Innovation and Chain-link Strategies

Big companies have a special challenge when innovating.

It’s that each function in the company affects the outcomes. It’s not just product development or marketing that decide the results.

Other functions also matter. Yet the pressure to succeed falls to project and product management.

Functions as Links in a Chain

There is nothing new in the “all functions matter” observation. Yet it amazes me that the notion of functional silos is still a common theme. This week I read three blog posts that implied functional silos to be a novel insight. Yet it’s been in the product development lexicon since the early 1980s, if not before.

But innovators can gain from a better understanding of the obvious. If you want to improve your success odds, you must make sure your company's functions work in unison to support the innovation.

UCLA Professor Richard Rumelt uses a metaphor to describe the unison.[i] He refers to business strategy as a chain in which each function’s strategy is a link. A weak link, he says, can ruin the entire chain. A poor strategy by any function, Rumelt argues, can undermines an entire business strategy.

Chain-link Success

Consider Apple’s stellar chain-link strategy. You’ll hear people rave about Apple’s retail store strategy. And they’ll give kudos to its iPhone product line strategy. Or they’ll give credit to its top intellectual property strategy and its “I” everything brand strategy. And this says nothing of its approach toward content management, operating systems, supply chain, HR, and finance. Each is stellar.

Competitors like Samsung might advance their products to compete nicely against Apple’s offerings. We see each Galaxy and iPhone generation look like a feature-to-feature boxing match. But the game plays out in a bigger ring. It’s more than just a product line strategy that matters. It’s hard for Samsung to outdo Apple’s retail stores and its “I” brand image. Product development and design engineering can do nothing about these other links. If Apple relied only on product features, you’d see mobile phone market share dynamics play out differently.

Every business has chain-links strategies that must work as one strategy chain. The strength of each link and how well they work together is what drives business performance. Yet not all are as strong as Apple’s. Nonetheless, innovators must recognize how well their innovation works within the chain. The chain-link connections will greatly affect the innovation’s success or failure.

Chain-Link Changes

The strategy of an existing or new product line bringing an innovation forward is just one link in the chain. This leaves the product line strategist a choice. You may change the innovation to support the full chain. Or you may work to change the other links to support the product line’s strategy change driven by the innovation.

Notice how intrapreneurship and lean startups stem from the old silo thinking. They assume the silo (other links in the chain) won’t change. Their approach is to work around the links. They think the other links don’t want to, nor can they change. As a result, they believe non-innovation chain-links will kill the innovation. The old thinking is that the different functions attack innovations like antibodies fight foreign organisms.

But I don’t believe the aversion to change is as true today as it was ten and twenty years ago. Today all chain-links expect to change. Nearly every company has major forces pushing it to advance its technologies and approach to business. The chain-links just want to know when, how, and why. But most business and product line strategies don’t guide the changes that must be made.

Look at a roadmap for a company’s new products. Typically, it’s a set of stacked Gantt charts that create a picture of project plans. That’s good for the product developers and technologist. And it’s vital to innovation. But these roadmaps say nothing about the changes and work other chain-links must complete to help the products and innovation be successful.

Product Line Strategy Moves

I divide product line strategy changes into three buckets. The first I refer to as ‘recasts.’ These are incremental changes or redo’s of existing products. These changes don’t alter the essence of the strategy. Recasts tend not to cause or need other chain-links to change.

The second bucket is for pivots. This is when a new platform-lever is added to a line. Or it’s when a market segmentation scheme changes. Pivots often force a change to other chain-links like sales, operations, and supply chain.

The third strategy bucket is the most notable. It’s transformations. This is when all chain-links and the product line change concurrently. It alters the chain. This matters because it also changes the manner the links connect and work with one another, what most call the business model[ii].

There's lots written on transformations and business models. But it's not specific to new products or innovations. More likely, it’s about business strategy. Yet exploring these topics helps managers understand a product line’s role within a full strategy chain.

