Ultimately, the collective group of senior management, product management teams, and technology managers hammers out the priorities to ensure that the various portfolios of advanced technology and product creation projects will generate the most competitive product or service portfolio as fast as possible. The size of the investment will dictate the pace of change, which suggests a natural transition to the annual budgeting process. The portfolio makes sense when market-back and technology-forward reviews align at an investment level the company can afford. The product strategy review then feeds the budgeting process in an informed manner, so that the new annual budgets become objective driven rather than merely an extrapolation of past revenues, margins, and costs.
Platforms, modules, and differentiators allow a company to drive continuous innovation while leveraging economies of scale. Senior management plays a crucial role in setting the context. Individual product managers, designers, engineers, and researchers generally focus on their own piece of the big picture. No company can afford to pursue all opportunities; it must find the right mix of technology-forward and market-back innovation ideas. The essence of strategy involves deciding what not to do as much as it involves deciding what to do.
Does a new technology require a fundamental breakthrough and accordingly warrant separation from product development and an ATD? Or does most of the technology already exist and do developers trust it enough that it can be tied to a new product program? When introducing night vision into the automotive world, GM used the launch of the 2000 Cadillac DeVille to drive the timing. Does the platform architecture provide adequate differentiation, or has it blurred important distinctions across brands? Should this innovation effort be stopped now or given more time and investment dollars? Such strategic decisions can be made well only by executives with a deep understanding of the technology and the innovation processes. A former GM manager once remarked that prior to the 1980s, “General Motors had 20 cars that looked different on the outside but were the same underneath.” But by the beginning of the 1990s, “GM had 20 cars that looked the same on the outside but were different underneath.” Who did he blame for this unhappy change? The executive leadership, and rightfully so.
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Tim Laseter (firstname.lastname@example.org) currently holds visiting faculty appointments at the Darden Graduate Business School at the University of Virginia, IESE in Barcelona, the London Business School, Emory University’s Goizueta Business School in Atlanta, and the Stern School of Business at New York University. Formerly a vice president with Booz Allen Hamilton, he has more than 20 years of experience in operations strategy.
Ron Kerber (RonaldKerber@AOL.com) has held executive positions in product development and technology management at the Whirlpool Corporation, McDonnell Douglas, and the U.S. Department of Defense. Now retired from corporate life, he remains an active entrepreneur and independent consultant who also provides pro bono service on a variety of federal government committees.
This article is adapted from the book Strategic Product Creation (McGraw-Hill, 2007), by Ron Kerber and Tim Laseter.