Product Strategy for High Technology Companies: Accelerating Your Business to Web Speed (MARKETING/SALES/ADV & PROMO) - Hardcover

MCGRATH

Hardcover

ISBN 10: 0071362460 ISBN 13: 9780071362467

Publisher: McGraw Hill, 2000

Synopsis

This book offers an insight into how leaders such as Microsoft, Intel, Motorola, and others - continue their dominance in an increasingly competitive marketplace. Companies looking to make a mark in today's crowded high-tech battlefield need two primary elements: a distinctive product and a powerful product strategy. Without both, they simply won't survive."Product Strategy for High Technology Companies, 2nd Edition", is today's only book on product strategy written specifically for high-tech companies. Updated and revised to encompass everything from changing product strategies to Web-based technologies, this forward-thinking book provides page after page of market-tested strategies and techniques that include: an in-depth examination of the market-proven Core Strategic Vision (CSV) and Market Platform Plan (MPP) Frameworks; case studies examining 14 unique differentiation strategies - what worked, what didn't, and why; and, more than 250 examples of product strategy in action, from the success of Microsoft to the equally stunning - at the time - failure of Osborne.The opportunities in today's wide-open technology marketplace are unparalleled in history. Benchmark yourself against the high-tech leaders - and discover techniques to carve out your own area of expertise and success - with "Product Strategy for High Technology Companies"."Product Strategy for High Technology Companies, 2nd Edition" contains topics such as: how did Xerox, a dominant world leader in light-lens copying, changed its strategic focus in time to secure a foothold in the emerging digital technologies arena? Which line strategies helped Tylenol leverage its single product - acetaminophen - into a broad-based platform that has sold nearly a quarter-trillion tablets? And, what innovative strategies did Dell Computer use to become a low-price leader in the notoriously razor-thin margin world of personal computers?Continuous technological change, short product life cycles, and, fast-moving, innovative start-up competitors: High-technology companies face a number of unique challenges not encountered by companies in other industries. And yet some - Microsoft, IBM, Apple, and Intel, to name just a few - consistently overcome the same obstacles faced by others, and continue to strengthen their competitive positions year after year. How do they do it? "Product Strategy for High Technology Companies" defines how high-tech companies have used product strategy and product platform strategy to achieve competitiveness, profitability, and continued expansion in the Internet age.Product strategists in high-tech companies will get the latest information on developing successful product policies - including technological change, product differentiation, timing and contingency planning, as well as marketing and financial considerations. And far from offering a one-sided viewpoint of the marketplace, author Michael McGrath draws on his nearly quarter-century of experience to relate how product strategy works in the real world. McGrath discusses the strategies that allowed Amazon to create and launch numerous products in record time - and their plans for continuing this cycle of innovation and growth. He examines how companies such as Motorola were able to successfully leverage existing product lines, while others such as Wang quickly failed and disappeared."Product Strategy for High Technology Companies" is nothing less than a template for growth in the brutally competitive arena of high technology. Candid, comprehensive, and generous in its use of real-life examples to illustrate strategic realities, it shows today's emerging technology challengers how to build a solid strategic foundation, leverage the strengths of that foundation, then build from it to assume and maintain a position of leadership - today and well into the 21st century.Michael McGrath is a cofounder and managing director of Pittiglio Rabin Todd & McGrath (PRTM), a leader in helping technology-based companies develop agile, robust management processes and methodologies. In over two decades of management consulting, he has worked with more than 100 companies in the U.S., Europe, and Asia. McGrath initiated PACE (Product And Cycle-time Excellence), PRTM's product-development consulting practice, and has directed many of PRTM's projects in reducing time-to-market in a variety of high technology companies. He coauthored the books "Product Development" and "Setting the PACE in Product Development", and has published numerous articles on international manufacturing, product development, and trends in the high-technology industry.

About this title

About the Author

Michael McGrath is a cofounder and managing director of Pittiglio Rabin Todd & McGrath (PRTM), a leader in helping technology-based companies develop agile, robust management processes and methodologies. In over two decades of management consulting, he has worked with more than 100 companies in the U.S., Europe, and Asia. McGrath initiated PACE“ (Product And Cycle-time Excellence), PRTM’s product-development consulting practice, and has directed many of PRTM’s projects in reducing time-to-market in a variety of high technology companies. He coauthored the books Product Development and Setting the PACE in Product Development, and has published numerous articles on international manufacturing, product development, and trends in the high-technology industry.

