September 30, 2026
Hi Everyone,
In March 2013, Target opened its first stores in Canada, backed by one of the strongest retail brands in North America. Less than two years later, it was gone. The exit cost $5.4 billion before tax. All 133 stores closed, and 17,600 people lost their jobs.
Target had the brand, the money, and the stores. What it didn't have was a way to win. The distribution system behind its US business simply didn’t work in Canada.
Before you commit people and budget to a new market or customer segment, six questions tell you whether you can win there or only show up. Today we're sharing the scorecard, plus the one rule that keeps it honest.
Only one in four expansion bets works
Chris Zook spent years at Bain studying what happens when companies expand beyond their core business. About one in four of those expansions succeeded. The odds were best when a company sold something new to customers it already had, and worst when the whole plan depended on building a new capability.
The most common mistake was underestimating the companies already in the segment. What looks like an adjacent market to you is somebody else's core business, and they’ll defend it harder than your plan assumes.
The six questions
Score each question from 1 (no) to 5 (clearly yes). We built a one-page scorecard you can copy here.
- Customer overlap: Do we already sell to these buyers, or do they at least know who we are?
- Capability transfer: Does what makes us good today give us an advantage in this segment, or is it standard there?
- Competition: Who owns this segment now, and what happens to our plan when they respond?
- Channel access: Can we reach these buyers through the channels we already use, or do we start from zero?
- Unit economics: Do the numbers work with today's assumptions? If the plan only works when several assumptions improve at the same time, score this a 1.
- Trust: Would these buyers believe our promise, or does our reputation stay behind in our current market?
Look at your lowest score, not your average
A strong average hides the single weakness that can sink the whole plan, the way distribution sank Target Canada.
If competition, channel access, or unit economics scores a 1, stop. Or narrow the entry to a part of the segment where that score improves. Averaging away a 1 is how companies talk themselves into markets they can't win.
What if the answer is no?
Then the scorecard did its job. Jason Fried and David Heinemeier Hansson said no to enterprise customers at Basecamp for years, even though the demand was there, because winning those deals required a sales operation they didn't want to build. Fried put it plainly: "We're not really that interested in enterprise stuff."
And a no isn't necessarily permanent. Segments change, and so do your capabilities. If a segment is worth another look next year, score it again then.
Try this today
Take the segment your leadership team has discussed most recently. Score the six questions yourself, then ask the person proposing the entry to do the same. Compare your lowest scores first.
Wherever you disagree by more than a point, that’s what to test next. Five calls with buyers in that segment, or one page on the strongest competitor's offer, will usually settle it.
Go deeper
👉 Bain: The New Rules for Growing Outside Your Core — read this before greenlighting any expansion; it covers where the odds improve and where they collapse.
👉 Signal v. Noise: Why we never sold Basecamp by the seat — see what a deliberate no looks like from inside a company that stayed profitable saying it.
👉 Retail Insider: Ten years since Target's exit from Canada — the full story of how a loved brand lost $5.4 billion in under two years.
👉 GTM Strategist: How to find your beachhead segment — use this to choose between segments if more than one clears the scorecard.
Coming up tomorrow
Tomorrow we'll look at when to trust your gut and when to trust the data.