What is a product strategy? Differentiation opens up an ocean of opportunities

What is a product strategy? Differentiation opens up an ocean of opportunities

“I will have the beef and vegetable please and a glass of chardonnay”

…where did I put my bag? oh yes here it is…

“You need to excuse me, I need the bathroom”

…syringe, cap, insulin vial… this stupid sect, the rubber is not tight! Need to open a new one…

Oooh this bathroom is filthy! Nowhere to put my stuff… ok the dose… 20mL… can’t see anything here, too dark! mmmh… all right, damn needle! ok done. Now, cap on the syringe, vial, all back in the bag. Need to bring this damn bag with me all the time! Back to the table… 

 

This is exactly what someone at Novo Nordisk was thinking about in the mid 80’s.

At the time all the other insulin manufacturers were focusing their efforts on product’s purity strategically looking at winning with doctors, the key influencers.

At that time technology progress started making production of high quality insulin very easy for major manufacturers. Competition was shifting to price, with shrinking margins and threatened growth despite favourable market drivers. So that’s why Novo Nordisk in the pursuit of diversification took a disruptive route.

The attention moved from the doctor to the patient. While focusing on patients, they found that insulin, which was supplied to diabetes patients in vials, presented significant challenges in administering.

What if we could change the experience of the patient? What if we can make it easier, quicker, less embarrassing?

 

“Can you excuse me for a second?”

…my compact pre-filled NovoPen is in the pocket. Just need a second. Oh it’s dark here… and filthy… never mind, I just need a moment! Done. Let’s enjoy the food now!

 

What did Novo Nordisk do?

They looked across the chain of buyers, identified a problem and developed a new solution. In doing so they changed the product’s focus from insulin itself to the administration device. This simplification for the user added complexity to the product, costs and a re-designed supply chain. Nevertheless, the attractiveness of the new offer justified a price premium and took Novo Nordisk out of the price war. This was pure product differentiation. Furthermore it was smart differentiation as it was solving an annoying problem for the users.

In other words, Novo Nordisk did not try to be the best at every aspect of their product. To beat the competition they just created uniqueness and relegated price and insulin purity to the background. The innovation came at a cost, but one that users where mostly happy to pay for the added convenience.

What is a product strategy?

This is product strategy at its best. Strategy is about choices. Choices imply risks. However, rewards can be huge.

In this successful example, the innovator pursued a Blue Ocean Strategy, shifting the industry landscape and reinventing themselves from an insulin producer to a diabetes care company.

Today pre-filled devices account for most of the insulin market.

Product strategy is a complex subject that cannot be developed in a short article. However I find that the simple Blue Ocean’s Four Action Framework is the best way to start.

  • Eliminate
  • Raise
  • Reduce
  • Create

The approach is based on acting on product “factors” or features and postulates that a proper strategy should be based on all four actions in the framework. What this means is that the product design should identify the factors to be eliminated, the ones to be raised above industry standards, to reduce below industry standards, and newly created factors that the industry never offered.

Resisting the temptation to try to respond to all possible demands from the market is key. Adding all possible features, focusing on all possible aspects, trying to build the universal product responding to every possible scenario is the contrary of strategy. It is in fact about not making choices.

The NovoPen created a completely new easy to use drug administration device. It increased the attention to the patient’s needs, reduced the attention to insulin’s and eliminated the attempts to market it to doctors. It also moved away from using price as the main attractive parameter in an ocean of comparable products from competition. Pure Blue Ocean.

I will dedicate more attention to these concepts in future posts, for now I can only recommend W. Chan Kim and Renée Mauborgne’s book.

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