Digital Transformations and
Product Line Performance
Digital transformations may screw up your product line’s performance, and your line may never recover.
And who gets blamed?
It’s a whole host of people, not only IT or product management. According to several studies, the blame falls to the company’s culture. 1 Top managers believe digitalization falls short because their culture is too rigid. They think people are stuck and unwilling to change.
IT departments around the globe are spending massively on the job. In 2021, Gartner Group expects companies to shell out nearly four trillion dollars on big data stacks, analytics, robotic process automation, and cloud-everything, all with an eye toward acronyms such as IoT, 5G, AI, and ML. 2
Companies also pay huge fees to consulting firms to help reshape their cultures. Yet most of the investment is to little avail.
It’s a wonder consulting firms have yet to create services with titles like “Bottle-in Front of Me”, “Frontal Lobotomy,” or “Timothy Leary Micro-doses.” Surely these approaches would alter behaviors. And there’s a bonus. Such services would work equally well when applied to both the managers who must change and the executives who wish to see them change.
The Big Secret
But here’s a secret that’s been lost in the fog of the massive IT spend. Never push directly on culture to change the culture. That’s what led to such notable catch-phrases like: “herding cats,” “wrestling with jellyfish,” and “teaching elephants to tap dance.”
The better approach is to influence and guide specific behaviors. And it’s to do so in the direction you want to go. But the challenge isn’t to pick the behaviors. Instead, the critical challenge is to understand and communicate the direction of the journey.
Blaming culture avoids the actual issue. There’s too little clarity on a destination and the strategy to get there. Sure, there are aspirations toward delivering more value to customers. But if that’s how you define where you want to go, you may want to revisit the three behavior altering services.
Product Line Velocity
My message is that most companies need to focus their digital transformations on improving their product lines’ performance. And they need to do that by focusing on each product line’s velocity. This is a big deal, so allow me to explain.
A transformation should be more than just improving how your company delivers value to your customers. That’s the customer-centric mission most CEO’s give to transformations. And it seems so “motherhood-like,” that I even wonder how I could question it.
The problem is that a focus on how you deliver customer value is too amorphous. It doesn’t provide enough guidance for large digitalization crusades. Nearly every task, deployment, or integration can fit.
Plus, if you seek to prioritize the work or workflows that are most impactful, you’re also declaring the current product strategy and its execution to be correct. You’re doubling down on your course forward. Why would that induce effective behavior change? And if the amorphous guidance allows transformation jobs to go astray or get out of sync with product thinking, it can be more damaging than helpful.
Focus on Performance
The reason to place product line performance at the center of digital transformations is that product lines are foundational to business strategy. For companies with only one product line, the product line strategy, by default, is also the business strategy. And a business’s core mission is always to create, advance, or retire product lines.
The need to focus on product lines is even true for businesses like retail services, distributors, and job-shops. In these cases, product line thinking seems off-base because the business model drives cash flow from selling related offerings. You don’t pay a company to use its store. Instead, you pay for their retailing service when you buy the products they sell. Whether it’s the brick and mortar line, the e-commerce line, or custom manufacturing, these entities can be set up using product line thinking.
Product Line Pivot
To drive home the need to focus on product lines, consider a business wishing to “Pivot” to avoid being disrupted by a competitor. Perhaps it’s Ford responding to Tesla, or P&G’s Gillette responding to subscription-based Harry’s Shave Club. The response must pivot a product line or start a new line. If the digital transformation doesn’t facilitate the changes and only doubles down on old approaches, what’s the point of the data journey?
The key to the product line orientation is to understand Product Line Velocity. This is a measure of improvement toward customer satisfaction, competitive positioning, and cash flow. It’s not a broad focus on improving how you create and deliver value to a customer. It’s more specific than that. And improving the velocity is rooted in product line strategy.
You see the importance of product line velocity when you use systems thinking to break down a product line and its strategy. And the product line systems lens also allows you to understand how digitalization affects the parts and forces that comprise the product line. You’ll see how some digitalization jobs will be great while others may push in the wrong direction.
Top managers should use digitalization to reform their practices and processes, and do so to accelerate their product line’s velocity. The job demands implementing new methods, data flows, and workflows. It also calls for new decision flows to speed up major strategy moves and new product line creations.
