You’ve got three potential markets for your new amazing unique and ground breaking new high-tech material, which market should you go after?

What type of product should you create with that material in the selected market segment that will create the greatest value to your future customers and investors?

Answer… “We will do them all.” Why? “Because the business case looks really good when do them all, we will make a lot of money, and we will all be famous!”

Problem… “We don’t have the resources to go after all three segments and lack the technical skills or end user customer expertise to fully understand the customer drivers in each segment which would allow us to ‘productize’ our whiz-bang material into real consumer products.”

“Not to worry, we will do it, we have to because this is what we have promised our investors and why people are so interested in us.” Further, “We must ignore the reality of the task ahead of us and press on, if innovation accepted these constraints then no one would invent anything. Onward and upward.”

This happens in start-ups and it happens in establish mega corporations. In fact, we would argue that the reason it happens in start-ups is because the people that lead them (most of the time) came from mega corporations where funds were abundant and time was not a constraint. They simply repeat what they learned in mega companies with disastrous results, most of the time.

However, we have found in many years (30+) in Silicon Valley that most of the failures we have seen are because companies do just exactly what the managers did in the example above. They have something special that has the potential for multiple applications, yet rather than target and focus on one to make it successful, they try to to it all and end up failing at all of them because they run out of runway (i.e., they run out of money before they breakeven… or before they reach a specified investor milestone to show a proof of concept which would trigger the next round of funding).

Perhaps the most famous example of “picking and sticking” is when Steve Jobs returned to Apple in about 1996 after an 11 year separation (while he created the NeXT workstation/OS which he sold to Apple, which is why he came back).

Apple was failing, losing money and most industry insiders predicted they would be acquired or even go out of business. Apple had become a “do everything for everyone” company in Jobs’ absence. They did a version of what I have described above, but on a grand scale. They went after everything they could in hopes that this would grow the company. It is the standard thing you do as a public company, sometimes, like at GE, it’s a flaming success, but most of the time it isn’t, because most companies lack the execution system that Jack Welch created at GE.

The first thing Jobs did was to kill 90% of their products and services. He focused them on four basic markets; Consumer and Pro, Desktop and Notebook.

"When we got to the company a year ago, there were a lot of products. There were 15 product platforms and a zillion variants of each one. I couldn’t even figure this out myself. After about three weeks. I said, ‘How are we gonna explain this to others, when we don’t even know which products to recommend to our friends?’”

We have seen and/or participated in formulating multiple examples of Steve Job’s best practice product strategy focus with our clients. “Picking and Sticking” to a focused strategy is obvious most of the time (when you look in from the outside), yet very hard to convince a leadership team who has stars in their eyes and sees the huge revenue potential of multiple market segments that generate multiple products in each segment… all from a single core technology. It is alluring to see the numbers in the business cases for all these products, yet in most cases almost impossible to operationalize due to a lack of resources (money and skills) and time, which in a start-up is a function how much money you have access to or how much equity you are willing to give away to get more of it, to extend the runway if you run out of time before you can deliver or prove the concept.

It all comes back to the ability of a leadership team to be able to focus. As Jony Ive’s said, “Focus is the ability to ‘say no’ to the things you really want.”

Picking the right market and then defining the right product in that segment is the key to success. That success is the platform you build the company on, the beachhead to launch the invasion. With no beachhead to consolidate your forces, you can never capture the capitol of your enemy. Same is true in product development. You try to do too much at the same time and you do none of them well because you lack the resources or expertise to be successful at any one thing. Steve Jobs never really “distorted reality” and was much more practical than people realize. The problem we see are Executives that distort reality and then believe their own distortions after repeating it so many times (see Theranos as a case study).

True for mega companies as it is for start-ups. We have observed the “Eyes are bigger than the stomach” phenomenon occur at the mega company just like it does in the start-up. The differences are the resources, which in the mega company tend to stretch the inevitable failure point out much longer. When the start-up runs out of money before delivering, they either have to give away founders equity or sell the IP to recover some of the investors money. The failure happens sooner. It is all because of the same problem; an inability to focus on a few things. As Jobs said, “We must focus on a few things and do them really well.”

We use an AHP decision-modeling process to develop scenarios with our clients to show where there is the greatest value. It always ends up in an 80-20 ratio, where 20% of the products generate 80% of the value. This means you can get rid of 80% of the things and focus the limited resources on delivering the remaining high value 20% as fast as possible.

It is much easier to create focus when you can quantitatively show this ratio to a leadership group. But modeling it and doing it are two separate problems. Picking is relatively easy (and modeling it too), yet sticking to it is the challenge.

Apple did it (sticking to it) all through the early 2000’s and became the first trillion dollar company, yet it is hard to persuade people to focus so they can execute quickly. It is obvious, yet difficult to implement without confident visionary leadership like I have mentioned above. Further, strategy decisions (more often today) are made by committee rather than a single product/customer focused person. As they say, “A camel is a horse designed by a committee.” Why? Because committee decisions are the best way to avoid accountability when the strategy fails during execution.

As Steve Jobs said…

“As a matter of fact, if we only get four, we could put the A-Team on every single one of them. And if we only have four, we could turn them all every nine months instead of every 18 months. And if we only had, four we could be working on the next generation or two of each one, as we’re introducing the first generation. So that’s what we decided to do: to focus on four great products. And the first one that we introduced of course was the Desktop Pro product.”