You Don’t Need a Bigger Lake. You Need Better Bait.
The strategic question that dominates the conversation, and the better question to solve first.
There is a question that comes up surprisingly often in strategy discussions. This came up today in a board meeting I attended.
“How big is the market for this segment? Is it big enough”.
It’s a perfectly sensible question. Investors ask it. Boards ask it. Management teams ask it. I guess we all do.
It’s rational, of course.
“If we’re going to focus on this customer, this segment or this particular part of the market, how many people are actually there? Are there enough of them? Aren’t we limiting our growth?”.
The underlying instinct is understandable: if you want to catch more fish, find a bigger lake.
But I’ve started wondering whether we reach for that answer too quickly.
Because in many of the businesses I work with, there are already plenty of fish in the lake.
They’re just not taking the bait.
And those are two very different growth problems.
If your company needs to grow 10% next year, you probably don’t need 10% more people to exist in your market. You don’t necessarily need another customer segment, another geography or another category either.
You may simply need to get chosen more often by the people who are already there.
That changes the strategic question.
Instead of asking:
How do we find a bigger market?
We should perhaps first ask:
Why aren’t enough people choosing us in the market we already have?
That is a much less comfortable question.
Because market size is external. Preference is personal.
The first lets us talk about demographics, TAMs and expansion opportunities. The second forces us to look at our own proposition, positioning, product, experience and brand.
Are we relevant enough to the people we want to choose us?
Do people understand why they should choose us?
Does our proposition create enough value?
What other choices are they considering? Why?
Are we genuinely more relevant than the alternatives?
Or are we simply standing beside a very large lake holding mediocre bait?
Unfortunately, this is true for nine out of ten brands.
Ok, I made up the stat, but I believe it’s more or less accurate.
Bigger Isn’t Always Better
One reason leadership teams resist narrowing their focus is that choosing a customer can feel like rejecting everyone else.
If we say this is the customer we’re designing the brand around, what about everybody else?
Won’t we lose them?
Possibly. It depends. But more often than not, not that likely.
But that misses something fundamental about how brands become strong.
The objective isn’t necessarily to prevent everyone else from buying. It’s to become exceptionally relevant to someone. And that takes focus. It takes understanding those people better and deeper than anyone else, and designing for them, not for everyone. The most relevant choice is rarely the most compromised choice.
A restaurant designed around the specific needs and aspirations of health-conscious, urban, Gen-Z women will likely attract other genders, older and younger. A B2B software company built around the problems of a very specific commercial leader can still attract adjacent buyers. And they probably will. Especially if the true motivations are understood, and if the positioning, identity, and proposition align.
Focus defines who you need to win with, not necessarily who you are allowed to sell to.
The alternative is often a proposition designed to offend nobody and excite nobody.
The lake is enormous.
The bait tastes like cardboard.
Growth Comes From Choice, And Markets Are Made Up Of Choices.
This is why I increasingly think market-sizing discussions should be paired with something else:
Choice sizing.
How many relevant buying occasions already exist within the market?
How often are we currently considered?
How often are we chosen?
What would happen economically if our share of those choices increased slightly?
Sometimes the answer is surprising.
A company may discover that it doesn’t need a dramatically larger addressable market to achieve its growth ambitions. It needs a relatively small increase in penetration, frequency or willingness to pay among customers and occasions already within reach.
That’s fundamentally a relevance problem.
And relevance problems shouldn’t automatically be solved with expansion.
They should first be solved by becoming more relevant.
Fix the Bait Before Changing Lakes
There are absolutely situations where the lake really is too small.
Markets mature. Demographics change. Categories decline. Companies outgrow geographies. New technologies destroy old demand.
At some point, growth genuinely requires finding another lake.
But expansion shouldn’t become an escape from fixing weak preference.
Because if customers aren’t choosing you strongly enough in one market, taking the same proposition into a larger market doesn’t necessarily solve anything.
You’ve just found more fish to ignore you.
So perhaps the order matters.
Before asking where else we could compete, ask whether we’ve earned the right to expand.
Before adding another segment, ask whether we’re sufficiently relevant to the segment we’ve already chosen.
Before calculating how many fish are in the next lake, take a harder look at the bait.
There may already be more than enough fish.
The real question is why they’re choosing someone else.
Tobias