Jumpstart Your 2025 Strategic Planning
We are honored to have Josh Hardy, a Mereo principal with more than 25 years of experience in marketing and product management, share his insights with us in this newsletter. His leadership of high-performing teams and execution of sales and marketing programs in the high-tech, cloud and software industries have made significant contributions to globally known B2B and B2C SaaS, manufacturing and service companies for more than two decades.
Many leaders mistakenly treat annual strategic planning as a last-minute exercise, often waiting until the late third or fourth quarter. This process often turns into mere budget planning rather than proper strategy development. While the actual assembly of the strategy may be condensed into a short timeframe, input-gathering should be formalized and continuous throughout the year. Shifting to a more disciplined approach reduces last-minute scrambles and leads to better work products that effectively guide your activities.
I challenge you to maximize the remaining summer days by analyzing your product portfolio. This proactive approach will jumpstart your annual strategic planning and enhance your ability to serve buyers. By meticulously examining your product portfolio, you can make informed decisions about the products that truly benefit your buyers and, in turn, help your organization.
THE IMPORTANCE OF PORTFOLIO ANALYSIS
While many organizations hold their product portfolios dear, the truth is that not every product is essential. Continuing to include products that no longer serve your buyers is a significant waste of valuable resources, including scarce marketing investments and your teams’ time. Moreover, retaining unnecessary products can derail your annual strategic plan, leading to further waste of resources and a failure to serve your buyers effectively. To help you decide which products you should keep — and which to get rid of — take a look at Mereo’s Portfolio Performance Analysis Chart and how to use it:
Plotting Your Products on the Chart
By using the Mereo Portfolio Performance Analysis Chart, you can easily see which products are your strongest and weakest and which need some fine-tuning. To plot your products on the chart, all you need is how much year-over-year revenue or bookings growth the product delivered and investment cost as a percentage of overall revenue. If a product you would like to retain falls outside of the “high performer” quadrant, you do not necessarily need to exterminate it. Instead, see your areas for improvement and explore if the product is salvageable. However, if your product lands in the “deficient” quadrant, it may not be worth saving.
Decide if a Product Can Shift to a Higher Value or Efficiency
Once you have plotted your products, start your analysis with those that fall in the orange quadrants. When developing products, this means they are demanding high investment costs but are contributing to your organization’s growth. Your teams can discuss aspects such as repackaging, delivery, and creation to lower costs and deficiencies.
Next, look at the products with low investment costs but low revenue returns. These products are somewhat neutral; they do not deplete resources but also do not contribute much to the organization’s revenue. This is another opportunity to move these products upwards by brainstorming how to boost their revenue return without increasing expenses.
Know When to Let Go
When a product lands in the red quadrant, it can be tricky to justify salvaging. If you cannot find a way to lower costs or increase revenues, it may be time to retire the product.
Now that you know where your products stand, I have three exercises to help you decide if there is a way to move your less efficient products to the “high performer” quadrant.
3 ESSENTIAL PRODUCT PORTFOLIO ANALYSIS EXERCISES
These three analysis exercises will help your leadership team assess the performance and potential of your solutions.
1. Brainstorm Growth Opportunities
You likely recognize this as a version of the Ansoff Matrix. And it is true: The Mereo Growth Strategies Matrix tool is nothing new and revolutionary. It has been around since 1957. Yet, we still employ it because it works. I share this idea because most B2B organizations do not have a leader who drives this thought process. Without a dedicated portfolio management group, an organization lacks anyone tasked with stepping back from the day-to-day who can envision how years of efforts and investments can be optimized and aligned for growth.
When you brainstorm growth strategies with your teams, you can grow even if you do not create new solutions often. While these growth strategies are great, it is important to activate your efforts to ensure you and your teams act out your new ideas.
There are two opportunities for growth with existing products. In both options, your team must identify how to revamp existing products for a current or new market. Some ideas include changing the packaging and pricing or mixing up how you market and differentiate the product.
Though leaders will not commonly encounter this situation, it is crucial to consider investments when creating a new product. These costs will be much higher when you have a brand-new product, even in an existing market. You also must consider the product development and go-to-market processes.
2. Revisit Your Horizon Plan
A horizon plan helps your leadership define and align with the company’s vision into the future.
When evaluating your horizon plan, it is important to be methodical and realistic. For example, when considering a product strategy, ask yourself: Which horizon would your strategy best fit? How fast can your team feasibly see an idea through?
Even if a strategy does not work for you right now, it does not mean it should be discounted entirely. Instead, see if they can fit into different time horizons of your growth strategy.
3. Perform a High-Level Pressure Test
Once you have a few product strategy ideas, validate them:
Score your capability and alignments:
Financial Benefit in 202x: The capability's potential revenue and margin contribution are significant enough to justify the company's investment at this level.
Ability to Deliver: Adjacent products that are part of the solution are technologically proven and well-integrated, and the company and / or partners have the resources/qualified staff to deliver on the customer promise.
Strategic Importance to the Customer: The solution addresses the customer's strategic business imperative or initiative.
Short-term Financial Benefits to the Customer: Your customer has a budget and can achieve financial benefits relatively quickly (1-3 years).
Capacity and Capability of Sales and Channel Partners to Sell the Solution: The value messaging and domain knowledge are straightforward and clear enough for the sales team with ample bandwidth to effectively sell the offering with proper training and tools.
Market Impact: The offering can potentially reposition the company in the marketplace and/or change the competitive landscape. It can also be supported by a compelling integrated marketing campaign.
Rate your business competencies from low to high, and be honest about what is feasible for your organization.
Consider the impact new products or modifications will make on your differentiation.
Get outside input from a client advisory board.
Additionally, put your strategy ideas through a pressure test to ensure you make wise investment decisions. A pressure test answers questions like: How can teams critically and objectively assess the feasibility and alignment of ideas with the internal strategy? How can you gauge your target buyers' reaction to a new product or changes to an existing product?
ENSURE YOUR PRODUCTS ARE SERVING YOUR BUYERS — AND YOUR ORGANIZATION
Analyzing your product portfolio is no small task. If you are looking for additional help, add another resource to your tool belt: Mereo’s Solution Management Workbook. In this eBook, our experts help you walk through your journey from growth opportunities to pricing strategies. Get your free copy today.