Ratio of tactical, strategic and disruptor requirements

This blog is the 6th part in the series of blog posts related to ‘Pragmatic Guide for Preparation of GREAT Product Roadmap’

1st part – A practical guide to product roadmap – What is product roadmap?

2nd part – Why product roadmap?

3rd part – Pragmatic purpose of product roadmap

4th part – Discovery of needs

5th part – Categorizing requirements – Tactical, strategic and disruptor

Ratio of tactical, strategic and disruptor requirements

I initially tried to categorize the roadmap into (i) tactical, (ii) strategic and (iii) disruptor adapting the 3 horizon framework described by McKinsey. I attempted to adapt the framework for products.

 3 Horizons - McKinseyMcKinsey 3 Horizon Framework

Source: http://www.mckinsey.com/insights/strategy/enduring_ideas_the_three_horizons_of_growth

Horizon 1 – Tactical

Focus on addressing existing business challenges to ensure flow of revenues in short term.

 

Horizon 2 – Strategic

Focus on expanding the product through innovative solutions or addition of new technology for targeting additional growth or revenue in near long term. Innovative solutions or new technology delivering potential value to customers would act as key differentiators to retain customers and to facilitate revenues in near long term.

 

Horizon 3 – Disruptor

Focus on creating viable options for future growth in long term through appropriately investing on technologies that has the potential to disrupt the market

There will always be clamor to introduce tactical requirements that fetch product revenues in shorter run. Unless Product Manager determines the split and allocates some portion of roadmap for non-tactical requirements, strategic requirements will never surface when confronted with tactical requirements owing to their inability to bring immediate revenues. The bitter truth that most Product Managers often miss is that exclusive focus on tactical requirements will shrink the life time of the product and thereby causing product to decline prematurely. Investment on strategic requirements is imperative to secure future revenues and growth. By explicitly defining a ratio, I am only trying to strike the balance between tactical and strategic avoiding potential conflicts while prioritizing requirements.

In order to figure out the ratio, Product Manager needs to understand what the product growth strategy is. Undeniably, the primary purpose of every product is to increase the bottom line and product growth strategy would exactly let everyone know what contributes (new customers or new market segment or new geo territories or new technology or new solution?) to additional growth. Please refer to the earlier related blog posts (Attacking White Space – Identifying Growth Opportunities). Accordingly Product Manager could figure out that ratio. For instance, if existing customers contribute to more revenues and the market is really saturated than customer product requirements should occupy higher ratio. In case of targeting new market segments, product requirements specific to those segments would occupy higher ratio. Honestly, there is no scientific way to derive the ratio. If anyone is hoping that I would suggest some scientific methodology to determine the ratio between each of the categories (tactical, strategic, disruptor), I am ‘TERRIBLY SORRY’. I don’t think I can draft a scientific methodology because roadmapping is a combination of art and science. Instead I will provide some guidelines that should equally translate into actionable items while determining the split. The success in determining the split clearly lay in formulating the product growth strategy.

  • Leap-frog strategy – If the product is not a market leader and the intention is to leap frog the competition, don’t act as fast follower and never attempt to accomplish everything that market leader has done. If the gap between your product and incumbent product is too wide, trying to ape incumbent and following them will never let the product to peak. Instead listen to the market, think ahead of time and try to imbibe new technology or new offerings to jump ahead of the market leader. Nintendo WII is a classic example of leap-frog strategy. While Nintendo’s competitors were busy driving the market towards expensive consoles and sophisticated graphics successfully, Nintendo did not follow them instead build WII leveraging new technology of gesture control and targeted a new segment of casual gamers with less expensive consoles driving huge margins.
  • Fast follower strategy – This strategy is adapted by companies that are averse to spending money on R&D and experimental products to validate the market for uncertainty. The fast follower should be nimbler to quickly jump into the fray after the 1st mover has cleared air on the uncertainty about new technology or innovation.

