What is a successful product strategy? A successful product strategy is the use of a firm’s product-related resources in such a way as to maximize growth and profitability opportunities. Sounds easy doesn’t it? In reality, developing the product strategy is one of the toughest challenges that companies face.
Product strategy development
There are several challenges in developing and executing product strategy. The major challenges include:
- The product strategy consists of both a planning (defining the strategy) and execution (developing the products) phase. If either planning or execution is flawed, the product strategy is likely to fail;
- The development and execution of the product strategy takes place within a complex market environment and success can be heavily influenced by external variables (the competition, the economy, and even regulation); and,
- Developing a realistic product strategy involves multiple functions within the company, and close collaboration between these functions. These functions often have conflicting objectives (for example: Development wants to meet schedule while reducing cost, however, Marketing may want to add features which will increase product cost and increase schedule risk).
I believe that most individuals involved in the New Product Development (NPD) process will agree to these challenges. However, my next statement may not find as much agreement. I believe that without a process for managing the product strategy, 99% of all product strategies are doomed to failure! And without a successful product strategy, most businesses will ultimately fail.
What do I mean by a ‘process for managing the product strategy’? In its simplest form, this process is a repeatable, measurable methodology for defining and managing the company’s product strategy and product portfolio. Firms will often have a ‘product roadmap’ which undergoes annual reviews among a few key executives during which time resources are allocated and priorities are set. However, having a roadmap does not constitute a product strategy process.
A product strategy process must be measurable, have definable checkpoints, and must involve all of the stakeholders in the process. In addition, it must have mechanisms for incorporating the external factors (competitor strategies, new product announcements, market trends, and market forecasts-the ‘marketing intelligence’ function) and internal factors (funding, human/development resources, access to technology, and paths to market) which will impact the success of the product strategy.
Product strategy traits
It’s very important to recognize that ‘one size doesn’t fit all’ when it comes to product strategy. Depending on the competitive intensity within your industry, the intellectual property landscape, and your internal resources, your product strategy process may be very simple or it may be very complex. The product strategy process must be crafted to suit the needs and abilities of your specific organization. However, I believe that most successful product strategy processes share several common traits:
- They have a method for incorporating external market information early in the process as a basis for setting basic product strategy priorities. Good product strategy processes are not formed in a vacuum. They incorporate a keen understanding of the market needs, market dynamics, and market trends.
- They encourage collaboration among corporate functions including Development, Marketing, Supply Chain/Manufacturing, and Finance. This implies that the process is well known, and understood by all functions. Additionally, there must be a method for resolving disagreements and conflicting priorities in a constructive manner.
- Someone ‘owns’ the product strategy process and holds final responsibility for ensuring the strategy is complete, and that all parties are in agreement to the final product strategy. I have seen this work successfully when either development, marketing, or corporate strategy groups are the ‘owners’ of the product strategy. The key issue is to ensure there is an ‘owner’ who is responsible for gaining consensus and publishing and maintaining the product strategy.
- Successful processes are followed religiously and are gates/foundations to other corporate processes. While the strategy itself may change during the year based on internal or external factors, the product strategy process happens every year according to a pre-defined time table. Other key deliverables (such as the annual budget) depend on the completion of this product strategy definition before they can occur.
Product strategy myths
When developing a product strategy process, it’s important to avoid falling into the trap of believing common myths regarding the product strategy process, including:
Product strategy is only for large multi-national companies with massive budgets and ‘armies’ of internal resources! Unless you have a product/service which doesn’t have any competition (and never will have), you need a product strategy process-regardless of the size of your company. You must be constantly adapting your portfolio to achieve or sustain a competitive advantage.
I have a product roadmap–therefore, I have a product strategy process. Wrong! While a product roadmap is a valuable deliverable from the product strategy process, much of the value of the product strategy process comes from assessing the market on a regular basis, collaborating with the different functions to develop the ‘best’ strategy, and rigorously validating and revalidating your assumptions about the market. You can have a roadmap without having an effective product strategy process.