Product Strategy Basics….. 1, 2, 3
Prioritizing your product portfolio became relatively easy with thanks to the Boston Consulting Group (BCG) Matrix. This model and many more can be found from www.valuebasedmanagement.net - a favorite of mine.
As obvious as this picture may look, the steps or strategies an organization should take are different for each quadrant. Before I explain "Defend, Extend and Exploit, the quandrant with the “dog” is really just an unattractive business unit and one in which the leadership team should ask the question: “Why are we in this business?” “Could our resources be better spent in one of the 3 areas, within my triangle?”
Position 1 – Defend
Defend your cash-cows has to be the mindset. Competitive pressure awaits this category,
someone wants to serve your clients and with that in mind, you need to create a “defend” strategy. Your issue over time becomes the erosion of
gross margin as your competitors try to offer a lower price and better service (they’ve
innovated). An organization where the product
portfolio is heavy in this category maybe lacking the ability to innovate.
Position 2 – Extend
Unproven, questionable potential product offerings are in this category, hence the question mark. The question is: Which one will likely deliver market share and a high rate of growth? To answer that question, I recommend my clients bend the typical business process rule book just a bit and use this category as a discretionary fund that can quantify and execute quickly; turning those “2's” into a “3's”. Be careful not to take on too many, no more than 2. I am mindful of the “Stage/Gate” model where you need to “kill” the no-goes by quickly prioritizing potentials (http://www.stage-gate.com). It has been my experience that the more you establish a cross functional team for this category - the better the result will be.
Position 3 - Exploit
As the title suggests, run with it! Establish barriers to slow down or keep your competitors out. Also, you want to use your position and cash
generation to defend and extend.
Differentiating starts inside – unlock new ideas and think differently.
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