANone, since the case documents the reasoning for the record.
  • BThe case should be written by finance rather than by product management.
  • CThe case should be skipped entirely to save time.
  • DA business case is an analysis that can conclude against the investment. A case written to reach a decision already made is a sales document, and the giveaway is that no risk in it is large enough to change the answer.
Check whether it stuck.

One per page, with a worked explanation.

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Related material
Book
Monetizing Innovation, On establishing willingness to pay before the product is built.
Book
Business Model Generation, On the revenue and cost structure around an offering.
Book
Value Proposition Design, On connecting the offering to a stated customer job.
Book
The Pyramid Principle, On structuring the argument so the conclusion arrives first.
Template
PRD, one page, Problem statement, supporting evidence, the proposed change, success measures, and an explicit out-of-scope list. Fits on a single page.