Product Management 101: Developing Business Case
Having a great idea is never enough. You are constantly faced with a moment of truth: Can you get your management on board and get them to fund the development? Given that executives scrutinize opportunities at a pretty high level, you don’t want to bury them in many details. You want to tell your story clearly and follow up to convince management that this idea is a worthwhile investment of resources, and that’s where the business case comes in handy.
A business case is created on the product level. It states that creating or changing a particular product or solution is a good idea for the company for strategic or economic reasons. The business case is supposed to get the company buy-in and funding for the concept as the first step towards a more complex journey.
To make your business case easy to understand, break it down into the following three components:
Story: The why of the problem you want to solve. Why is it so important to solve the problem for a specific customer set/s? Present this part as clearly and as simply as possible.
Numbers: The Evidence that backs your story. In the numbers part, you bring them proof; for example, you have x number of potential customers, and with a y amount of budget, you can achieve the expected level of profitability. You may have a massive spreadsheet with numbers as background material but simplify again. Focus on those which are most important to your story.
Downside: These are the risks and tradeoffs the company has to be aware of. Be realistic. Tell your management about the potential downsides, and you will be better off.
Business Case factors in many components which forms the basis of the whole project. These components are listed below -
Executive Summary: This piece will be written last but placed first in the document. It sums up the entire business case. It includes problem definition, vision, project evaluation, risks, Return on Investment (ROI) and recommendation. The summary should be about a page — two pages at most — for a completely new idea.
Problem and opportunity: What is the problem, and how can your company best use it to solve a problem? The key sub-sections include a problem statement, vision, current alternatives, strategic alignment, goals with different KPIs, opportunity timeline, and exit strategy.
Market landscape: What is happening in the market that leads you to believe that your solving it is the optimal use of the company’s time and resources?
Competitive Landscape: What is happening with the competition in your chosen market that makes you believe that solving this problem will allow your business to compete and win? The Competitive Landscape section describes whom you think are your main competitors will be. It starts with you explaining what your organization is about and then providing details about your competitors and their products.
Financial and resource impact analysis: It covers the financial and resource impact your product will have on the company after it is launched in the market. This includes how much it will cost, what the revenue and forecasted profits will be and what resources will be needed.
Risks: Identify the main obstacles related to the progress of the product development and bringing to market. How could the risks affect the company? For each risk, give an estimate of whether the risk is low, medium, or high. Include recommendations for risk mitigation as well.
Additional Section: Some other sections included in the business case are assumptions, open issues, conclusion and recommendations, governance, etc. According to your executives’ need, add the required section.
Remember, the clear and crisp your story will be, the more likely your business case will be approved.
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