From the Back Cover

[BACK COVER]

Product Strategy for High Technology Companies 2nd Edition Michael E. McGrath

[CATEGORY] Management

[HEAD] How Today's High-Tech Leaders--Microsoft, Intel, Motorola, and Others--Continue their Dominance in an Increasingly Competitive Marketplace.
Companies looking to make a mark in today's crowded high-tech battlefield need two primary elements: a distinctive product and a powerful product strategy. Without both, they simply won't survive. Product Strategy for High Technology Companies, 2nd Edition, is today's only book on product strategy written specifically for high-tech companies. Updated and revised to encompass everything from changing product strategies to Web-based technologies, this forward-thinking book provides page after page of market-tested strategies and techniques that include:
- An in-depth examination of the market-proven Core Strategic Vision (CSV) and Market Platform Plan (MPP) Frameworks
- Case studies examining 14 unique differentiation strategies--what worked, what didn't, and why
- More than 250 examples of product strategy in action, from the success of Microsoft to the equally stunning--at the time--failure of Osborne
The opportunities in today's wide-open technology marketplace are unparalleled in history. Benchmark yourself against the high-tech leaders--and discover techniques to carve out your own area of expertise and success--with Product Strategy for High Technology Companies.

[FLAP COPY]

Product Strategy for High Technology Companies 2nd Edition Michael E. McGrath

- How did Xerox, a dominant world leader in light-lens copying, change its strategic focus in time to secure a foothold in the emerging digital technologies arena?
- Which line strategies helped Tylenol leverage its single product--acetaminophen--into a broad-based platform that has sold nearly a quarter-trillion tablets?
- What innovative strategies did Dell Computer use to become a low-price leader in the notoriously razor-thin margin world of personal computers?

Continuous technological change...Short product life cycles...Fast-moving, innovative start-up competitors...
High-technology companies face a number of unique challenges not encountered by companies in other industries. And yet some--Microsoft, IBM, Apple, and Intel, to name just a few--consistently overcome the same obstacles faced by others, and continue to strengthen their competitive positions year after year. How do they do it? Product Strategy for High Technology Companies defines how high-tech companies have used product strategy and product platform strategy to achieve competitiveness, profitability, and continued expansion in the Internet age. Product strategists in high-tech companies will get the latest information on developing successful product policies--including technological change, product differentiation, timing and contingency planning, as well as marketing and financial considerations.
And far from offering a one-sided viewpoint of the marketplace, author Michael McGrath draws on his nearly quarter-century of experience to relate how product strategy works in the real world. McGrath discusses the strategies that allowed Amazon to create and launch numerous products in record time--and their plans for continuing this cycle of innovation and growth. He examines how companies such as Motorola were able to successfully leverage existing product lines, while others such as Wang quickly failed and disappeared.
Product Strategy for High Technology Companies is nothing less than a template for growth in the brutally competitive arena of high technology. Candid, comprehensive, and generous in its use of real-life examples to illustrate strategic realities, it shows today's emerging technology challengers how to build a solid strategic foundation, leverage the strengths of that foundation, then build from it to assume and maintain a position of leadership--today and well into the 21st century.

About the Author Michael McGrath is a cofounder and managing director of Pittiglio Rabin Todd & McGrath (PRTM), a leader in helping technology-based companies develop agile, robust management processes and methodologies. In over two decades of management consulting, he has worked with more than 100 companies in the U.S., Europe, and Asia. McGrath initiated PACE" (Product And Cycle-time Excellence), PRTM's product-development consulting practice, and has directed many of PRTM's projects in reducing time-to-market in a variety of high technology companies. He coauthored the books Product Development and Setting the PACE in Product Development, and has published numerous articles on international manufacturing, product development, and trends in the high-technology industry.

Excerpt. © Reprinted by permission. All rights reserved.

Product Strategy for High-Technology Companies

Accelerating Your Business to Web SpeedBy Michael E. McGrath

McGraw-Hill, Inc.

Copyright © 2001 The McGraw-Hill Companies, Inc.
All right reserved.
ISBN: 978-0-07-136246-7

Contents

Chapter One

Strategy Requires Vision

Product strategy begins with a strategic vision that states where a company wants to go, how it will get there, and why it will be successful.

