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Product Strategy for Product Development

 Taylor 2006-05-08
Visions: Back Issues: July 97 :


Product Strategy for Product Development

Albert L. Page
Professor of Marketing, U. of Illinois-Chicago
apl3@uic.edu

On April 10 of this year the Chicago Chapter of PDMA held a highly successful joint meeting with the Midwest Council of the American Electronics Association (AEA). Over 75 people, including more than 40 PDMA members, came together for a half a day to go "Beyond Product Development - Driving Growth with Product Strategy" with four very effective presenters. Special thanks are due to the Chicago office of Pittiglio Rabin Todd and McGrath for organizing this excellent meeting for PDMA and AEA.

Product Platform Strategies

The morning began with a presentation by Michael McGrath, Managing Director of Pittiglio Rabin Todd and McGrath who discussed what we can learn from the best companies about how to drive growth with product strategy. After a company learns to manage an individual development project effectively and then to manage its program as a portfolio and pipeline of projects, it is ready to develop a strategy that directs and drives its program. The core of that strategy is the product platform concept and companies need to think in terms of platforms rather than individual products since platforms naturally lead to entire families of products.

Using Intel‘s family of 486 chips and Disney‘s Walt Disney World as illustrations McGrath discussed how to plan the deployment of individual products off a platform to target market niches and increase penetration of the market. He also stressed the necessity of understanding the underlying characteristics of your product platforms so that the correct strategic decisions can be made. For example, he pointed out that the defining technology for Wang‘s word processors was not their hardware but rather the applications software. Had Wang built its product strategy around this software platform rather than trying to compete with new hardware its fortunes might well have been very different. Finally, he pointed out that management needs to know what the remaining life of their platform(s) is so they can plan on new technology replacements. Unfortunately, this can only be estimated and it seems better to plan on a shorter life for a platform rather than a longer one.

Six Steps to Strategy

The second speaker was Dennis Duffy, the Director of Business Development for the 3M Medical Markets Group. He described the process they created for developing product and platform strategy and also provided a succinct definition of what a platform is. He defined it as "the smallest set of technologies common for a range of products that determine the ultimate competitive performance of those products. It is an explicit entity which remains unchanged in all the products incorporating the platform." Duffy said that in world class companies there are typically 8 or 9 products per platform.

Duffy related the six step process 3M created for developing product and platform strategy. The steps include a statement of strategic intent, a situation analysis, a strategic plan, defining the basis of competition, developing product family maps, and finally, business valuation. It is an iterative process and it appears that the product family maps are a unique feature of the process. 3M uses this process to manage 30 technology platforms such as the re-positionable adhesives used in its Post-Its family of products. Sometimes platforms are only identified as such when you see the same technology or sets of technologies re-appearing in several different products. Thus an analysis of the technologies in your products can be helpful in identifying them.

Platforms to Product Families

The third speaker was Prof. Marc Meyer from Northeastern University who has co-authored a recent book on product platforms. The thrust of his presentation was on the strategies that can be used to develop platforms into families of products the market will find valuable. He first described platforms from the systems perspective of subsystems and interfaces. Then he showed how to use a market segmentation grid arraying market segments versus product performance levels to plot out platform strategies. In the grid each combination of a technology solution with a market segment represents a potential market opportunity into which a product family can be expanded. Starting with a technology/performance solution for a particular market segment Meyer illustrated how to use strategies like horizontal leverage and vertical scaling to expand into new markets defined by different performance/segment combinations via modularity and subsystem components that are compatible with the system interfaces of the platform technology. He illustrated his presentation with interesting examples of HP ink jet printers, Gillette‘s Sensor-Excel razors, Compaq computers and Swatches to name just a few.

Strategy? Charge Ahead!

The final presentation was by John Manzo, Vice President, Research and Development at US Robotics. The provocative title of his presentation was "Keeping Product Strategy From Getting in the Way of Success." His message was an interesting counterbalance to the more methodical and planned approaches to product strategy advocated by the first three speakers.

Manzo said that "in some of today‘s dynamic markets, planning product development makes about as much sense as trying to plan the moves in a basketball game." However, "change becomes a friend when you‘re better at dealing with it than your competitors." He used the example of the development of US Robotics recently introduced X2 modems, which went from a technological breakthrough to store shelves in ten months, to illustrate how traditional product strategy played no role in the successful development of the X2! Their only strategy was to charge ahead and be first to market with a critical mass of customers adopting the X2 technology before it was introduced.

US Robotics used many of the standard tools for gaining cycle time speed in the X2‘s development including teams, empowerment and a culture of commitment to speed and "fleetness of foot." Later, Manzo said the X2 technology would, in fact, be the technology platform for many new modems. Thus while platform-based product strategy did not lead to the original X2 it may well guide the development of the family of X2 products!

Replacing Platforms

After the four presentations there was an extensive round of questions of the presenters. The most interest among the attendees was centered on the questions of "how do you recognize a platform when you have one" and "how can you anticipate when a technology platform should be replaced." Both McGrath and Duffy recognized the replacement issue as a difficult one while Duffy suggested that a related problem is that platforms tend to take on lives of their own and never die - management must learn to recognize their decline and kill them at the right time.

The first three presenters all agreed that it takes a substantial amount of analysis to do product strategy well and it is not a strictly logical process since there are elements of intuition and insight involved which can not be routinized.  

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