Product and technology strategy
The business area strategy defines the strategic thrust and the products that will be used to compete in the respective market. The product strategy refines these considerations, it defines the specific product portfolio, the precise functionality of the respective products, the time of market launch and phase-out and with which technology the respective product functionality is to be realised.
Along with the technology strategy, the product strategy is the most important source of orientation for the R&D sector as a planning basis for the medium- and long-term horizon. Both strategies influence each other. Thus, the product strategy can formulate demands for the development of new technologies. On the other hand, the technology strategy enables new product offerings that customers may not yet be able to imagine. In a good balance of market-pull and technology-push lie the opportunities the underpin your strategy work.
Derived from the business area strategy, which describes the company’s position in relation to the competition (e.g. “cost leader” or “differentiation through innovation”), the product strategy is then described.
In order to position the company consistently as a brand among competitors or customers, it is important that each individual product makes its own contribution.
The essential components of a product strategy are:
Determination of the important product characteristics including design features and, if necessary, product variants from these.
Differentiation of the product
Defines the features (including design) that distinguish the product or product line from competing products or other product segments.
Describes novel product features that represent a new customer benefit.
Product innovations are often driven by technological developments. Therefore, especially for this area, an intensive and detailed synchronisation of the product strategy with the technology strategy and the Technology Roadmap is required.
Life cycle and continued development of the product or product versions
Describes the predecessors and successors of the product, as well as the marketing period, in order to ensure a consistent positioning of the product or product line in a specific segment.
Product development and production
Here, the product strategy is aligned with the R&D and production strategy.
A clean and detailed dovetailing of the individual area strategies is elementary when striving to deliver a successful implementation in all areas of the company.
The result of a product strategy is, among other things, a Product Roadmap in which the entire product portfolio is presented. There are defined marketing periods for the individual products, which also list the market launch and the “End of Life” (EOL). The planned marketing periods are used to coordinate product provision, i.e. the product development process.
Building on the product strategy and roadmap, the company can define its marketing strategy, which usually consists of the well-known four P’s:
- Placement (distribution / channel)
- Promotion (customer approach / communication)
The technology strategy is closely linked to the product strategy. It represents the technological basis for the realisation of the product strategy. Which technology, as well as the resulting technology- and pre-development projects, do you need to realise your products with the intended positioning?
In practice, six essential elements of a technology strategy have proven their worth:
Selection and structuring of strategically relevant technology fields.
This is where the basic technology fields are defined. When selecting the relevant strategic technology fields, the following questions are typically answered: What added value can a technology create? What other technologies could hinder its use or make it superfluous? Which other technologies supported the technology to be introduced or make the introduction possible at all?
Describes the ratio of the desired technological performance of each technology area compared to the competition. While the technology leader wants to deliver “best-in-class”, it is sufficient for the technology follower to be in the lower midfield, technologically speaking.
Determining the time of availability – The timing
Together with technological performance, timing is described for the respective technology field. Pioneers are those companies that first develop a technology or bring it to market. Technology followers enter the development later, or buy the technology.
In practice, the determination of performance and timing is closely linked to product strategy. If “differentiation through innovation” is the goal, it is important to describe the strategically important technology fields as pioneers and technology leaders. Conversely, in the case of “cost leadership”, the company should – in most cases – define itself as a technology follower.
Determining the type of exploitation
With exploitation, you answer the question of the type of use of the technology. While internal utilisation serves to further differentiate your own products and processes, external utilisation focuses on joint utilisation, licensing or even the sale of the technology. The source from which the technology is to be procured is closely related to the type of utilisation.
Assessment of the technology fields – The technology portfolio
For each technology field, a separate evaluation is made based on the strength of the company’s competence in that technology field and the respective appeal of the technology for the company. It shows the typical life cycle of the various technology alternatives within the technology field. The core questions are as follows: Which technologies do we need to monitor? In which technologies do we want to invest and from which do we need to divest?
- Deciding on the technology source
As in any classic “make or buy” decision, a distinction is made between internal and external sourcing of the technology. Internal sources come from the company’s own R&D. When choosing external technology sources, there is the possibility to buy or license, or to enter into equity-uninvested (or equity-invested) forms of cooperation. Derived from the assessment of the technology field and the resulting links to the corporate and product strategy, a selection can then be made.
The benefit to you
- You link your corporate-, business area and product strategies with your technology strategy in such a way that you can position yourself competitively on the market with your future products.
- You focus on the strategically relevant technology fields for your company.
- You systematically evaluate individual technology fields and derive specific measures for your project portfolio. In this way, you use the opportunities afforded by the market-pull and technology-push in equal measure.
- You enable long- and medium-term planning of technology and product development projects.
- You lay the foundation for timely technology maturity at the start of your product development projects.