As in Alice in Wonderland, if a company does not have any vision of where it wants to go, then any product strategy is likely to take it somewhere. The problem is, the company, like Alice, may not be happy with "somewhere" once it gets there. Product strategy is like a roadmap, and like a roadmap it's useful only when you know where you are and where you want to go. What we call a core strategic vision (CSV) provides the destination and the general direction from where you currently stand. It supplies the context for product strategy and guides those developing the product strategy by telling them where the company wants to go, how it expects to get there, and why it believes it can be successful.

While knowing where you want to go appears obvious, too many companies operate as though they are blind or as though their strategic vision has deteriorated. In fact, most business failures can be traced to such deficiencies. In this chapter, we examine ways that companies learn to see clearly so they can act effectively. Sometimes it's helpful to know what's not working, before you can understand what will work.

Developing a core strategic vision is not a static process. When Ken Olsen founded Digital Equipment, his original vision of a "minicomputer" in the 1950s led to the creation of a new market. He developed the first small, low-cost computer and introduced a keyboard and video screen that interacted directly with the computer. Likewise, An Wang turned his vision of word processing systems into reality.

Unfortunately, in both of these cases, the founders' vision became shortsighted. They didn't foresee how the continued evolution of information technology would change their industry, and when change did occur, they didn't change their vision of where they wanted to go. As a result, their companies stayed where they were, while the rest of their industry changed. For Digital Equipment and for Wang, as well as for many others like them, the status quo proved to be fatal. Conversely, those companies that articulate a core strategic vision know where they want to go, how they will get there, and why they will get there successfully. They are confident that they will be successful, and they move decisively. There is no confusion about what to do or how to do it. They determine their product strategies to achieve their visions and then execute these strategies.

Some of the biggest successes in industrial history were created by people with exceptional vision. Joseph Wilson saw copying machines in Chester Carlson's xerography. Tom Watson saw the future in computing. Bob Noyce saw the potential of microprocessors. Henry Ford envisioned a process that would put a car in every garage. And Bill Gates saw better than anyone else that the explosion in microprocessors would open vast opportunities for computer software.

Even these visionaries, however, could not always see clearly into the future. Tom Watson turned down Carlson's xerography because he did not see future opportunity for it. Henry Ford did not see the need for more than one color or model of automobile. Bill Gates's early vision for the future of computing underestimated the Internet revolution.

We put the word core in front of strategic vision advisedly, because we want to emphasize that we are referring to the essence of strategic vision. In this chapter we discuss the advantages of a core strategic vision and the necessary ingredients for a successful one. We also discuss who is responsible for a company's CSV. Success in achieving an effective core strategic vision requires competence in conceiving future opportunity and directing product strategy toward that future.

Impaired Vision

There are many types of vision that companies employ to power their strategies, but most of them fall short of core strategic vision. Before examining the characteristics of a CSV, let's look at some of those other types of vision and why they fail to serve strategy as well.

Tunnel Vision

A company can take a very narrow view of the future and not see threats or opportunities outside of its narrow focus. This narrow focus can help the company excel where it is concentrating, but its peripheral vision may be diminished; as a result, it doesn't see the impact of a new technology with better potential, the possibility of a new industry standard that could change the market, or emerging competition coming at the market from a new perspective.

Tunnel vision is particularly fatal to high-technology companies. In the late 1970s, Adam Osborne was considered by many to be a visionary of the fledgling microcomputer industry. He published his views on its technology and markets in books and magazine articles. In 1981, he introduced the Osborne 1, a portable computer with bundled software that sold for $1,795. His vision was a computer for the masses—not the best computer, but one that was adequate and priced to sell in volume. He saw himself as the Henry Ford of the new microcomputer industry.

The Osborne 1 proved to be a hit. Sales took off; in 1982 Osborne Computer was one of the fastest-growing companies in American history, and Osborne predicted that his company would reach $1 billion in sales by 1984. But Osborne's tunnel vision reinforced his self-perception that he could do no wrong, and he failed to see the looming impact of changes taking place in the industry.

In 1981, IBM, which Osborne had repeatedly put down as an obsolete company, introduced its PC based on a 16-bit microprocessor that was faster than Osborne's 8-bit microprocessor. Osborne predicted that "IBM will soon be out of the business completely." However, the DOS operating system developed by Microsoft made Osborne's CP/M operating system obsolete. IBM's computer screens and disk drives were superior to those of the Osborne 1. Other companies, such as Compaq Computer, improved on Osborne's original strategy by making portable computers that were IBM-compatible. Sales of Osborne computers dropped precipitously in 1983, and by September the company had to lay off almost all of its employees. Soon after, it filed for Chapter 11 bankruptcy.