Doing this requires the IT group to take a seat at the product line governance table, not just having a product manager join the transformation team. It’s critical to have digitalization become part of product line strategy moves. Gaining this seat can be more critical to a transformation than deploying big data stacks. You’ll see why with a quick exploration of what makes product line strategies excellent or not.
A systems view of product lines shows they are made up of many parts and forces. But as with all systems, a few critical parts hold the most influence over the system’s performance. A smart strategy will focus intensely on managing these parts and the forces between them. In most product lines, the dominant components are platform-levers, attribute-sets, and chain-link alignment. Let’s look at each and see how digital transformations can boost these components and deliver synergy across the three. See the table below.
Key Product Line System Parts
|Product Line System Part|
|Description of the product line system part||Product line strategies divide markets into segments. Teams develop products with features to satisfy the customer needs in each segment. Attribute-positioning is the deliberate and coordinated match between product features and customer needs.||A Platform-Lever is a common factor that cuts across products. By focusing on the Platform-Lever, product lines gain faster development time and better performance and quality economies. There are many Platform-Lever types. Common types include product assets, hardware designs, and software operating systems.||The strategy term for this is 'Chain-link' alignment. The product line strategy is one link in a business strategy chain. Other links include sales, marketing, and manufacturing. All roles and functions must align to form an effective business strategy chain. Misalignment across links can degrade a product line's effectiveness. The manner in which the chains link to one another is the business model.|
|The force your product line system gains from this part||Demand Pull, Competitive Blocking||Leverage: faster and less expensive developments||Chain-link synergy: boost to the line’s performance... beyond mere alignment.|
|How technology and market changes affect the part||Market segments become more finely defined. Such market division may be driven by data from real-time product use, consumer choices, and systems sensors. Strategies may seek to make services more tangible, and tangible products more service-oriented.||Platform-levers and their types may change. For example, hardware design platform-levers may see shifts to stress IoT or machine learning. Organization structure, processes, methods, and support systems will need to change to match the new lever type.||Each functional link can boost its performance through its own processes, tools, and techniques. Changing technologies and customer demands can affect each. These changes also affect how each function connects and works with other functions. Improved alignment across the function links can boost a product line's performance. Misalignment, however, can hurt a product line's performance.|
|Potential Impact of Digitalization on this part||Digitalization enables intelligent segmentation with respect to “jobs-to-be-done” theory and aligns such segmentation with voice of the customer, UX and CX, agile feedback, and CRM interests. Insights from these customer and market threads then enable clear product feature and attribute definitions for maximizing customer satisfaction and building strong competitive positions. Roadmapping and Multi-generational planning spreads the timing of attribute deliverables.||Often, companies first digitize products and offerings by adding digital features to existing products. This first step of digitizing is to add onto existing products. But to remain competitive, digitizing must become integral to the core platform-lever upon which products are built. This requires substantial investment and redesign. Platform digitizing can notably advance a product line.||Good alignment needs all functions (sales, engineering, marketing, etc.) to align with each other when creating, designing, developing, launching, and supporting all products (value creation.) Digitalization can create matched data, work and decision flows across the chain-links. Synergy is then created by coordinating and optimizing all flows for all processes and all projects. Greater strategic impact comes from better coordinated data, work, and decision flows within and across all chain-links.|
A notable change to any of the critical product line components will require the other two parts to change. By definition, that’s what the strategist calls a Pivot. And if the current state of the product line system comes to a grinding halt because the parts can’t change in unison, the pivot will be a failure. But if your digital transformation enables faster and more flexible interplay across the system components, the pivot is far more likely to succeed.
Historically, big companies have been bad at enabling fast changes across their product line systems. Just ask ex-employees of Kodak, Blockbuster, or Compaq. And if digitalization doubles down with greater efficiency toward the same system interplay, the transformation may also be setting up a future disaster.
The good news is that it’s never too late. Well, at least until it really is beyond hope. And if you find yourself in that situation and choose to follow through with the ‘Bottle-in-Front of Me’ service, please invite me in. But by all means, don’t expect much. And as a heads-up before inviting me in: I prefer 18-year-old single malt scotch from the highlands. Cheers!
To learn more about digital transformations and product line performance please consider contacting us directly. HERE
Also consider reading my book, The Profound Impact of Product Line Strategy.
Click here to add your own text