Worksheet · Strategy Health Check
Break the market one level deeper
Averages hide where the profit sits. This sheet splits the market into segments one level finer than you manage today and puts growth and profit against each. It builds the Competent step of the check:
Growth and profitability are mapped at segment level, and the strategy names which segments matter.
Step 1. Define the segments
Cut by whatever changes the economics: product, customer type, channel, region or use. Check three things:
- The segments do not overlap.
- Together they cover the whole market.
- A salesperson could tell which segment a given customer sits in.
Step 2. Fill the map
| Segment | Market size ($m) | Market growth (% a year) | Typical margin in the segment | Our revenue ($m) | Our share | Our margin | Source of the figures | Matters to the strategy? |
|---|---|---|---|---|---|---|---|---|
| e.g. Commercial refurbishment, east coast | 180 | 6% | High | 22 | 12% | 18% | Trade data; our invoices | Yes |
| Total |
Step 3. Check the totals
- Segment sizes add up to the market total you use elsewhere.
- Our segment revenues add up to our P&L revenue.
- Each figure says where it came from: our data, trade data or an estimate.
Step 4. Name the segments that matter
Write two or three sentences for the strategy: which segments you will grow in, which you will hold and which you will leave to others.
Done when: the table shows growth and profitability for every segment, and the strategy names the segments that matter.
Adapted from our own strategy reference (PSP, 2010).
From the Strategy Health Check. Your report links the sheet for each of its moves.