From Concept to Market: Embedding Product Development in Corporate Strategy

After a long day at work, I stop by a local restaurant to grab a meal. The owner, curious about my work, asks, “What do you do?” I responded, “I’m a Strategy Advisor.”

Her eyes light up. “What kind of strategy?” she asks. We dive into a conversation about corporate strategy, business strategy, and functional strategy. For me, it’s déjà vu—I often find myself helping entrepreneurs understand the importance of strategy at every level, which inspired this newsletter edition. The focus is on product development units within corporate strategy, emphasizing their role in portfolio management and organizational success. Let’s dive into why these units matter and how they transform an organization's trajectory.

Understanding Portfolio Strategy

Portfolio strategy involves managing a company's array of businesses and products to achieve overarching success. Key considerations include:

• Portfolio Logic- Assessing the coherence and strategic fit of each business unit.
• Portfolio Development- Identifying opportunities for growth, innovation, and market expansion.
• Portfolio Synergies- Leveraging interdependencies among units to enhance value creation.

Critical questions addressed in portfolio strategy framework are:

• Which businesses are underperforming?
• Which units serve as cash generators?
• What is the overarching rationale behind our portfolio?
• What are the strategic roles and priorities of each business unit?

Triggers for a corporate portfolio review often encompass:

• Performance Issues- Addressing problematic or underperforming units.
• Growth Challenges- Countering slowing market outlooks and identifying new growth avenues.
• Portfolio Coherence- Clarifying complex or ambiguous portfolio structures.
• Shareholder Activism- Responding to external pressures for strategic realignment.

The Role of Product Development Units

Product development units play a pivotal role in shaping portfolio logic. They ensure that the organization’s resources are allocated to high-impact projects, align with vision, and deliver measurable outcomes. For example, Safaricom, Kenya’s telecommunications company, expresses portfolio strategy through its diverse product offerings:

• M-Pesa- A mobile money platform revolutionizing financial transactions in Africa.
• M-Shwari- A savings and loan service enhancing financial inclusion.
• Safaricom Home- Broadband services catering to the growing demand for home internet.
• Among others.

These innovations have not only diversified Safaricom's revenue streams but also reinforced its market leadership.

Growth- The Imperative for Innovation

Growth is a constant pursuit for any organization, but it’s not without challenges. Slowing markets, underperforming units, and unclear portfolio logic will stifle progress. This is where product development units shine. Innovation is more than just creating new products; it’s about solving real-world problems and driving systemic change. Product development units are at the forefront of this mission.

Practitioner Insight

Some strategy experts argue that a strategy formulation or development exercise is incomplete without the introduction of a transformative product. This perspective highlights the symbiotic relationship between strategy and innovation. Without integrating innovation and new product initiatives, strategic plans risk becoming static and unresponsive to market dynamics.

Reflect on your organization's portfolio. Are your product development efforts aligned with your vision? How will you foster innovation to address underperforming areas and capitalize on growth opportunities?

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