Chain-Link Strategies, Innovation, and Transformations

Big companies have a special challenge when innovating.

In big companies, each function affects the outcome of every innovations. It’s not just product development or marketing or sales that determine the results.

Other functions also matter. Yet, the pressure to succeed falls to project and product management.

Functions as Links in a Chain

There’s nothing new in the “all functions matter” observation. Still, it amazes me that the notion of functional silos is still a common theme. This week I even read three different blogs implying that functional silos are a novel idea. Yet, it’s been in the product development lexicon since the early 1980s, if not before.

But I recognize that innovators need a better understanding of the all-functions-matter insight. If you want to improve your success odds, you must make sure your company’s functions work in unison to support the innovation. Let me explain why.

Famed strategist, author, and professor Richard Rumelt of UCLA uses a metaphor to describe the unison.[1] He refers to business strategy as a chain in which each function’s strategy is a link. A weak link, he says, can ruin the entire chain. A poor strategy by any function, Rumelt argues, will undermine the effectiveness of a whole business strategy. But Rumelt also shows us that the entire chain, when crafted smartly, is far stronger than any single link by itself.

Chain-link Success

Consider Apple’s stellar chain-link strategy. You’ll hear people rave about Apple’s retail store strategy. And they’ll give kudos to its iPhone product line strategy. Or you’ll read an article that gives credit to Apple’s intellectual property strategy and its “i” everything brand strategy. And this says nothing of its approach toward content management, operating systems, supply chain, HR, and finance. Each is stellar.

Competitors like Samsung might advance their products to compete nicely against Apple’s offerings. We see each Galaxy and iPhone generation look like a feature-to-feature boxing match. But the game plays out in a bigger ring. It’s more than just a product line strategy that matters. It’s hard for Samsung to outdo Apple’s retail stores and its “eye” brand image. Product development and design engineering can do nothing about these other links. If Apple relied only on product features, you’d see mobile phone market share dynamics play out differently.

Every business has chain-links strategies that must work as one strategy chain. The strength of each link and how well they work together is what drives business performance. Yet, not all are as strong as Apple’s. Nonetheless, innovators must recognize how well their innovation works within the chain. The chain-link connections will greatly affect the innovation’s success or failure.

Chain-Link Changes

A product line strategy bringing an innovation to market is just one link in the chain. And it leaves the product line strategist a choice. You may change the innovation to support the full chain. Or you may work to change the other links to support the product line’s strategy changes needed to bring the innovation to market.

Notice how intrapreneurship and lean startups stem from the old silo thinking. They assume the silo (other links in the chain) won’t change. Their approach is to work around the links. They think the other links don’t want to change because they simply can’t change. As a result, they believe non-innovation chain-links will kill the innovation. The old thinking is that the different functions will attack innovations like antibodies fight infections.

But I don’t believe the reluctance to change is as true today as it was ten and twenty years ago. Today all chain-links expect to change. Nearly every company has major forces pushing it to advance its technologies and its approach toward data flows and workflows. The chain-links want to know when, how, and why. But most business and product line strategies don’t guide the changes that must be made.

Look at a roadmap for a company’s new products. Typically, it’s a set of stacked Gantt charts that create a picture of project plans. That’s good for the product developers and technologists. And it’s vital to innovation. But these roadmaps say nothing about the changes and work other chain-links must complete in order to help the products and innovation be successful.

Product Line Strategy Moves

I divide product line strategy changes into three buckets. I refer to the first bucket as ‘recasts.’ These are incremental changes or redo’s of existing products. These changes don’t alter the essence of the strategy. Recasts don’t need other chain-links to change.

The second bucket is for pivots. This is when a new platform-lever is added to a line. Or it’s when a market segmentation scheme changes. Pivots often force a change to other chain-links like sales, operations, and supply chain.

The third strategy bucket is the most notable. It’s transformations. This is when all chain-links, including the product line link, change concurrently. It completely alters the chain. This matters because the change also affects the manner in which the links connect and work with one another. We refer to the interconnection across the links, the details of the connection, as a company’s business model.[2] This is important to recognize because of how difficult it is to carry out two different business models concurrently.