In either case, there is precedent of what works and what do not work. So Product Manager while focusing on closing the parity has to leverage the experiences of incumbent to focus on requirements that are valued most by customers

  • Market leader strategy – If the product is a market leader, then it has to be at the forefront of innovation disrupting the market continuously. Something similar to what Microsoft and Intel did for Desktop. While Microsoft evolved Windows OS, Intel evolved the processors to meet the higher processing requirements of Windows OS. I don’t think any customer have directed both Microsoft and Intel to evolve their products. What Intel and Windows did was to create a demand. I don’t think they ever targeted to satisfy a demand.
  • Customer focus strategy – In case of mature or saturated market, existing customers constitute a majority contributor of revenues. In such scenario deriving a product roadmap constituting predominantly customer focused features with some room for market features yields better results. Otherwise there is always a possibility for someone to disrupt the saturated market and grab your customers. For instance what OLA, UBER did for traditional taxi business.

As long as there is steady flow of revenues, Product Manager will have a free hand in implementing his plans of incorporating strategic requirements into the product. However decline in revenues of subsequent quarters will hit the overall resource allocation to the product eventually scuttling the plans of Product Manager to introduce any strategic requirements. Hardly Product Manager would be given a long arm, so it is vital to show gains in short run while simultaneously planning for long term gains. De-facto, I generally adapt 80:20 rule to derive the split between tactical and strategic. Depending on the strategy, I utmost take +/-10 from strategic. In both leap-frog and market leader scenario, the emphasis will be on strategic requirements but definitely not on par with tactical requirements. I generally prefer allocating 30% of the overall roadmap for strategic requirements. The value 30% is just a hunch that perfectly helps me to keep inflow of revenues intact while focusing on strategic requirement. As long as Product Manager follows rigid prioritization process, creating space for strategic requirements in the roadmap will never be an ordeal.

Depending on the overall strategy of the organization, Product Manager has to determine % split for each of the 3 horizons in product roadmap. Wait! Why did not I talk about disruptor? Organizations has to focus on both strategic and incremental requirements, there is hardly no choice. But explicit focus to identify potential disruptors is purely by choice even though all the firms have to continuously innovate to stay afloat in the market. The reasons I said choice is that there is lots of uncertainty in disruptor technology even after they hit the market and until they mature. Organizations have to cautiously validate them. Further any new technology with exception of some take longer time to mature. So it is the prerogative of the organization depending on their overall strategy whether to exclusively invest their resources to anticipate new normal and invest on either identifying or creating disruptor innovations or technologies. Some organizations might not take the tedious journey of unraveling the mystery around new technology by resolving the uncertainty and identifying the potential market for those technologies, instead they chose to wait for someone to clear all uncertainties surrounding new technology and later start investing on them (fast follower) or acquire companies with the expertise on the new technology. Gartner Technology Hype CycleTechnology Hype Cycle

Source: Gartner

Investing on disruption technologies is not a norm as much as there is necessity to focus on both strategic and tactical. Technology adaption takes time and quick look at the hype curve will reveal that most of the technologies take a minimum of 5 years to reach ‘Peak of Inflated Expectations’. At the height of inflated expectations, we could notice that the early adapters express interest to invest in technology. Yet, the technology is raw and validation of technology takes place during this period. The technology would be further refined based on the feedback received during validations by early adapters to reach mainstream. Obviously organizations do have time to keep a watch and assess the maturity of the technology (refer Gartner Maturity Curve and Adoption Curve below). While technology reaches the height of inflated expectations, organizations either have to be nimbler to enter the fray much faster or start acquiring companies investing in that technology. Uncertainties surrounding the technology would then be mostly resolved. The challenge is in the adaption of the technology to address appropriate business challenges that are critical to customer. To put in other words, the focus would be mostly on demand generation.

When I said investing on disruptor is not a norm does not essentially mean that I am advocating companies against investing on disruptor technology and such move would spell doomsday. What I had indicated is that depending on the overall strategy of the organization, they can adapt wait and watch approach. From the innovation trigger to reaching peak of inflated expectations, there was always sufficient time to take a note of how technology is evolving and to jump into the bandwagon. If you look at some of the earlier technologies, how long did it take Bluetooth, Virtualization to enter into the mainstream? We are now talking about driverless cars, but what is the right time to start investing on driverless cars so that it is commercially viable. In fact, I am desperate to understand or figure out some frameworks or models to understand the right timing to invest on any technology. Much of the new technology although fascinating and tough to evade the hype surrounding it, how does one determine the actual potential and right time to start investing on it. I only have too many questions than answers. The idea is to enter the market just on time without being too early or too late.


Much of the new technology although fascinating and tough to evade the hype surrounding it, how does one determine the actual potential and right time to start investing on it?

