Unique challenges of product strategy in high-tech companies
The product strategy for high-tech companies poses unique challenges - challenges not faced by other companies that do not have technology-driven products. They can be grouped into four main challenges:
Consistently build new markets Briefly and quickly manage changes in the market and product life cycle
Use emerging technology
Adapt to collapsing markets
Understanding these challenges is the starting point for developing a successful product strategy.
An integrated framework is required to manage the product strategy. This framework synthesizes the structure of the product strategy, the organization of competitiveness and growth strategies.
Strategic vision
The strategic vision is the starting point for the product strategy. It provides context and direction by describing where the company is going, how it hopes to get there, and why it can be successful. The strategic vision varies widely among high-tech companies. Some have faulty strategic vision such as blind vision, short vision, tunnel vision, and mirage vision. The normal strategic vision is the 20/20 vision. Some companies are exceptional because they have peripheral vision or farsightedness.
While the format may vary, a strategic vision includes specific ingredients that describe the 'where to', 'how' and 'why' of the vision. A vision also changes over time. This change can be a clarification, an evolution or a complete change of direction. The strategic vision should be tailored to the business unit level and the CEO of a company or business unit is responsible for its vision. The resulting product strategy is aimed at achieving that vision.
Product platform strategy
The product platform is the primary strategic unit of measurement for the product strategy and accordingly this is where top management should pay more attention. Product platforms have unique characteristics and are defined, planned and developed differently in each individual product. In high-tech products, the definition of platform technology is the most critical feature. The product platform strategy serves several essential purposes that affect the outcome of the resulting product line, long-term business strategy, and technological development.
The successful platform strategy must incorporate some essential ingredients such as technology selection, the basis for differentiation, integration of other platforms, life cycle management and sustainability.
The result of the product platform strategy is expressed in the form of a product platform plan, this plan guides the evolution of current product platforms and ensures that they are replenished.
Product line strategy
While the product line strategy does not have a strategic impact like the platform strategy, it is nevertheless critical in all events of any product strategy. The product line strategy is a staggered time conditional plan for / by the sequence of product development within a product line, serves various purposes, defines product variations, schedules their reviews, and guides the product development team.
The primary objective of the product line strategy is to cover the market by penetrating the appropriate market segments. The biggest ingredient in the success of the product line strategy includes market segment coverage, focus, tiered timing and coordination.
The product line strategy results in a product line plan that defines the sequence of products and the segments they cover. This plan is used to prepare a development program for the product line that shows the project program for each product and estimates the resource requirements. The product line strategy, product line plan, and related development program are illustrated using the Intel 486 product line as an example.
Strategic balance
The strategic balance defines the characteristics and mix of new product opportunities that a company believes are appropriate. This balance requires trade-offs as an approach against differentiation, short-term vs. long-term, current platforms vs. new platforms, high risk vs. low risk and expected financial return.
Defining the correct balance requires adjusting a general objective for investment in new product developments. The R&D effectiveness index provides a measurable goal. It is a total measure of the overall success of a company's product development efforts.
Achieving strategic balance requires adjusting priorities to obtain the desired balance. This is a 3-stage process: Establish criteria, make a preliminary segmentation of resources, and assign resources to specific projects. How to achieve the strategic balance and the R&D effectiveness index are illustrated in a case study that shows a company rebalancing its priorities.
Reference
McGrath, Michael. "Product Strategy for High Tech Companies". Ed. McGraw-Hill, 1995
