V, U, and L are shapes that represent paths the US economy may take in our recovery from the current Covid pandemic. There’s no question about the direction of the left side of each letter. It’s been straight down and we’re waiting to see how far it will go. In the past two weeks, reputable forecasts changed from 10 to 15% unemployment to 25 to 30%. And second-quarter GDP forecasts went from negative 20% to negative 40%. These are astounding numbers. And now ― because we have no herd or vaccine immunity, no assured therapeutic response, and not enough testing and monitoring capability ― our economic recovery is not looking good. We’re undoubtedly in the fight of our lives.
The recovery path we take during the next several months is not a politically correct or socially polite topic to bring up with friends, neighbors, or family. But in business, you’re making a huge mistake if you follow the wrong path. Sidestepping the topic is lousy leadership and bad management.
The L path is not inherently popular. There’s something anti-American about it. From the V and U believers’ view, those embracing the L shape are pessimistic nay-Sayers. But L-believers will say, “call me names if you will. I’m only reflecting facts – our reality.”
My view shifted from V to U, and now I see a high likelihood the L path will rule. And while Resiliency, Positivity, and “Bounce-back” are the leadership mantras for the return-to-normal V and U-shaped recoveries, they’re not enough to guide an organization through a deep economic valley and a prolonged L-shaped recovery.
I believe the V shape is a delusionary and alternative fact forecast. The U-shape is slightly more believable, but how long the bottom extends is a crucial question. The longer the recovery time, the less likely we’ll return to normal. And that’s where my thoughts land. It’s time to accept the L-shape recovery and move on with it. Learn what it means and how it will affect your business. Most important, figure out how you must change.
The L-shape pushes an extreme need for Responsiveness ― a significant move forward. And that calls for actions far beyond the bounce-back resiliency path. It also means getting in front of change, not waiting for deep financial pain to cause your company to make moves.
During the V-stage of our collective thinking, most companies rightfully sent people to work from home. And their leaders embraced a simple, resilient morale-boosting message. It encouraged us to ‘keep focused on the work we’ve been doing, even though you can’t have in-person meetings, visit customers, or do physical work in laboratories or on the shop floor.’ Or, you may have read articles by experts saying, ‘Just do more of what I was preaching before our crisis, and you’ll succeed.’ The notion was that a return to normalcy is soon to come. Work hard, and we’ll bounce back.
But as we shift to an L path recovery, several critical business issues arise. At the top of the list, and equal to your company’s financial well-being, is product demand. For most companies, product sales are down substantially. But product demand isn’t a binary, on or off function. In an L-shaped recovery most products will not return to pre-Covid levels, at least not quickly.
The big problem for product managers is a growing mismatch between current offerings and new behaviors by customers and markets. And this mismatch will cut across all product types, whether consumer goods or business-to-business, services or tangible products, and both high-tech and low-tech products.
In medium-sized and large companies, strategies and approaches must account for multiple products going to many markets. And most often, the markets are global. This multi-product perspective isn’t the same playing field nor a simple team roster that entrepreneurs must guide. It’s bigger and has more moving parts. And unfortunately for larger companies, if previous market demand was the glue holding the parts together, as often the case, the L-shape recovery may reveal a tangled mess.
Leaders and experts can preach bounce-back resiliency as much as they want. But stabilizing and rebuilding a business demands more, much more. It calls for a level of Responsiveness and change that’s never been tackled. Plus it demands coordination of changes across many products and markets. That’s not a call to keep your nose to the grindstone, nor to do more of what someone was preaching before the crisis.
The Pivotal Response
It’s easy to say “be responsive” to the market shifts you’re bound to see. But what does Responsiveness mean, and how can companies carry it out? The answer is to Pivot your product lines to improve their impact.
My advice in the current Covid economy is to begin the Pivot by shelving all innovation and development projects except those scheduled to launch in the next few months. I know that’s not what my fellow innovation professionals want to hear. It is, though, the correct approach. The intent is not to kill innovation but instead focus resources on the immediate job of fixing existing products. And that’s an all hands on deck job.
