Functions as Links in a Chain
There’s nothing new in the “all functions matter” observation. Still, it amazes me how functional silo rigidity remains a common theme in innovation. It’s been in the product development lexicon since the early 1980s, if not before.
I recognize 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.
UCLA Professor Richard Rumelt shares a metaphor to help us understand the unison. He refers to business strategy as a chain in which each function’s strategy is a link. Rumelt argues that a poor strategy by any function will undermine an entire business strategy. But he also shows us the whole chain, when crafted smartly, is far stronger than any single link by itself.
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 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.
Next, add to the chain Apple’s iMessage and Facetime app’s that lock in it’s customer base. The results, as Rumelt tells us, are far better than what any single link can produce. Apple has achieved Chain-link synergy This is where each link boosts the other links.
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 product features that matter. It’s hard for Samsung to outdo Apple’s retail stores and its I 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.
The big challenge for Apple is that their strategy chain doesn’t play out the same in every geographic market. In China, for example, intellectual property, retailing, and customer lock-in come up short. Both the chain-links and smart phone competition are different. Nonetheless, Apple’s ability to manage geography-specific chain-links is strong, just not as strong as in North America.
Every business has chain-links 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. Innovators must recognize how well their innovation works within the chain. The chain-link connections can significantly affect the innovation’s success or failure.
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 whole chain. Or you may work to change the other links to support the changes that product advancements cause in the line. But leaders must understand they can’t leave all chain-links unchanged forever.
Notice how intrapreneurship and lean startups stem from the old silo thinking. They believe the silos (other links in the chain) won’t change. Their approach is to work around the links because the other links don’t want to or can’t change. And while many gurus preach the entrepreneurial mindset as a new, modern-day approach, I base their thinking on the old-school assumption that non-innovation chain-links will kill .the innovation. The old-school belief is that functional silos will attack innovations like antibodies fight infections.
Change is the only Constant
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. Each chain-link’s leadership wants to know when, how, and why. But most business and product line strategies don’t guide those changes as well as they should. They keep functions independent of product line changes. And that’s a mistake.
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 the work other chain-links must complete for the products and innovations to be successful.
Chain-link strategies impact every product line, but the impact isn’t the same. The product line team’s job is to influence each chain-link to minimize hindrances to the line and maximize potential synergies. It’s challenging to do this without a framework to think through the relationship between chain-links and with the product line.
I divide product line strategy changes into three buckets. I refer to the first bucket as ‘recasts.’ These are incremental advancements of products or redo’s of existing products. The recast title refers to both individual products and the entire line. These changes don’t alter the strategy’s essence, and there’s no need to change the non-product related chain-links.
The second bucket is for pivots. There are varying degrees of pivots. You’ll see a pivot in action when a team adds a new platform-lever to a line or introduces a new generation of a platform-lever. It also takes place when a market segmentation scheme changes. A pivot is a more significant change than the recast, and it often demands change to other chain-links like sales, operations, and supply chain. You can judge the magnitude of a pivot by the change needed in the chain-links to be successful.
The third strategy bucket is the most notable, and by exploring this bucket you’ll learn much about how chain-link strategies affect a product line’s performance. I call this the product line transformation bucket. These are notable changes to the product line that demand concurrent chain-link changes.
Big Moves, Big Change
A common reason for such magnitude of change is when a product line strategy seeks to switch a core platform lever type, not just improve an existing platform-lever‘s performance. For example, a product line strategy shift may change the core platform-lever from a high volume production asset to a mass customization production line. To succeed, such strategy moves demand changes across the chain-links. Production, sales, and supply change all must change.
Product line transformation affects how the links connect and work with one another to support the line. It’s helpful to know that the manner and outcome of chain-link interconnections is also called the business model. That’s why product line transformations get confused with business model innovations. The difference is the vantage point. In product line transformations, the product line team’s focus is to seek the best performance. But business model innovation doesn’t always put pumping up a product line strategy at its core.
Please recognize it’s difficult, if not impossible, for a product line to perform well within two different business models concurrently. That demands interplay with different chain-link sets, which demands different product line strategies. Because performance depends on intense, deliberate focus, responding to two business models will reduce the focus and diminish the line’s performance.
Understanding chain-link strategies related to a product line strategy is also important during a company’s digital transformation journey. This is when a business embraces digital technologies to improve its work and data flow and drive greater customer satisfaction. Digitalization happens within every link in the chain. And it alters the way the links or functions connect and work with one another.
The big question for product line strategists is whether to transform the product line as part of the cross-company digitalization journey. If you leave the product line strategy “as is,” digitalization will double down on the approach. Yet during digitalization, the entire organization should have higher readiness and dedication to the change. I don’t wish to solve this dilemma in this blog. I merely want to highlight the relation between chain-link strategies and digitalization.
You’ll find the product line strategy chain-link advances when technologies such as artificial intelligence and IoT become part of the transformation. These can be direct changes to the line. But you’ll also see product lines reshaped by data analytics used across other chain-links. Both direct and indirect product line changes can affect the line’s 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. They need to spell it out and communicate it. And once the change is underway, they need to make sure that changes stay on track.
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.
Once a product line team understands the strategy move they want to make, it’s their job to ensure the other chain-links keep pace. Most managers know this intuitively. But it’s surprising how many managers feel the job is secondary to technical, engineering or marketing work specific to products. That’s a mistake.
Old School End-runs
Old school logic ensures teams finish the product before other parts of the company change 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 the company.
Chain-link changes are vital to carrying out innovations and intelligent 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 it doesn’t give you the means to create or display such changes.
It’s not that the roadmap software providers don’t want to give teams the functionality. The problem is that companies aren’t asking for it. This suggests a significant lack of awareness or poor understanding of chain-link changes and their interplay with a product line and its performance.
New School Strategy Moves
The issue is that too many innovators and product line teams continue to take an old-school view. It’s us-versus-them; the product developers versus the chain and its 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 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.
Change to Succeed
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: Chain-link change is an essential part of a great product line strategy.
Managing chain-links is a critical task in driving great product line performance. Savvy product line managers will master the topic. But chain-link management is not enough by itself. I encourage any manager wishing to advance their innovation and product line management skills to take a deep dive into Platform-Levers and Attribute Positioning. You’ll find much on these powerful topics on our website.
|||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.|
|||A business model describes the rationale of how an organization creates, delivers, and captures value|
|||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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