Product Leadership

Product Leadership is all about designing and delivering superior products to customers.

In some cases, it could be as simple as continually making incremental improvements to a product so it can sustain a claim as being superior to its competitors. A more extreme approach involves leadership via innovation – developing breakthrough or disruptive products.  Note you could just as easily substitute “Service” for product when Service is what you deliver to customers (or clients), not service as in how you deliver the service to the customer.

Product LeadershipI liked the photo you see at the right because it seemed to give the clearest idea of what product leadership is all about.

A company that practices Product Leadership as a strategy is known by its customers as a company whose products are one or more of the following:

  • Best-in-Class. They perform better than any competitor’s product.. They may be of the highest quality.
  • The Latest. Their products are considered trend-setters.  They may have innovative features.
  • Most trusted. This probably applies most to Services, which may rely on integrity to be sold.

1. Best-in-Class

We’re starting off with Best-in-Class because it’s the easiest and most cost-effective way to get into Product Leadership.

PRODUCT.  Your product consistently outperforms your competitors’ products on multiple dimensions

INNOVATION.  Instead of R&D, your focus is on product development: working with existing technologies in new ways.

PROFITABILITY. The perceived value of your superior performance by customers is significantly greater than the cost of imparting the features into the product.

SELLING. Demonstrations are the best way to show your customers how much better your product is than your competitors’. 

PEOPLE. Your employees are dedicated to identifying improvements to your product to maintain its edge over the competition. Problem-solving is probably one skill common to them all.

YOUR EDGE. Keeping ahead of competitors with a steady stream of product improvements.

An example of a company that is based on product leadership via having products that are consistently best in class would be Procter & Gamble. Whether it’s laundry detergent (TIDE) or hair care products (HEAD & SHOULDERS), P&G has always sold products that outperform competition.  For that performance, they also charge a premium price.

The Latest

Being first with a new product has advantages – especially if your product is a breakthrough and you are, in essence, defining the market. This approach requires more investment and risk than “Best-in-Class”, but can also yield higher profit margins.

PRODUCT.  You consistently introduce the newest products in your category. You’re first with new features or breakthrough technologies.

INNOVATION. The Latest approach requires investment in R&D to drive innovation and discover those new features or breakthrough products. You probably support these innovations with patent protection.

PROFITABILITY. Don’t be afraid to charge a very high price at launch. Pricing will only go down as competitors try to imitate you. For trend setters, money is no object; having the latest thing is everything to them.  Maintain a premium to competitors’ entries at all times.

SELLING. Show People. Focus on trend setters and early adopters. Demonstrations are a great way to show your customers your new gotta-have product.  Social media can also be a powerful driver when your product launch goes viral.

PEOPLE. Your employees have inquiring minds.  You hire the best and brightest throughout the organization because scientists don’t have a monopoly on innovation. You probably have a strong marketing team to complement R&D by identify trends and consumer issues your company can address.

YOUR EDGE: Constant innovation.

A good example of a company focused on leadership by being first is Apple. The iPod was a breakthrough in making music portable. Similarly, iTunes was the first (legal) way people could download music. The iPad made computers truly portable.

Most Trusted

This is not an approach new companies can take. It takes time to cultivate the trust of your customers.

I think this approach applies well to mature categories where innovation and new products are not seen often.

PRODUCT. Your product is probably known for quality and reliability more than innovation and your leadership is based on the quality of your products.

INNOVATION. As with Best-in-Class, your focus will be more on product development – incremental improvements, but always thoroughly tested before being made available to customers. Innovation could also focus on the operations side to develop improved ways of manufacturing to guarantee better quality.

PROFITABILITY. Don’t be afraid to charge a very high price at launch. Pricing will only go down as competitors try to imitate you. For trend setters, money is no object; having the latest thing is everything to them.  Maintain a premium to competitors’ entries at all times.

SELLING. Remind people about your reputation for quality. Position your product as a safe purchase because your product is more reliable than your competitors’. Showing off awards for product quality can help.

PEOPLE. Your employees reflect your trustworthiness in the market. They’re not the best nor the brightest, but they take pride in their work.

YOUR EDGE: Your reputation. Being around longer than your competitors. Very few complaints.

For a variety of reasons, I’m using IBM as an example of a company with product leadership on the basis of being a trusted brand. They weren’t seen as the innovators in computer hardware (that was Apple). They’ve moved on from focusing on products to being a service provider.  They certainly are not the lowest-priced provider of software services, but they are one of the most trusted, In the world of information technology it’s said, “No one ever got fired for buying IBM”.


There’s plenty more that could be said about product leadership.  If you’d like to learn more, a good book to read is “The Discipline of Market Leaders” by Michael Treacy and Fred Wiersema.


Next week, we’ll introduce you to Operational Excellence., providing an overview of what Operational Excellence is and how it looks in practice.




Strategy: It’s About Making Choices

I find most people over-think strategy.  They feel it’s complex, full of buzzwords, too theoretical. For smaller businesses, some think strategy is something for large corporations who can afford to have strategic planning departments.
Some companies spend their time crafting mission statements.  It’s not that mission statements are a bad idea. A good mission statement will be a way of expressing the company’s underlying strategy. When the mission statement is developed without being founded on a strategy, it usually comes out vague, wishy-washy and meaningless to most employees and customers.

Strategy is really all about making choices and it’s not as complex as people think. In truth, there are only 3 basic strategies to choose from.  

Where most people go wrong is not sticking to a single strategy or not aligning the other elements of their business plan around a single strategic principle. Another trap is focusing on tactics rather than strategy. Your tactics may be sending mixed messages to your customers because they are drawn from multiple types of strategy instead of consistently following a single strategic direction.

3 Basic Strategies, Strategy is about choicesMichael Porter has an interesting way of phrasing it: “Strategy is what allows you to say “no” to the things you shouldn’t do.”
We’re going to discuss the basics of strategy over the course of the next few weeks.  What we promise is to keep it simple. No buzzwords. No charts or diagrams.
A colleague of mine recently did a presentation on strategy for a business networking group and I liked the way he structured it.  He used the analogy of a triathlon: three different sports – cycling, swimming and running. Winning triathletes don’t win because they’re the best at all three sports.  They win because they’re tops in one sport and just good at the other two.
In a similar way,  business can be broken down into 3 strategic elements: Product (or Service), Operations and Customer Focus.

A concept I learned from some of the sales people who worked for me –  the 3-legged stool – shows how simple it can be to apply strategic principles. They offer the customer a choice of three things: Product, Price and Service.  The customer can only have two of those three things, and the third they have to concede to the sales person.  For example, if a customer wants great products and excellent service, he will have to accept that he will have to pay a premium for these.  If it’s price and service, the customer will have to make some concessions product quality or features.

 At the overall business level, the three strategic directions a company can take are:
  1. Product Leadership – sometimes known as innovation
  2. Operational Excellence – sometimes referred to as “low-cost producer”
  3. Customer Intimacy
Next week, we’ll discuss what Product Leadership means and how it can be applied in your business.  Don’t feel disappointed if you don’t think Product Leadership is right for your company. It’s OK to not follow that path. It just means you will have to make a choice between the other two types of strategy.