The goal of the first Pivot step is to reformulate, as quickly as possible, a succinct product line strategy or game plan. And it’s to lay out a roadmap that best guides resulting work and decisions. This is a job for your best and brightest people, not those most senior or experienced. You’ll see this isn’t a technical, marketing, or finance job. It’s an everything job. Those given the task must be able to think creatively, strategically, and systemically. They must know your business, plus be capable to learn new facts quickly. They must be able to form, manipulate, and exploit new thoughts and insights.
Each new product line strategy or game plan will be different. And unfortunately, all products may not survive the shift. The issue is that when demand falls, contribution to cover overhead also falls. And when overhead can’t be cut fast enough, it may not be wise to keep the weakened products. Hopefully, other products may see increased demand.
Please consider the fundamentals before racing off to do your work. These fundamentals will be the difference between a Product Line Pivot’s success or failure.
All Product Line Pivots are major strategy moves that demand three parts to work in unison:
- Matching Product Attributes to customer needs and behaviors;
- Gaining or keeping Leverage; and
- Aligning functions across the organization to amplify outcomes.
The challenge is to coordinate all three parts, not just carry out one. And it’s to do it damn quickly. The job is to bust through the typical decision-making swirl and carry out work across functions regardless of silos. Smart managers know this. They’ve heard it forever. But now’s the time to do it.
Take a moment to look at the three Pivot contributors. And then explore the tough job of making the parts work together.
I’ve written extensively on the three Pivot parts. In my book The Profound Impact of Product Line Strategy, I lay out how the product line strategy parts work together. None of my writing reflects the immediacy of a Covid economy. And what I say here is not exactly what I say in the book. But I’d argue the fundamentals and interplay between the three strategy parts are the same. The difference, and it’s a big difference, is the extreme pressures companies will experience in their efforts to dig out of the Covid trough.
In the book, I use the product line strategy parts to help companies develop better products. But here, my message is to use the strategy parts to correct sudden mismatches between the products you’re already selling and the markets they serve. Sure, a few development projects, especially those nearing launch, may fall into this purview. But your development portfolio must take a back seat until you make corrections to existing products.
Matching Product Attributes to Customer Needs.
Smart marketers know to use marketing tools to position a product specific to a customer’s needs, wants, and desires. But in product line strategies, we also use design, engineering, and technologies to embody sets of attributes into products. And as customer needs shift, we must use those same skills and talents to change the existing products or recast new products to match new sets of customer needs. The job is more than creating a sharp positioning message to help boost sales. It’s to reform and re-engineer current products to better fit new customer needs.
The most critical step in matching product attributes is to figure out how customer needs have changed. And this presents an enormous challenge, especially when you must do it fast and without face-to-face customer contact. You’ll find the most critical aspect is to see the customer need shift in terms of Jobs-to-be-Done outcomes. And if you don’t understand what that means, you best learn the topic. See more HERE.
Don’t wait for your sales force, your CRM system, or monthly sales reports to tell you something has changed. You must build that understanding before you and your colleagues become overrun with issues and challenges.
Consider the following steps:
- Compile a “best guess hypothesis” of how market needs are changing based on the knowledge held by colleagues and contributors. Do this for each critical product already being sold. Then do the same for those products in development nearing launch. Compile the best guess hypotheses for all offerings in a product line. Do the hypotheses fall into groups or cut across products or offerings? What do you think has changed?
- Conduct over-the-telephone interviews with top customers to stay on top of what they want and what they will buy. Is there a pattern in what you’re hearing? What insights seem to be most important? How do customers describe the changes they want?
- Identify “lead user” customers (those with a serious economic incentive to change) per each product group within a line. Gain lead user insights about changes to understand their pressing needs. How will this lead user behavior affect your products? Will their economically pressured needs migrate to be your big or stable customers’ needs?
- Aggregate all findings and then deconstruct your new insights into Jobs-to-be-Done It’s these outcomes that create targets for each product’s features. Managers often know this intuitively. But it’s less common to see managers lay out the outcomes to be targeted sets of product attributes, and then translate the attributes into product specifications. And that’s what needs to be done.
