Product market issues

For many innovation-driven companies however, product market strategy is value-limiting, not value-enabling. These companies evolve their product market strategies by default, rather than through proactive, systematic analysis and thought. Target markets are selected based on the background of the company founders or through historical accident, not through careful evaluation of which markets offer greatest potential. Similarly, product and service offerings are a result of early engineering and positioning decisions, some of which were made without sufficient understanding of customer needs and competitive offerings, or long term strategic considerations.

A common reason for a lack of an effective, well thought out product market strategy is that it has to be a truly cross-functional process. Most key functions in the business are directly affected by, and have strong views on, which products the company should offer to which markets. Many companies do not have the right structures and processes in place to achieve the level of cross-functional work required. Add in the egos that get involved, and past investments that loom large and must somehow be justified, and it becomes clear why so many companies struggle in this area. 

The net result is that a great many of the issues that such companies confront can be traced back to problems in their product market strategies. Consider the following example issues, which can be traced to poor market strategy:

• Revenues are slow to ramp, due to a lack of urgent customer needs.

• Sales cycles are too long, due to lack of customer urgency and competitive intensity.

• With few customers in each of many markets, the company does not have a credible reputation in any one market.

Or think about the following issues stemming from inadequate product strategy:

• Customers fail to understand what the company does.

• Customers do not appreciate or want to pay for the difference between your products and your competitors.

• Engineers are struggling to build the product as defined.

• Operations is not able to deliver the customer experience required.

• Margins are poor, due to poor pricing strategy and high engineering costs.

Are you experiencing any of these issues? If you are, chances are that you are trying to address them through business system responses - throw more resource into engineering, hire more salespeople, run more marketing programs. Such efforts end up draining funding and resources, and provide “band aids”, without solving the real underlying issues. Perhaps you need to look deeper, to identify the root cause of the problem – a need to overhaul your underlying product market strategy.