IBM's Bill Lowe also suffered from tunnel vision when he maintained an IBM-centric view of the future. In 1985, he gave Microsoft the rights to sell the jointly developed DOS operating system to other manufacturers in return for IBM's free use of it on IBM PCs. IBM, after all, had 80 percent of the DOS market. Microsoft's Bill Gates saw that this would change. By 1992, IBM's share of the market dropped to 20 percent, and IBM had given away its share of a $2 billion market for PC operating systems. It would spend over a billion dollars developing a competitive operating system, called OS/2 and later renamed WARP. But this offering was too late to make a difference.

Blindness

Some companies appear to be blind or at least sleepwalking. They just keep moving along contentedly until they hit a wall without ever seeing it coming. Because they lacked a vision to show them what was ahead, they were blind to what would or could happen. Companies can be strategically blind for different reasons. Some companies just don't seem to have any strategic vision. Maybe they think it isn't very important, or perhaps they just forget about it. Actually, this is not as outlandish as it seems. Without any deliberate process for evaluating a core strategic vision, it's all too easy for executives in a company to neglect it. They may have the best intentions and know that it's something they need to get to, but other things keep getting in the way. As we discuss throughout this book, a company needs to have a deliberate process to give creation of strategic vision sufficient priority.

Other strategically blind companies may think they have a strategic vision, but what they really have is a statement of how they would like to feel, not where they are going. It's as if someone said he or she wanted to be where it is warm and the sun always shines, instead of figuring out where that is and how to plan to get there.

Prime Computer is a classic example. It stated in 1988 that it had a "clear goal: to make money for its customers, and through that, for its owners." That "clear" goal was too vague and too general. Some within Prime may have had a more specific vision of where they thought the company should go, but theirs was not the company's vision. Prime was a cash-starved company with few core competencies in a market that was deteriorating. If any company needed a core strategic vision it was Prime. Eventually, it went bankrupt and spun off its only real technology of value, the Computervision business it had previously acquired.

A company may have a vision of its future, but this vision might have a blind spot—typically an issue or assumption about which it is markedly ignorant. For example, one company making advanced composite materials failed to acknowledge the advantages of an alternative technology. A competitor was able to see those advantages and won in the market.

Bachman Information Systems is an example of a company with a blind spot. It achieved meteoric growth and went public through the success of its mainframe-oriented software. Ranked nineteenth among Inc. magazine's fastest-growing companies in 1992, it grew from $13 million in 1990 to $48 million in 1992. Bachman failed to see the changes that were taking place in the mainframe market, though. Revenue collapsed in 1993 as PC-based client-server computing began to replace mainframe computing.

The trend had been visible to others for several years, but Bachman didn't see it. "I should have had my periscope up faster and seen this happen," was how CEO Arnold Kraft acknowledged his lack of vision. Former employees believed that the company's close ties to IBM, which was a stockholder and joint developer, blinded the company to the shift to distributed computing. This example illustrates how easily a company can develop a blind spot by unconsciously assuming that a critical factor that determines its success is unchangeable.

Some companies are virtually blind because they see things in so many different ways that their vision is blurred. Dozens of incompatible visions may be scattered throughout the company. Individuals may have beliefs about where they think the company should go, but there is no collective vision. There is no visionary leadership. One major electronics conglomerate gave up on developing a strategic vision, and its CEO stated that it was going to be "customer led." This resulted in each business unit and division working on so many different products that repetition, duplication, and wasted development dollars became a way of life. It doesn't take long to get in trouble when leadership lacks a sharply focused vision.

Since they don't know where to go, blind companies typically try to go in multiple directions. They launch many initiatives but are unable to make the tough decisions necessary to select a strategy and set priorities. As a result, resources are overallocated, and product development activities tend to drift. Frustration results, but this is just a symptom of the malaise: The cause is lack of strategic vision.

Shortsightedness

Some companies, on the other hand, tend to be too shortsighted, not seeing far enough into the future. They may be very good at the immediate tactical issues of management, but they don't see opportunities in time to take advantage of them, or threats in time to defend against them. Technological leaders are most vulnerable to shortsightedness. They are so tied to their own technological advantages that they underestimate those of others. Ironically, some of the biggest success stories in history happened when industry leaders were too shortsighted to see future product opportunities based on new technologies. Kodak, for example, was not interested in Edwin Land's instant-camera invention in 1947, so Land founded Polaroid Corporation.

