At companies that have weathered the recession, CFOs are finding opportunities galore to lead their firms in the transition from survival into the growth mode.In his new book Capturing New Markets: How Smart Companies Create Opportunities Others Don't (McGraw-Hill; June 2011), business strategist Stephen Wunker attempts to offer senior executives a practical guide to taking their companies to the next level -- by taking advantage of uncharted markets. An entrepreneur and strategy consultant with degrees from Princeton, Columbia, and Harvard Business School, Wunker leads Boston-based consultancy New Market Advisors. The firm's work in helping clients with new-markets strategies is based on Wunker's long-time collaboration with Harvard Business School professor and disruptive-innovation expert Clayton Christensen.He speaks with CFOworld's Lisa Yoon about the CFO's role in future and developing corporate ventures.Why is this important now?Companies have emerged from the Great Recession. And a lot of them have a lot of cash on their books, but they don't have a clear formula for growth. One way they can go about growth is just by acquiring competitors. But there's a lot of research that shows that, ultimately, those acquisitions don't really create good returns for shareholders.If companies want to go about organic growth, they need to take different approaches from what they used to take, particularly given all the discontinuities in the environment, given the recession, globalization, new technologies, and so on. New markets are an important way to capture the upside of turbulence and change while protecting companies from the downside.Can you discuss an example?A lot of media companies have stared into the abyss, and kept on walking into it. Blockbuster, newspapers, television studios -- all of them have clung to outdated business models and not profited from the upside of change in their industry.Barnes and Noble stands out as a company that has had the courage to do things differently. They have disrupted their own core business with Nook; they have picked a handful of target markets where they really want to win, and they're not trying to expose themselves on all fronts. They are relentlessly experimenting, and they're humble about how much they know regarding how their industry is going to evolve. That is very unusual, but it makes them quite a viable company, even in an industry that's in the midst of construction.Is there a common misconception by senior executives about approaching and capturing new markets?Yes. In big companies, executives tend to approach new markets just as they would established markets. They create medium- to long-term plans; they allocate resources over at least an annual basis; they hold executives accountable for meeting clear targets.Venture capitalists don't do that. They realize that the operating rules of new markets are totally distinct. You need to have much faster integration of strategy. You need to suspend some of the principles of good business in established industries, such as embracing competition as one of your best allies in generating initial customer demand.How can CFOs exercise leadership in tapping and capitalizing on new markets?They need to be realistic about how to assess and measure new-market opportunities. Asking for an NPV on a market that doesn't exist is going to generate a work of fiction.A venture capitalist is never going to go through that exercise because he knows it's foolhardy. Instead, what you can ask for a reasonable degree of precision on is the expenses as well as the key risks and associated milestones that will reduce the risk in a new venture. You can also insist on a portfolio strategy. Most big companies tend to cluster their new-market adjustments very close to the core, so that they're really line extensions and not really new-market explorations. Then, to compensate for that risk-averse strategy, they'll try a couple of swing-for-the-fences home-run attempts that usually don't work out.Now, a personal investment portfolio would never look like that, and a corporate investment portfolio shouldn't either. It's the CFO's job to ensure that the forces of corporate politics don't lead to an irrational investment portfolio for new markets.How precisely can a company project the dollar value of a yet-untapped market?In most new markets, all you need to know is the number of zeros. Realistically, you cannot know more. Now, you can gauge the potential size of the addressable market, the number of customers that might be interested in the proposition, how much they might be willing to pay for something, and you might guess a rough market share that you can get. But there should be a wide range around each of those figures. What's important is not the ultimate value of the market, but is it big enough to be interesting?I got an assignment in 1997 for an IT-services company to size the value of the Internet. We had no idea--we still don't know. But it was a fool's errand, because the answer was simply that it's big enough that you have to be there. Most new markets are like that. Now, there are a few exceptions: if you're launching satellites, or you're undertaking some major drug-discovery program, for example--then there a lot of upfront costs that you might have to commit to. But with most new markets you can stage your investments such that you can be pragmatic about investing a little, learning, and then doubling down.What's the first step? How can companies even know when it's time to find new markets in the first place?The trigger for looking at new markets is looking at your own growth forecast. How much of that growth is realistically going to come from organic extensions on your current offerings versus tapping into new markets? For most public companies, a substantial part of the valuation comes from a new-markets phase that has yet to be defined. They have to go there to meet what the public markets are expecting in terms of their growth. And that will vary. But typically, if you're looking for upside surprise, it's going to come from new markets that people have not yet accounted for into your share price.Now, the way you go about it is you stop thinking about a new market from the standpoint of your company. See it through your customers' eyes: what are the pain points in their lives? Then work backwards to how your company might be relevant. But don't think about it in terms of, you're a widget company that's looking for a new way to sell widgets. That's often not what people want, and by definition that's not going to be a new market. Steve Jobs didn't ask, are you looking for an iPad? They stepped back and they looked at what was important in people's lives and whether technology could facilitate getting that done.What's the key to follow-through after identifying and researching new markets in order to maximize profitability?Counterintuitively, the best way to grow big fast is to start small and highly targeted. If you try to do too many things at once you're going to be slow in execution, and your limited resources are going to be unfocused and deliver poorly against your goals. Pick a target market that can provide quick feedback and reference customers for broader groups of later adopters. Bring the market something that is simple, scrappy, and as inexpensive as possible. Do it fast, not necessarily to make a lot of money, but to learn a lot at low cost. And take what you learn and decide what's going to be a winner or not. A conundrum is that companies that don't innovate will die, but most innovations will fail. So fail fast and learn when to double down your investment.What specifically is the role of the finance team in this?A lot of new markets are derailed by making financial forecasts the way they do in the existing business and then holding executives accountable to meeting unrealistic numbers. Moreover, a lot of companies funnel too much money into new-market efforts, before they're ready to absorb that wealth. To succeed, a company needs a well-disciplined, but not overfunded, effort to pursue a portfolio of initiatives; and to learn rapidly and think about expense management before making fictional revenue forecasts.An effective CFO makes the difference between success and failure in a new-market venture. Traditional financial-management tools will strangle initiatives before they get off the ground. It doesn't have to cost a lot, it doesn't have to take a lot of risk, but it needs to be different to be effective.