Product Strategy and Corporate Success
Formed by three engineers who had done advanced computer systems development in a large electronic systems firm, Computer Technologies, Inc. (CTI) initially developed calibration machines for the production of magnetic tape storage devices, sold directly to large computer manufacturers. Encountering limited opportunity the company then developed its own read/write heads for tape machines, sold as components directly to its manufacturing customer base to satisfy a new user functionality. CTI subsequently developed a third and unrelated product line, attempting to enter the microcomputer software business with a proprietary operating system for a popular microcomputer. In a following product release the firm also developed small business applications software. The two software products entailed major changes from CTI's earlier user functionality, customer groups, and channels of distribution, selling these packages through office systems dealers and computer retail stores. None of the products became profitable and, after six years of struggling, Computer Technologies ran out of funds that had been provided by the founders and some private investors. The founder-CEO thinks they would have made it if only they had more capital. I think the fundamental problem was in their product strategy.
Deciding what products to make and how to make them is a constant challenge to the management of technology-based firms. Companies operating in areas such as computers, electronic components, optics, medical devices, telecommunications, lasers, and biotechnology are frequently and profoundly affected by rapid advances in their respective product technologies. In these industries where the rate of new product introduction is high, a stagnant research and development effort can be disastrous. Even good ideas are insufficient; firms must turn them into successfully marketed products. Given that technology-based companies must continue to innovate their products (and perhaps their manufacturing processes as well) to survive and grow, they must make fundamental choices about their technology and market strategies.____________________