Another shortsighted company was Ampex Corporation, which invented the video tape recorder (VTR) in 1956. Even at an initial price of $50,000, the VTR became a big success with broadcasting companies. Ampex had a strong patent position and actively improved the VTR product with solid-state circuitry and color capability. But it did not have a sufficiently clear vision of the possibilities for the VTR in the consumer market, choosing instead to focus on the broadcast market and to diversify outside of VTRs. As a result, Ampex lost the opportunity to be a participant, or possibly even the leader, in the multi-billion-dollar consumer VCR market.

Shortsightedness is most critical when technological discontinuities are on the horizon. Technological discontinuities appear when the improvement of one technology begins to diminish, and another technology takes its place. DuPont was successful in introducing nylon cord tire technology to displace rayon in the 1960s. Later, however, it did not see the technological discontinuity coming when polyester fiber technology proved to be superior to nylon, and it lost out to Celanese.

Hallucination

Sometimes a company looks into the future and sees an exciting opportunity that turns out to be as illusory as a mirage. High-technology companies frequently try to create products for new markets that don't yet exist, and sometimes these new markets fail to appear.

In 1980, SOLVation, Inc., envisioned the emergence of PC-based information systems for small businesses. It saw a market opportunity even larger than the $10 billion systems market for computing in midsized companies. As part of its vision, SOLVation saw low-cost customized application software, online support, and total turnkey solutions for specific industries, all at 5 percent of the price of minicomputer-based information systems.

To implement its vision, SOLVation pioneered the development of several new technologies. Innovative online support systems enabled SOLVation support staff to operate customer computers remotely in order to tutor customers or diagnose problems. It created software application generators using large, powerful computers to develop and customize software for individual customers. Finally, it configured turnkey systems with complete applications software for small accounting firms, advertising agencies, and manufacturers. SOLVation sold its systems at a competitive price on three computers: one of the first multiuser systems; IBM PCs; and, through a joint venture with Sony, the Sony personal computer.

Four years and $16 million later, SOLVation failed. Its vision turned out to be a mirage, because the market it envisioned never emerged. Instead, small businesses were content to use Lotus 1-2-3 spreadsheets as their introduction to computers. Even 10 years later, the market for customized computer applications in small business was not significant.

Strategic hallucination is a particular problem for new ventures that are trying to establish an entirely new market. They have a vision of the future, but sometimes it never really materializes. Today, at the beginning of the twenty-first century, the Internet is creating new visions of the future. Numerous start-ups are trying to capitalize on these visions. Some will succeed, but for all too many their visions will turn out to be hallucinations.

Exceptional Vision

There are also effective types of vision. Those who possess superior vision are able to see product strategy opportunities ahead of others.

20/20 Vision

20/20 vision represents the average capability for anticipating what lies ahead. With 20/20 vision, a company can see sufficiently far into the future to decide where it wants to go and how it will get there, incorporating an understanding of technological trends and market opportunities. Usually this is sufficient—as long as the competition doesn't have better vision.

Understanding technological trends requires focusing on technologies critical to the company's product strategy. To do this, a company needs to identify its key technologies. Valid Logic saw the coming trend in open systems and adapted its circuit-board design software to work with the UNIX operating system. Mentor Graphics, its leading competitor, stayed with the Apollo proprietary closed operating platform and did not convert to UNIX until four years later. This cost Mentor significant market share.

Sometimes even with 20/20 vision, it may be difficult for a company to formulate an appropriate core strategic vision. IBM faced this in 1984 with its PC business. It couldn't quite see how to avoid becoming a commodity business. Bill Gates saw how IBM could do it, and he even shared that vision with IBM CEO John Akers in 1984. Gates's strategic vision was for IBM to use its semiconductor expertise to differentiate its microprocessors from those that Intel was making available to IBM's competitors, the clone manufacturers. Then IBM could produce operating system improvements to take advantage of the special features it built into its chips. But Akers ignored Gates's advice, and IBM failed to achieve any unique competitive advantages in the PC business.

(Continues...)

Excerpted from Product Strategy for High-Technology Companiesby Michael E. McGrath Copyright © 2001 by The McGraw-Hill Companies, Inc.. Excerpted by permission of McGraw-Hill, Inc.. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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Edition details

• Publisher: McGraw Hill
• Publication date: 2000
• Language: English
• ISBN 10: 0071362460
• ISBN 13: 9780071362467
• Binding: Hardcover
• Edition number: 2
• Number of pages: 400