Über die Autorin bzw. den Autor

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.

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[BACK COVER]

Product Strategy for High Technology Companies2nd EditionMichael 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.

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Product Strategy for High Technology Companies2nd EditionMichael 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 AuthorMichael 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.

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Product Strategy for High-Technology Companies

McGraw-Hill, Inc.

Contents

Chapter One

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...