Consideration 3: Are the segments precisely defined? 

Specificity matters. The difference in size between a more generalized market segment (say, genomic testing for infectious disease) and a carefully defined subsegment (say, follow-up testing for resistance markers for patients unresponsive to antibiotics) can be orders of magnitude. And all too often, people settle for the larger, less precise estimate because this is all that they have, or they believe that one is a reasonable substitute for the other.  

Furthermore, when estimating future product revenue, it’s critical to be brutally honest about what subsegments your product serves, where it is truly differentiated and where the status quo might prevail. More times than not, the long-term clinical opportunity for a given technology is vastly larger than the immediate basic research opportunity. But if your product is fundamentally unsuitable for use in a clinical setting, you may have unrealistic expectations about future revenues. This is equally true in certain applied markets like agricultural testing and forensics.

The need to define precise market segments is amplified when you attempt to communicate your projections to others inside and outside your organization. People’s initial biases are often unshakeable, and they hear what they want to hear. When stakeholders aren’t 100% aligned on the definition of a market, chaos generally ensues. Teams that thought they were aligned on the risk and potential rewards of pursuing a business strategy find themselves in an unholy tower of Babel.

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