Managing Product Portfolios: Single Product vs Multi-Product Companies
The Triple Chasm Model describes the commercialisation journey for a single product: most companies typically start by focusing on a single product in order to gain market traction.
Sometimes early stage companies may adopt a go-to-market strategy based on taking multiple products to market in parallel but this is fraught with difficulty and hence rare.
However, many established companies will consider taking multiple products to market, building up a product portfolio in the process. A portfolio will be based on products at different levels of maturity so that they have a robust ‘pipeline’ of products and services in order to maintain and grow market presence.
Managing a multi-product strategy based on the Triple Chasm Model requires a systematic approach based on the following steps:
Articulate the overall vision for the company;
Define the range of products and services, with clarity about the target market spaces and target customers for each product;
Understand any relationships between the different products and services, for example, the use of common technologies or sales channels;
Specify each product in terms of shape and timing;
Create an explicit Product Portfolio, including an aggregate execution plan.
Most multi-product companies focus their product portfolios around a common technology base and shared core competences, but focused on different customers as follows:
Products targeted at the same market space and the same customers, where the differences between the products are mainly due to differences in features, benefits, and costs (for example entry level and premium products)
Products targeted at the same market space but targeted at different customers, where different functionality is provided to different customers (for example products provided to consumers and business customers)
Products targeted at different market spaces and different customers, where similar functionality may be offered to (different) customers active in different market spaces (for example different customers in healthcare and media market spaces)
Understanding and implementing a multi-product strategy depends on building an explicit Product Portfolio, which captures relative priorities in the context of an integrated commercialisation strategy. Construction of this Product Portfolio depends on assessing the relative importance of three key axes, which enable a structured assessment based on the 12 meso-economic vectors:
Assessing the Strategic contribution from each product to the company as a whole, based on an aggregate view of 11 of the 12 vectors (not including the Funding and Investment Vector).
Assessing the Financial contribution from each product based on conventional financial measures used by the company such as return on capital, cash generation, NPV, time to payback or margins.
Assessing the Execution resources required and risk of failure, including its impact on more mature products which currently underpin the business metrics.
Companies need to build an integrated view of the Product Portfolio which enables decisions about priorities to be made based on data-driven logic rather than gut feel and instinct, although they may have been adequate in previous decision-making.
Larger corporations, in particular, can use the portfolio mapping approach to underpin a structured strategy for mergers and acquisitions, in contrast to internal development.