Gartner Maturity CurveAdoption Curve and Maturity Curve

Source: Gartner

Once the organization decides to make a move and start investing on disruptor technology, my focus of discussion is to figure out the right balance between old and new technology. Unlike tactical and strategic, we cannot allocate a static % of the roadmap to disruptor. As the new technology evolves and matures, the old technology eventually declines. The point at which old technology dissolves and new technology emerges is called inflection point. Inflection point causes a shift in revenues, technology, customer preferences etc. So product roadmap has to be flexible to adapt to the shift in technology or rather pro-actively accelerate the shift. I will be elaborating on this topic in the next blog.

Categorizing requirements – Tactical, strategic and disruptors

This blog is the 5th part in the series of blog posts related to ‘Pragmatic Guide for Preparation of GREAT Product Roadmap’

1st part – A practical guide to product roadmap – What is product roadmap?

2nd part – Why product roadmap?

3rd part – Pragmatic purpose of product roadmap

4th part – Discovery of needs

Categorizing requirements – Tactical, strategic and disruptors

Explicit focus on customer and market is to discover all possible needs without leaving any needs behind. Unless Product Manager discover all needs, (s)he will not be able to make right prioritization decisions and it will hamper the evolution of the product. Once all needs are discovered, trying to categorize and prioritize them based on market or customer hardly makes any sense. Discovery of customer needs provides a foundation to build a generic representation of the broader segment of customers and to embark on the journey of discovering market focus needs. So somewhere deep down needs discovered through customer focus will ultimately be a subset of the market focus unless the business models rests on customization.

I have already provided hints of possible categories while talking about ‘Discovering of market focused needs’. Yes, you got it right. I am trying to categorize the requirement into tactical and strategic. In addition, I have added new category called disruptor.

Tactical, Strategic and Disruptor

Tactical

These are short term (mostly 1-2 years). There is no uncertainty on any of the requirements listed in this category. The requirements are lucid and therefore there is hardly any risk in implementing those requirements. Further the requirements when incorporated into the product would be readily embraced by the customers ensuring steady flow of revenues. The requirements under this category address the short term business challenges of the customer providing an attractive proposition for customers to invest in the product. The requirements under this category are mostly evolutionary in nature. Tactical requirements are essential to ensure the steady flow of revenues to meet the revenue targets of the product.

Strategic

These are near long term (typically around 2-3 years). There is some amount of uncertainty on how customer would react to the proposed changes to the product and therefore risk of implementing them is moderately higher. So the priority is to build minimalistic prototype, validate, and solicit feedback in an iterative manner until the uncertainty is completely eliminated and the requirement is moved to tactical category. The requirements under this category bring-in absolutely new value to the customer but more often customers do not explicitly request them and customers can still live without them unless the requirement becomes parity. Online fashion store adding the capability of augmented reality to facilitate virtual dressing room can be categorized under strategic category.

Disruptor

Disruptor is a game changer. They uproot the entire market, create new market and install new normal. Disruptors make old way of doing things irrelevant and they create new product line, new consumption models, and new ecosystem that does not existing before. Disruptors mostly do not evolve the product but they will extend the product line introducing new products embracing disruptive technology or innovations. Strategic requirements when chosen properly can extend the product life cycle without pre-maturely declining the product. However they could not stop the product declining from disruptive innovations or technology. Focus on disruption is to embark on the journey of finding new technologies that has the potential to disrupt the entire market and create a new normal. Disruptors create viable options and alternatives for growth in long term. In case of strategic requirements as well, we focus on imbibing innovation and new technology into the product to create a better value but those innovations or new technology are sustaining in nature and does not create new markets. While disruptor technology or innovation creates new market uprooting the older ones, ideal way to tackle the disruptor technology is to embrace it and not to fight it. Organizations therefore have to start investing on new technologies that has the potential to disrupt the market and introduce new normal.

Product offering vs market matrix

In order to better explain tactical, strategic and disruptor, I derived product offering vs market matrix. I believe the diagram below is self-explanatory. Incremental enhancements to existing product offering to better position the product in existing market belongs to tactical category. Evolutionary changes to existing product offering to position in new market or creating new product offering for positioning in existing market belong to strategic category. Revolutionary changes to create new markets through new product offerings belong to disruptor category.

 

Product offering vs market matrix