There’s lots written on transformations and business models. But it’s not specific to new products or innovations. More likely, it’s about business strategy. Yet exploring these topics helps managers understand a product line’s role within a full strategy chain.

Digital Transformations

Think of the change a company faces pursuing a digital transformation.[3] This is when a business embraces digital technologies to improve its processes, customer experience, and competitiveness. The changes impact every chain-link. And it alters the way they connect and work with one another.

You’ll find the product line strategy chain-link advances with innovations like artificial intelligence and IoT in transformations. These are direct changes to the line. But you’ll also see product lines reshaped by data analytics used across other chain-links. Both the direct and indirect changes to the product line affect its performance. And so does its interplay with the other chain-links. Just ask Apple.

So who’s responsible for laying out functional chain-link changes for each product line strategy move? The answer is everyone. But it’s central to the product line team’s job.

Change Management and Responsibility

Driving smart chain-link changes is critical. It demands managers carry out the responsibility but to do so without authority over the chain-links. And it calls for top management to oversee the job and open pathways for needed changes. This is classic matrix management work.

Once a product line team understands the strategy move they want to make, it’s their job to ensure the other chain-links can keep pace. Most managers know this intuitively. But it’s surprising how many perceive the job as secondary to technical or engineering work specific to products. That’s a mistake.

Old school logic is to make sure the product is finished before expecting other parts of the company to support it. This approach does to strategy moves what serial task management does to projects. It makes them late. And too many late strategy moves can be disastrous, both to the product line and to the company.

Chain-link changes are vital to carrying out innovations and smart product line strategy moves. They’re fundamental to strategy execution. And roadmaps need to show how and when the changes will happen. But if you go to your favorite roadmapping software, you’ll see they don’t give you the means to do such roadmaps.

It’s not that the roadmap software providers don’t want to give teams that functionality. The problem is that companies aren’t asking for it.  This suggests a significant lack of awareness and a basic understanding of chain-link changes and their interplay with a product line and its performance.

New School Strategy Moves

The issue is because too many innovators and the product line teams continue to take the old school view of their organization. It’s us-versus-them, where its product developers versus the chain links. If you live in that world, you revel in the intrapreneurship and lean startup end-runs to chain-links.

But recognize the new school thinking. Today we know it’s far more impactful to get chain-links to change as part of innovation-driven strategy moves, whether the move is a recast, a pivot, or a complete transformation. Inducing and managing change is part of a product manager’s job. And a company’s well-being and success depend on it. Please reconsider what you hear when old-school thinking pops up, and those around you tell you it’s best to avoid change.

In big companies, the most critical innovation job isn’t just to come up with ideas. The job also demands teams carry out smart product line strategy moves. And to succeed, you must drive change across other chain-links. Remember that chain-link change is an essential part of a great product line strategy.

Learn More

To learn more about chain-links, innovation, and product line strategy please consider several Adept Group venues.

Consider purchasing and reading my book, The Profound Impact of Product Line Strategy. Or consider our customized Seminar, held either online or at your offices.





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Time-to-Market vs. Product Line Velocity
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Footnotes

[1]The term “chain-link” builds on Harvard Professor Michael Porter’s “value chain model” and UCLA Professor Richard Rumelt’s work invoking “chain-link logic,” where one strategy link adds to another. Porter introduced the value chain in his 1985 book Competitive Advantage, published by Free Press. Rumelt wrote about chain-link logic in his book Good Strategy Bad Strategy: The Difference and Why It Matters, published in 2011 by Crown Publishing Group. Neither work associates the single word “chain” to the other. Also, neither Porter nor Rumelt reference product line strategies within their thinking. You may blame the author for using the chain-link system plus culture to address the inner-workings of organizations.
[2]A business model describes the rationale of how an organization creates, delivers, and captures value
[3]Digital Transformation is the application of digital technology to solve business problems. These digital solutions enable innovation and creativity, not just enhance and support traditional methods.
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