Remember, the goal isn’t just to understand shifts in customer needs and changes in Job-to-be-Done priorities. Responsiveness is to put those insights into changes to your product line. But before conjuring up and engineering the changes, you should explore the other two parts of intelligent Pivots. If you don’t, you’re likely to experience negative forces pushing against the changes you hope to carry out.
Being able to realize a bigger bang for your buck is a cornerstone of smart product line strategies. And that’s what Leverage delivers. When you make notable Pivots, it’s best to keep or create Leverage across products.
In product line strategies, I refer to the object which delivers Leverage as a “Platform-lever.” These are internal to the product line. They are not eco-system platforms like Google’s search engine, Amazon’s online shopping, or Microsoft’s operating system. A product line’s Platform-lever can be a production process that delivers Leverage by flexibility or scale. It can be a core design like a motherboard that purposely enables reuse across many products. Or the Platform-lever for services might enable low-cost personalization. See more on Platform-levers HERE.
If you knew your Platform-levers in the pre Covid world, you have a great starting point. The goal, in this case, is to morph your levers to enable product attribute changes. But if you didn’t know your Platform-levers, you must then focus on figuring out what they need to be going forward. That task demands a healthy combination of creative and strategic thinking.
Many strategists think of a business strategy as a chain of functional strategies that link together. Product line strategy is one of the chain-links. And you’ll see that Supply Chain, Operations, Finance, IT and Sales are also separate links. But most importantly, all links must connect and be strong for the whole business strategy chain to be effective.
The big challenge in carrying out a Product Line Pivot is that other functions may not align with the changes. It may be that Sales, Supply Chain, and Finance have different directions or orientations. Consider what may happen when a product line’s response to Covid is to reform products to better fit markets, but other functions double down and lean out existing workflows for current products. The incongruity weakens the whole business strategy linkage. And there’s no difference between the pre and post Covid world. Poor Chain-link alignment undercuts business performance.
Changes in product Attribute Positioning and Platform-levers always demand Chain-link alignment changes. What’s frustrating is when managers work in silos and don’t see a Chain-link’s misalignment until a product is ready to go. That mistake can cost money and time, and in the Covid economy may cause considerable damage to a business.
The Unison of Parts
Good Product Line Pivots, as with good strategies, gain synergy across the three strategy parts. Failing to do so will degrade the move. Each part should boost the other two. And when your company recognizes the power of the three parts working together, you’re in a better position than many other companies may find themselves.
Still, you must carry out the unison. And that’s where many companies come up short ― perhaps not failing, but short nonetheless.
The current high pressure Covid environment sets up a unique situation. You may see that smartly re-engineering your offering to match new customer needs is the most important strategy part. You can move forward without simultaneous synergy across the parts. Why? Because, compared to competitors and in light of major customer needs, your speed may prove more important. But with time, that won’t be the case as competitors catch up.
Any product line’s first response to the Covid economy will not be perfect. Think of it as a “Ready-Fire-Aim” response. The readying part is the fast planning just described. The firing is the re-engineering and relaunch of products – the execution of the game plan and roadmap. And the follow-up aiming is a continued effort to form new insights coupled to changes to the strategy and go-forward roadmap.
Your product line and your practices must reinforce a sensitivity and Responsiveness to the many economic and behavior changes that will come. Hopefully, your Pivot will also enable you to recast many of the innovation and development projects put on hold.
A Call to Action
We’re about to see every company around the world race to tackle their product mismatch issues. You don’t have to do this blindly.
Learn more about Product Line Pivots. And explore what your leadership team needs to understand to move your organization forward.
Please pick up the phone or send me an email with questions or concerns you have about Product Line Pivots.
Few companies have ever seen such extreme pressures to carry out intensive product line changes. I am happy to share my insights in a one-to-one discussion or a one-to-many Q&A dialogue. It’s remote, and it can be as deep and specific to your products as you’d like. You just have to contact me.
paul dot oconnor at adept-plm.com
Whitepaper– Good Product Line Strategy Matters.