The ‚ÄúPivot‚ÄĚ is synonymous with successful startups. Experts love to tell the stories about how pivots are the key to success. Paypal, Starbucks, and Twitter all found fortune through a pivot. And you‚Äôll 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 or game playing move.
The Pivot is also a critical strategy move for medium- and large-sized companies with existing product lines and established business practices. Sure, many entrepreneurs might envy their larger cousin‚Äôs resources and advantages. But top managers in larger firms have their own concerns as they struggle to redirect and renew their company‚Äôs offerings. There‚Äôs hardly a big company immune to the need for such change. And every manager and top executive knows the pain of trying to change. And they cope with the fear of what‚Äôs coming if they don‚Äôt change. The problem is that many managers lack the knowledge to guide good strategy moves. This understanding is about what I call Product Line Pivots.
It‚Äôs sad to watch organizations react to the pressure of change without grasping the tenets of Product Line Pivots. Some top managers embrace the call from innovation gurus to reorient their beliefs and behaviors. They‚Äôre told the solution is to stress an innovation culture, to push intrapreneurial work, and to ring-fence startups into lean environments. This sounds right. And it works to an extent. Unfortunately, these approaches fall short in the grand scheme of running a large business. They simply don‚Äôt 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‚Äôs the dirty little secret of the innovation world. For most companies, business success is in trouble when a core product line stops advancing.
A Wave of Change
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 are forcing transformation. These advances cause a change in customer needs and behaviors, the products and services we offer, and the methods and approaches we practice to innovate. I‚Äôd argue the product line, not the individual product, is at the center of the change. It‚Äôs at the product line level that companies work to satisfy new clusters of customer needs, leverage new technologies, and exploit digitalization into new work methods and approaches. And although many companies focus on creating one product at a time, it‚Äôs at the product line level that they form powerful market and technology positions, regardless of industry.
The problem for many companies is that future success depends on changing their product lines significantly, not just innovating one product at a time. But to do so, they must understand Product Line Pivots and how to execute them successfully. This is exciting stuff in business and innovation. A Product Line Pivot can be pure-genius when it‚Äôs well-thought-through and superbly carried out. It‚Äôs what gets pictures of executives on business magazine covers. Of course, failing to lead smart pivots also gets pictures on covers ‚ÄĒ but with different headlines.
First, The 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‚Äôs about change to the three parts that make up a product line strategy‚Äôs core: the platform-lever, attribute-positioning, and chain-link alignment. See Table 1 below for an explanation.
Advancing the line with new products but not changing the core product line parts does not promote a move to be a Pivot. That‚Äôs because to make a strategy impactful, each part must be strong plus they must work in unison. Once you change one of the three parts, you‚Äôll need to change the other two parts to realize full effectiveness. I call this three-part unison the product line‚Äôs Strategy-Essence. A Product Line Pivot, therefore, is when you change the Strategy-Essence. Successful and impactful Pivots demand great execution of smart changes to the three-parts and the Strategy-Essence unison.
To hammer home the importance of Product Line Pivots, let‚Äôs look at them from a different view. Let‚Äôs say you sell technology like machine learning, digitalization software, 5G, or factory automation ‚ÄĒ any contributor to the change tsunami. Think about your diffusion challenge. Are you selling your technology‚Äôs full gain or benefits? Most likely, the answer is yes. But can the customer realize the full gain without a major change to their product line? Probably not.
Your benefit offer depends on the customer‚Äôs Product Line Pivot. The diffusion challenge exists because your customer lacks the knowledge or ability to carry out a Pivot. The likely recourse is to position your product to supplement, not transform, the customer‚Äôs 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‚Äôs diffusion and success, therefore, depends on customers‚Äô Product Line Pivots.
Change and the Chasm
The key to a great Product Line Pivot is to exploit the change tsunami for each Strategy-Essence part and their unison. Wow! That‚Äôs so simple. But it‚Äôs also so very difficult. It seems simple when you read a business article with a title like ‚ÄúBig Company Embraces New Technology‚ÄĚ ‚ÄĒ you fill in the company name and tsunami fed technology. First impressions leave you thinking you need only ‚Äúembrace‚ÄĚ 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 companies non-product functions like sales, operations, and finance? Should the company change its organizational structure?
These questions stem from a deep understanding of Product Line Pivots. And it‚Äôs this same understanding that leads to good answers and sharp execution. Understanding Product Line Pivots matters.
The first step in dealing with the tsunami of change is to learn the nuances of Product Line Pivots. It‚Äôs with such powerful strategy moves that companies drive fundamental change. Take the time to learn about Pivots, then apply your knowledge. It‚Äôs enormously valuable.
You’ll learn much more about product line strategy in my book The Profound Impact of Product Line Strategy.¬† I show how a good Strategy-Essence works to boost any product line.
Table 1. Core Product Line Strategy Parts (and their Strategy-Essence unison)
|Product Line Strategy Part:||Attribute Positioning||Platform Leverage||Cross-Functional Alignment|
|What it is||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 ‚ÄėChain-link‚Äô alignment. The product line strategy is one link. Other links include roles such as sales, marketing, and manufacturing. All must align to form an effective business strategy chain. Misalignment across links can degrade a product line‚Äôs effectiveness.|
|How the Tsunami of change impacts the individual parts||Market segments become more finely defined. This is driven by data coming from real-time product use consumer choices, and systems sensors. Strategies may seek to make services 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 boosts its performance through its own processes, tools, and techniques. The change tsunami can affect and improve each. These changes then affect how the functions connects and works with other functions. Improved alignment across the function links can boost a product line‚Äôs performance. Misalignment, however, can hurt a product line‚Äôs performance.|
|How the Tsunami of change impacts the Strategy-Essence unison||New segment definitions also demand new attribute-positioning. This creates new requirements for new or renewed platform-levers.||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. 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