What has always amused me is that practically every company used as examples in “Best Practice” books such as In Search of Excellence, Good to Great, or Execution seem to have failed to continue being excellent, or great, or have stopped executing. They have fallen prey to the dilemma of holding on to what once was their glorious market dominance moment, and disrupting themselves into a future growth opportunity. [Good reason for concern if an author of one of these books asks YOU to be included in the next one.]
I am the first to point out that I am an avid reader of the authors of these texts, but perhaps overcoming the odds of failure and staying on top is not as easy as the authors might imply. I said last time that the responsibility for missing market transitions rests squarely on the shoulders of top leadership, and that you need to take long-range strategic market planning as seriously as any quarterly or monthly planning process. However, long-range strategic planning is becoming much more difficult to support under the short-term pressures leveled at your job – from large adversarial shareholders, from your gun-shy board, or even from your very own leadership team hoping to maintain their dominance in the organization.
The fundamental challenge is to implement successful innovative disruption into your own business models before you need to.
Real innovation, and end-user-experience driven product development does not march to the same drumbeat as the demanding expectations of your customers, investors, and board. If you are confident that your strategies and roadmaps are spot on, but the development effort will take longer than your annual sales plan, you will need stakeholder support to provide your development, marketing, and sales teams what they need to deliver it in a realistic timeframe (i.e. money, talent, technology, time, more money).
Last week, I showed you how to create a snapshot of where you stand in relationship to your market’s evolutionary cycle. This week I’d like to expand on that with a more sophisticated tool – The Balanced Portfolio Worksheet – which I discovered in the Harvard Business Review article: Creating Project Plans to Focus, by Steven Wheelwright and Kim Clark. The tool they described in 1992 is still very relevant today, although you may need to modify the worksheet slightly to work in your unique company environment.
Rather than spending time describing how the process works, I suggest you look at the HBR reprint for the details, or better yet, drop me a note, and I will guide you through how to implement the process.
The example identifies key market differentiation opportunities, as well as gaps that need to be filled to fully compete in the Networked Telecommunications category (i.e. wire-line products and services). The specific products and categories have long since changed, but I want to show you how the tool is used to identify both categorical as well as individual product offerings.
- The worksheet compares Product Change Complexity against Process Change Complexity.
- Derivatives represent what you might continue to improve in your current lineups (think Sub-Version 1.1, 1.2, 1.3, etc.), and are the primary focus of the sales development and product marketing organization.
- Platforms represent what you expect to introduce in the next 6-18 months (think Version 1.0, 2.0, 3.0, etc.), and are the primary focus of your product management group.
- Longer-term Breakthrough categories – the focus of your product engineering team – represents next generation core solutions (think Models A, B, C, etc.). These are key to sustaining your future differentiation and developed in the very long-term (3-5 years). Moreover, they should represent radically new technology or service enablers that promise to revolutionize your market position, and can oftentimes represent the disruptive force to your current offerings.
In the end, my team and my top management had a much sharper view of what I was talking about when I had proposed we not only needed to dominate these categories today with minor improvements to our current lines of business, but also what solution gaps we needed to fill to maintain that position.
By the way, you may discover that a product or category is heading down a dead-end, or will require more investment than it will return, and thus needs to be abandoned, or eliminated. I will discuss in a separate post, how and when to make that call.
The really wonderful benefit of this tool is that it assigns R&D responsibility directly into the roadmapping process, so they don’t wander off and develop the Nematode Neuron Network Circuit.*
*I actually stood next to this “living product” demonstration in the AT&T exhibit at my first COMDEX in 1986. We literally had to feed the circuit to keep it alive.
Your R&D groups may be doing fascinating fundamental research, but without a practical, framework to create and deliver the next new device, software, or service offering, it is certain to gain the resentment of those divisions downstream paying the corporate “allocation tax” needed to support this wonderfully expensive research – which it did, prior to AT&T spinning off Bell Labs.
Get this right, and developing traditional product family roadmaps are a snap – okay – easier.
Encourage your product teams to develop and maintain a Balanced Portfolio Worksheet roadmap as part of your monthly product reviews, and the annual operating and strategic plan reviews. This establishes the routine discipline of building and filling your development pipelines. It also gets you involved with the product development effort – the proper way.
Contact Us today and we will help you objectively look your “future” in the eye to see if you will have the weapons (products, software, and services) required to gain and grow your market positions now and into the future.