Digital Transformations

Think of the change a company faces pursuing a digital transformation[iii]. This is when a business embraces digital technologies to improve its processes, the customer’s experience, and its competitiveness. The changes impact every chain-link. And it alters the way they connect and work with one another.

In transformations, you’ll find the product line strategy chain-link advance with innovations like artificial intelligence and IoT. These are direct changes to the line. But you’ll also see product lines reshaped by data analytics used across other chain-links. Both the direct and indirect changes to the product line affect its performance. And so does its interplay with the other chain-links. Just ask Apple.

So who’s responsible for laying out functional chain-link changes for each product line strategy move? The answer is everyone. But it’s central to the product line team’s job.

Change Management and Responsibility

Driving chain-link changes is a critical job. It demands managers carry out the responsibility without authority over the chain-links. And it calls for top management to oversee the job and open pathways for needed changes. This is classic matrix management work.

Once a product line team understands the strategy move they want to make, it’s their job to make sure the other chain-links can keep pace. Most managers know this intuitively. But it’s surprising how many perceive the job as secondary to technical or engineering work. That’s a mistake.

Old school logic is to make sure the product is finished before expecting other parts of the company to support it. This approach does to strategy moves what serial task management does to projects. It makes them late. And too many late strategy moves can be disastrous, both to the product lines and to the company.

Chain-link changes are key to carrying out innovations and smart product line strategy moves. They’re fundamental to strategy execution. And roadmaps need to show how and when the changes will happen. But if you go to your favorite roadmapping software, you’ll see they don’t give you the means to do such roadmaps.

It’s not that the roadmap software providers don’t want to give team’s that functionality. It’s that product managers are not asking for it. This suggests a lack of awareness or understanding of product line strategies and needed chain-link changes.

New School Strategy Moves

The issue is because too many innovators and the product line teams continue to take the old school “us versus them” view of their organization. If you live in that world, you revel in the intrapreneurship and lean startup end-runs to chain-links.

But recognize the new school thinking. It’s far more impactful to get chain-links to change as part of innovation-driven strategy moves, whether recasts, pivots, or transformations. Inducing and managing change is part of a product manager’s job. And her company’s well-being and success depend on it. Please reconsider when old school thinking tells you to avoid change.

In big companies, the most critical job isn’t just to come up with ideas. It’s to innovate smart product line strategy moves. And its to drive change to other chain-links to make these moves successful and realize the greatest impact.

Learn More

To learn more about chain-links, innovation, and product line strategy please consider several Adept Group venues.

Consider purchasing and reading my book, The Profound Impact of Product Line Strategy. Or consider my in-depth Masterclass. This 1-day class enables deep discussion specific to different product lines and organizations. You may also find our customized Seminar, held on-site at your offices, a perfect fit to your needs and your product lines.

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Book – The Profound Impact of Product Line Strategy– Buy at Amazon https://amzn.to/2QXF5NZ

Masterclass Creating Powerful Product Line Strategies and Roadmaps Atlanta 30 July 2019

Whitepaper– Good Product Line Strategy Matters. Here’s How to Create One.

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[i] The term “chain-link” builds on Harvard Professor Michael Porter’s “value chain model” and UCLA Professor Richard Rumelt’s work invoking “chain-link logic”, where one strategy link adds to another. Porter introduced the value chain in his 1985 book Competitive Advantage published by Free Press. Rumelt wrote about chain-link logic in his book Good Strategy Bad Strategy: The Difference and Why It Matters, published in 2011 by Crown Publishing Group. Neither work associates the single word “chain” to the other. Also, neither Porter nor Rumelt reference product line strategies within their thinking. You may blame the author for using the chain-link system plus culture to address the inner-workings of organizations.

[ii] A business model describes the rationale of how an organization creates, delivers, and captures value. See more

[iii] Digital Transformation is the application of digital technology to solve business problems. These digital solutions enable new types of innovation and creativity, rather than simply enhance and support traditional methods. See more.