And you’ll also hear business school and consulting jargon thrown at the topic. Phrases spring to mind like strategic agility and business model re-alignment. Regardless of the stories or words, the Pivot amounts to a major strategy move.
The Pivot is also a critical strategic move for medium- and large-sized companies with existing product lines and established business practices. Sure, many entrepreneurs might envy their larger cousin’s resources and advantages. But top managers in larger firms have their concerns as they struggle to redirect and renew their company’s offerings.
There’s hardly a big company immune to the need for such change. And every manager and top executive knows the pain of trying to change. Plus, they must cope with the fear of what’s coming if they don’t change. The problem is that many managers lack the knowledge to guide these major strategic moves. This understanding is about what I call Product Line Pivots.
Principles of Great Product Line Pivots
It’s sad to watch organizations react to the pressure of change without grasping the principles of Product Line Pivots. Some top managers embrace the call from innovation gurus to reorient their beliefs and behaviors. They’re told the solution is to stress an innovation culture, push intrapreneurial work, and ring-fence startups into lean environments.
The advice sounds right, and it works to an extent. But these approaches fall short in the grand scheme of running a large business. They don’t contribute enough to offset the problems and decline of core product lines. I know this notion runs counter to what most bloggers, authors, and academics say. But it’s the dirty little secret of the innovation world. For most companies, business success is in trouble when a core product line stops advancing.
The Change Tsunami
What makes this topic so important is the Tsunami of change every organization faces. Digitalization, AI, 5G, IoT, factory automation, machine learning, social media, and an endless list of technologies force transformation. And these become more important as companies work to keep up with market and customer changes, whether induced by the pandemic or some other influence. Plus, the changes also affect our methods and the approaches we use to innovate and launch new offerings.
I’d argue the product line, not the individual product, must be at the center of the change. At the product line level, companies work to satisfy new clusters of customer needs, leverage new technologies, and exploit work methods and approaches. And while many companies focus on creating one product at a time, it’s at the product line level that they form robust market and technology positions, regardless of industry.
Many companies know their future depends on making major changes to a product line, not just innovating one product at a time. But to do so, they must understand Product Line Pivots and how to execute them successfully. And the challenge is exciting. Let’s face it, a Product Line Pivot can be pure-genius when it’s well-thought-through and superbly carried out. It’s what gets pictures of executives on business magazine covers. Of course, failing to lead smart pivots also gets pictures on covers — but with different headlines.
Product Line Pivot and System Basics
When I teach and consult on product line strategy, I gain a sense of what clients think is important. Understanding Pivots tops the list. But you first need a few basics to understand what raises a move to the Pivot status. It’s about change to the three parts that make up a product line strategy’s core: the platform-lever, attribute-positioning, and chain-link alignment. See Table 1 below for an explanation.
A product line view shows these three parts and how smoothly they interact is the most significant determinant of a product line’s performance. And when you change one of these essential parts, the system’s performance will also change. Smart pivots make sure these three essential parts change in unison, and their smooth interaction follows. And you’ll find that how the parts interact, exactly how they work with one another, is defined by a company’s business model. If a business model conflicts with the desired three-part unison, the Pivot will be compromised.
Changing The Strategy Essence
Advancing the line with new products but not changing the essential product line system parts does not promote a move to be a Pivot. That’s because if you don’t make changes to one of the key parts, your strategy is merely pushing forward on its current course. This approach doubles down on the strategy, it doesn’t change it.
To carry out a Pivot, you must change one of the three parts. And when you do, the other two parts must also change to keep full effectiveness. I call this three-part unison the product line’s Strategy-Essence.
A Product Line Pivot, therefore, is when you change the Strategy-Essence. Impactful Pivots demand excellent execution of changes to the three critical system parts. And success demands the Strategy-Essence gains a unified interplay of those parts; that’s the unison. You’ll find that when teams use systems thinking focused on the Strategy Essence, they’re better able to create, plan, and carry out a smart Product Line Pivot.
Pivots and Market Diffusion
To hammer home the importance of Product Line Pivots, let’s look at them from a different view. Let’s say you’re a B2B company that sells technologies like machine learning, digitalization software, 5G, or factory automation — any contributor to the change tsunami.
Think about your diffusion challenge. Are you selling your technology’s full gain or benefits? Most likely, the answer is yes. But can the customer realize the full gain without a major change to their own product line? Probably not.
Your benefit offer depends on the customer’s Product Line Pivot. The diffusion challenge exists because your customer lacks the knowledge or ability to carry out their own Pivot. The likely recourse is positioning your product to supplement, not transform, the customer’s product line. Unfortunately, this approach slows diffusion. Crossing the life cycle chasm[i], so to say, will happen only when customers move to transform or Pivot their product lines. Your product’s diffusion and success, therefore, depends on each customer’s Product Line Pivot.
Change and the Chasm
The key to an excellent Product Line Pivot is to exploit the change Tsunami for each Strategy-Essence part and their unison. Wow! That’s so simple. But it’s also very challenging. It seems simple when you read a business article with a title like “Big Company Embraces New Technology” — you fill in the company name and Tsunami fed technology.
First impressions leave you thinking you need only “embrace” the new technology. But details can cause difficulties. Should the big company redefine its market segments? Will secondary technologies be added to resultant products? Does the company have the skills to redo their offering? Will a Pivot cause change within the company’s non-product functions like sales, operations, and finance? Should the company change its organizational structure?
These questions stem from an understanding of Product Line Pivots in the context of systems thinking. And it’s this same understanding that leads to good answers and sharp execution. Understanding Product Line Pivots and seeing how a product line works as a system is crucial if you wish to succeed.
The first step in dealing with the change Tsunami is to learn the nuances of Product Line Pivots and Product Lines as Systems. Building this knowledge can be a powerful game-changer. And thinking that it’s OK just to wing it… well, that’s up to you. Everybody should get their picture on the cover of a magazine.
Let’s hope it’s for the right reason.
The columns in this table share the three parts of the Strategy Essence – the very core of a product line strategy. Each row describes that part’s relevance in the product line strategy. A pivot requires notable change to one of these key parts. Great product line performance then demands the three parts to work in unison… after the change.
|Product Line System Part|
|What is this part of the product line system||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. 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 force your product line system gains from this part||Demand Pull, Competitive Blocking||Leverage: faster and less expensive developments||Chain-link synergy: a to boost to the line’s performance. Without synergy, the alignment allows performance but doesn’t boost it.|
|How the Change Tsunami impacts the individual parts||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 tangible, and tangible products become 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. The change Tsunami can affect and improve each. These changes then 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.|
|How the Change Tsunami impacts the Strategy-Essence unison||New segment definitions also demand new attribute-positioning. And the new segmentation may create a need for a new platform-lever.||New platform-levers require support across functions. This may demand new skills and organizational structures.||Good alignment needs all functions (sales, engineering, marketing, etc.) to align with newly defined segments. This alignment requires cross-functional data, analytics, processes, and decision-making and workflows. Innovations can cut across chain-links to create value previously impossible to achieve.|
[i] Geoffrey A Moore, Crossing the Chasm (1991, revised 1999 and 2014) HarperCollins