Because of the key role played by products and offerings in competing in technology markets, product policy is a key element in the strategy of a high-tech B2B/B2G company.
Although some companies sometimes confuse the whole thing under the terms “products and innovation” or may organise the boundaries between their different departments in different ways, it may be useful to distinguish three concepts:
- Technological innovation
- Innovation in products and services
- Management of all products
The product policy essentially concerns the last two points. It relies on the technological resources of R&D or R&T: the latter is responsible for technological innovation, which enables the company to control or at least have access to technologies that can be used in products and services.
Product policy, on the other hand, is responsible for both :
- create innovative products using or not using innovative technologies
- strategically managing all the products in the product portfolio, whether or not they are innovative products. In particular, this involves validating the strategy for each product or product line and making resource trade-offs.
- managing product life cycles at the operational level
- establishing the processes and governance rules applicable to all product-related decisions
Technological and product innovation
There are many examples of this distinction. As a simple illustration, we can take the example of the foil in the maritime world.
- Initially discovered and tested before 1900, and followed by various attempts to apply and improve it in the 20th century, the effect of using a foil (or hydrofoil) is based on an application of Bernoulli’s theorem which states that, at similar altitudes, the pressure of a fluid increases as its speed decreases, and vice versa.
- By the difference in pressure between the lower and upper surface of the foil, this effect makes it possible to generate a vertical thrust on the foil as a function of speed, thus supporting a surface marine craft from a certain speed, thus greatly accelerating the possible speed according to a given available energy (wind or engine) by reducing hydraulic friction.
- This technology was first tested in the laboratory and with prototypes in order to determine the best generic shapes of a foil daggerboard.
- This technology has the potential to be used in many different products for different surface marine craft.
- It can of course be used to design innovative boats.
- The product policy of a boat manufacturer will be both to develop these innovative boats and to manage the whole portfolio of boats offered to the market, whether they are conventional boats or boats using foil technology.
The dimensions of product policy in B2B/B2G high-tech
In addition to governance, product policy in the B2B/B2G high-tech company has two equally important dimensions:
- at the strategic level, it consists of defining and validating the strategy for each product and allocating resources between the different products or product families. This allocation of resources will be carried out, whether these products are innovative or not, on the basis of the potential and prospects of each of them. It will essentially be a matter of allocating resources to develop new products or improve existing ones, and of deciding not to support or to discontinue other products. These decisions will be based on a detailed analysis of the situation and prospects of each product from a strategic, technical, economic and financial point of view.
- At the operational level, it consists of managing the life cycle of each product or each product family. This involves taking decisions step by step throughout the life of the product, from the “product idea” and its technical development to its end of life on the market.
Product policy: differences between B2C and high-tech B2B / B2G
There are significant differences between the consumer world and the professional high-tech world in terms of product policy:
- In technology, strategy and product steering are often shared between strategy, R&D or R&T and marketing. In B2C, it is marketing that almost systematically drives products, notably by allocating products between brands and deciding which new products will benefit from any new technology.
- the technological world gives priority to the technical performance of the product to create value for the customer, whereas the consumer world often gives priority to communication and image
- the technological world mainly manages products, whereas the B2C world frequently manages both a product portfolio and a brand portfolio.
- In the technology world, the internal part of the life cycle, the part that precedes the commercial launch, can be long, expensive, risky and is considered to be just as important, if not more so, than the commercial part of the life cycle, the part that follows the launch of the product on the market.
- The commercial product life cycle is generally much longer in the technology field than in the B2C field (with the exception of a few “great B2C products” that are able to span time and generations).
Why the technological world does not recognise itself
It is thus easy to understand that, with the possible exception of some IT and telecommunication companies, high-tech B2B/B2G companies do not recognise themselves very well in the way mainstream marketing literature deals with the product. For example, they do not recognise themselves in:
- Products whose technical dimension is underestimated compared to the communication and image dimension
- Products driven essentially by marketing
- Issues of innovative technology, cost, risk and duration of technical development are often virtually ignored, even though they are essential to the technology
- A product reduced to a simple variable in the marketing mix
- A “product life cycle” often described as the only business life cycle, i.e. starting after the commercial launch
- A product lifecycle that does not adequately address the issues of product evolution over a long period during the maturity phase
- a life cycle that does not sufficiently link products and services
