The Profound Impact of Product Line Strategy
In my book and Masterclasses, I lay out a strong framework for product line strategies.¬† I complement this with an easily understood lexicon. Together, the framework and lexicon are important to gaining greater impact from product lines. And they‚Äôre not just for product line teams. Let me explain why.
Product line success in large companies demands many functions to work together. It‚Äôs not just the product line team‚Äôs work that matters. It‚Äôs also the work by sales, manufacturing, and supply chain. Problems arise when functions separate from the product line don‚Äôt understand the game plan fully. It causes misalignment of work and decisions. It causes conflicting priorities, and it results in lost opportunity.
Many top managers don‚Äôt recognize how the way they share a product line strategy affects business performance. When communication is poor, it‚Äôs a serious problem.
Adept Group research, unfortunately, suggests poorly communicated product line strategy is common. Our findings fall in line with two separate Harvard studies[i]. The Harvard studies show how less than 10 percent and not over 30% of managers understand their business strategy. Because product lines are a major part of a business, the same poor understanding cascades to product lines.
Our research on product lines examined 20 companies. The goal was to find out how clarity of a product line strategy affects work. We interviewed product line managers and contributors about their product lines. It turns out the strategy clarity is not as sharp as people think. Both product line managers and contributors within only three companies thought strategy was well understood. Managers in the other companies offered disjointed descriptions.
A Major Problem
The Adept study is a small and qualitative assessment. Confirmation demands an empirical look across a larger sample.[ii] But the findings are noteworthy. Poorly understood product line strategy can cause significant harm. It undercuts initiatives. It slows down work. And it lessens the delivery of customer benefits.
Ideally, product line strategies should guide people to work collaboratively. And strategies should lead one function to boost the impact from others.
The randomness across strategy descriptions in the Adept study underscores the challenge. Without a common framework, managers create discussion points for themselves. Unfortunately, they do it in ways that differ from how others view that same strategy. It hurts communication and complicates execution. Many contributors recognize the confusion and revert to instructions from their bosses. Their philosophy is ‚ÄúI do what the boss tells me to do. Developing a strategy is her responsibility.‚ÄĚ
Working hard and steadily is admirable. But in a fast-paced product line, it‚Äôs not enough. Good product line strategies must have good execution. Work, project plans, and roadmaps should not diverge from a strategy. Or, if the work needs to change, strategy might also change. Still, few managers say they have concern about how their work aligns with a product line strategy. And even less say their work can increase a strategy‚Äôs impact.
Consider how a strategy should influence work prioritization. Product lines need support from sales, supply chain, information systems, and manufacturing. Problems arise when these functions do not embrace the importance of the product line work compared to other work. Each function uses their own thoughts to rank their work. This can, and often does, affect a product line negatively. When work decisions involve multiple functions and multiple product lines, conflicts worsen.
A clear product line strategy presented in easily understood words is a first step toward good execution. Without a means to form strategies and a language to share them, product lines fall short of their potential.
The job is to adopt a framework and lexicon specific to product lines strategies and their execution. The key is the framework‚Äôs simplicity, yet thoroughness. It must hold up to each product line‚Äôs nuances, its actions, and its intent. Plus, the framework must be learnable by all players.
Consider how clarity about the core of a product line strategy is critical. It‚Äôs so critical that I gave it a unique name in the product line lexicon. And it‚Äôs a key part of the framework. I refer to a product line strategy core as it‚Äôs Strategy-Essence. Creating and communicating a smart Strategy-Essence are the most important tasks for a product line team.
What‚Äôs important, though, are the Strategy-Essence‚Äôs three parts. Together, the parts explain a strategy‚Äôs what and why. Here are the three parts.
- Platform-Levers are common factors across products such as design elements, manufacturing, or service methods. There can be much genius in how platform-levers create ‚Äėleverage.‚Äô Leverage plays out through faster development times and lower costs. Poorly understood platform-levers deliver less leverage and less gain to the product line.
- Chain-link Alignment is coordinates functional strategies that make up a business‚Äô unit‚Äôs strategy. Product Line Strategies are just one link in the business unit strategy chain. Ideally, the alignment results are greater than the sum of links. Each boosts the others. Poor alignment negatively impacts a product line‚Äôs performance.
- Attribute-Positioning is embodies each product‚Äôs features within market segments. A product line‚Äôs coherence and impact depends on the full set of products and their features.
Each part of the Strategy-Essence is important. But it‚Äôs more important how the parts relate and boost each other. It‚Äôs the unison of the three parts that matters. Managers should understand these key parts of a Strategy-Essence[iii]. It goes a long way in building clarity.
Fully understanding product line strategy goes beyond the Strategy-Essence unison. Other key concerns include roadmap management, objectives, and metrics. Plus, managers should understand how product lines relate to a business. Fortunately, such knowledge is teachable.
Learning and applying the framework is important. Adept offers several means to help.¬† Our most helpful is a two-day interactive workshop. You may find more information on the workshop.
[i] “A mere 7% of employees today fully understand their company’s business strategies and what’s expected of them in order to help achieve company goals.” Robert S. Kaplan and David P. Norton, “The Strategy-Focused Organization,” Harvard Business School Press, 2001
-Harvard Business Review article, ‚ÄúWhen CEOs Talk Strategy, Is Anyone Listening?‚ÄĚ June 2013: 29% of people could state their company‚Äôs strategy… 71% could not.
[ii] When to Use Quantitative Methods – https://cirt.gcu.edu/research/developmentresources/research_ready/quantresearch/whentouse
[iii] Product Line Strategy Essence Anytime Webinar – http://adept-plm.com/on-demand-webinar-product-line-strategy-essence/