Have You Outgrown Product Strategy?


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Up until now, your CEO and her direct reports have been very involved in detailed product planning. The process for defining products and outwitting competitors was robust and driven right from the top. The strategic question on C-level management’s mind was always “How will we win?”

But over the years, the key strategic question at the top has changed. Product planning details are no longer central to the discussion and competition is only dealt with superficially. Sure beating the competition is still important. But the C-suite is more concerned with the question “What businesses should we be in?”

It feels almost like your company has outgrown product strategy.

What’s Going On?

In addition to a shift in top management’s strategic focus, you’ve noticed some other changes. Your CEO has delegated her role in product development reviews. Her direct reports are now P&L executives instead of functional department heads. And a vice president of corporate development has been added to the senior staff.

“Things sure are changing” you say to yourself.

But changes like these are signs of growth. Your company is graduating from a single business unit entity trying to establish market position, to an enterprise preparing to explore growth options.

Strategy Development Implications

Two levels of strategy development begin to emerge your company grows from single to multiple business units. The top level is portfolio (or corporate) strategy, which is supported by product (or business unit) strategy.

Portfolio strategy defines the company. The fundamental question that it seeks to answer is “What business should I be in?” Product strategy must satisfy the objectives within the boundary conditions established by the portfolio strategy. The fundamental question that product strategy seeks to answer is, “How do I compete?”


Corporate vs BU Strategy

When your company was a single business unit entity, your CEO was likely also the business’ “general manager.” In that role, she was mostly concerned with product strategy and creating competitive advantage. As the company grew, she hired business unit leaders and stepped out of the general manager’s role. This enabled her to turn her attention to portfolio strategy and deciding which businesses to pursue.

When a company develops to a point where the questions of portfolio strategy begin to dominate the CEO’s thinking, two potential strategy development issues can emerge.

Risk of Product Strategy Atrophy

Product strategy atrophy occurs when the CEO, who had once been the primary product strategy driver, becomes more concerned with portfolio strategy. The risk is that the whole company shifts its attention with the CEO’s.

But portfolio strategy is in addition to, not instead of product strategy. Business unit leaders need to pick up where the CEO left off. They are now the owners of product strategy and must drive the process.

Risk of Product Strategy Misapplication

Product strategy misapplication occurs when an organization attempts to apply a product strategy process to portfolio strategy questions. It’s just the wrong tool for the job.

For example, consider these portfolio strategy questions:

  • How will we define the enterprise; what is our brand; vision; value set?
  • What are our growth rates and profitability targets?
  • What is our target enterprise value?
  • What markets will we pursue?
  • What position(s) in the supply chain will we target?
  • What are the best growth option opportunity vs. fit trade-offs?
  • Shall we pursue organic or inorganic growth?
  • What will the scope of our offering be?
  • What are the boundary conditions for each business unit?
  • How shall we allocate resources across businesses?

A strategy process that’s designed to define competitive products for an existing business just won’t do these questions justice.