Senior IT Business Leader & Global Trade Expert having successfully led multi-million dollar projects.
I found myself continuously pondering a few questions as a product leader.
Why do some organizations sustain and win customers’ hearts?
Why do some organizations nowhere to be seen today?
Well, the answer to my questions is having Sound Strategy in place , which allow us to maintain a sustainable competitive advantage. Most of my questions has been answered by @AG Lafley and @Roger Martin in “Playing to Win”.
To begin with, strategy is not about best practices or defining the vision & mission statement. To learn the art of strategy as a typical product leader, the first step is to understand the concepts, frameworks, tools, and procedures that will help us win and build amazing products. Strategy is all about making specific, integrated choices to win in the marketplace.
Strategy Choice Cascade
There is a saying, “Modest aspiration is far more dangerous than a lofty one”. How many times have we, as product managers, attempted to create marginally better versions of our competitors’ products? We need to step up and make the tough choices focusing on customers and changing the marketplace. The biggest risk of using a product lens is that it will focus on the incorrect things, such as features, technology, and so on. But how many times have we designed a product roadmap around consumers’ unmet and undermet needs?
In my opinion, winning aspiration should always be crafted with the customer at the core. One of my favorites is Nike “If you have a body, you are an athlete”. We should not just build the products to satisfy customers, but also to win them over. We are unlikely to commit our time and energy to create a sustainable advantage over our competition unless winning is our ultimate goal. So, instead of competing, let us play to win.
We must question ourselves when setting a winning aspiration
Looking at the best competitor will provide us valuable insight on how to win in a variety of ways
Where to Play
Choosing the correct playing field is one of the most difficult decisions, and we all make the error of trying to play in all of them at the same time, resulting in under performance and failure. Choosing the correct customer segment for our product is a crucial decision that should be done in tandem with our goal. The strategy must be based on a desire to address customer needs in a manner that benefits both the organisation and the customer. When creating products, “Where to Play” choice can be one of the possibilities below or a combination of possibilities.
When deciding where to play, it’s as important to consider where not to play. If someone asks me where should I play, I’ll tell them I want to focus on the customer. Spend time and effort learning about your customer’s likes and dislikes, as well as their unmet and undermet needs. I’d advise delve deep to learn about their daily lives and gain insights so you can pinpoint the customer segment for whom your product is intended. When it comes to competition, one thing we must remember is to bring new distinctive value.
As Product Leaders, our mantra is to avoid falling prey to three temptations
How to Win
What we will do on the field is determined by how to win. We have two options at ten thousand feet: low-cost player or differentiator.
Cost leadership refers to a competitive advantage gained by a low-cost structure. It’s all about cost drivers, constant expense cutting, sacrificing non-confirming customers, and a dedication to standardization. A low-cost player does not necessarily mean the lowest prices, but rather the ability to undercut competitors or reinvest margin differentials to gain a competitive edge. If we wanted to be the market leader in terms of pricing, we’d start tracking costs as early as the ideation stage.
Differentiation strategy is something distinctively more valuable to customers. The more a product is differentiated along dimensions consumers care about, the higher premium price it can demand. It is all about a deep and holistic understanding of the customer, brand building, guarding of customers, and commitment to innovation.
Cost leadership or distinctiveness are the two ways that all successful product strategies use. Both cost leadership and differentiation can create a larger revenue-to-cost margin, resulting in a long-term competitive advantage. It’s quite uncommon to use both tactics at the same time.
In conclusion, the “Where to Play” and “How to Win” options should complement one another to form a unique combination.
Core capabilities are those activities that, when performed at the highest level, enable the organization “Where to Play” and “How to Win” to life. Competitive strategy is about being different which means deliberately choosing a different set of activities to deliver a unique value. We need to ensure the set of activities that we do should also be uniquely different than our competitors.
Identifying the core capabilities that we could deliver is a vital step in the strategy process. Identifying the capabilities required for “Where to Play” and “How to Win” gives clarity on where we should spend our focus and investments. For example, @Apple core capabilities are quality, customer service, innovation, and so on, whereas @Nike core capabilities are a brand, R&D, a huge customer base, superior marketing capabilities, and so on, all of which are competitively defensible.
Let us just say we have a winning aspiration, clarity on “where to play” and “how to win”, and have articulated the capabilities required. If we do not put in place a proper management system, we are destined for failure.
Specificity is crucial when designing business models around our products. We can’t just say “market leadership” or “increased market share,” we have to quantify a number range within which we label success, and anything below that is failure. WPI (Weighted Purchase Intent), a metric used by industry leader P&G in their product offering, looks at numerous factors such as the product’s aesthetic appeal, design, touch, feel, look, and technical performance. Other crucial indicators, such as net promoter score (NPS), can be used to track consumer sentiment and loyalty in addition to WPI. The strategic choice cascade is incomplete unless we have systems and metrics in place.
My dear product leaders, a great product can
launch a firm, build value, and win in the
marketplace for a period of time. Finally, you
must respond to five questions regarding the
strategic choice cascade.
I’d like to express my gratitude to @Dr. Pavan Soni for introducing me to the world of strategy and design your thinking.