A Strategic Planning Process for Product Strategy and Product Portfolio Management

Seven Tools For Improvement


In too many companies, product development strategy remains as undefined as it was decades ago. 

Companies spend endless time revising development project budgets, or fighting tactical fires with products about to ship, while ignoring the strategic management of the ideas that are the lifeblood of tech companies. 

Product concepts, those vague ideas that might be tomorrow’s revenue generators, are your company’s future. They include: 

  • Ideas the executive team creates

  • A piece of code a software engineer might be playing with when she gets a moment

  • That conversation a marketing rep had with a customer that puts a lightbulb over his head

  • A widget an operative on the shop floor put together from two other shop models

  • The drawing on a napkin, consisting of boxes and arrows, that a design engineer created over lunch

  • Not to mention the project ideas written-in to your annual strategic planning process

These are a portfolio of assets that your company owns. It needs to be managed as such.

Yet many companies manage these vital investments in a haphazard way, not because they’re unmanageable but because 1) they do not have the right mental models, 2) they do not have proven processes to realize their product strategy, and 3) nor do they have a clear understanding of who decides.  


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It Begins With A Strategy

Without a product strategy, it is impossible to select the nascent concepts that will grow into winning, marketable products. Think of your development activity like a map that has the broad outline of the entire country on one level, and then as you zoom in, at a more granular level, it shows each of the 50 states; and then at a yet more granular level, it displays the counties, cities and towns comprising each state.

A viable product strategy begins with:

  • A Vision: a broad statement of where you’d like your company to be (3-5-year horizon)

  • A Strategy: steps you intend to take to achieve that vision (2-3-year horizon)

  • Product and technology roadmaps, priorities and budgets, connected to specific programs that realize the strategy

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To manage the front end of development requires a system: a means of turning a vision, a strategy, and a set of product concepts into a stream of products flowing steadily through the pipeline.

We urge companies to think of their early stage product concepts, however vague or aspirational, as an asset, as a portfolio managed like a portfolio of capital investments. This is a simple but important shift in mental models. 

Many ideas in the portfolio are worth little or nothing to your company. Others might be the next iPhone or Amazon, ready to disrupt markets, open new categories, and earn enormous revenues. How can your company manage these vague concepts and ideas to leverage the best, weed out the rest, and develop the winners into viable products in a competitive marketplace? By understanding the two systems for product portfolio management. 

  1. A yearly, systematic portfolio planning process, tied to budgeting

  2. A monthly or continuous portfolio management process for:
    a) selecting emerging product concepts, aligned with the company’s strategy and,
    b) prioritizing and initiating work on new product concepts

Why are two systems better than one?

Having both a yearly strategic product planning process, as described below, and an ongoing front-end management process is effective because product innovation and competitive movements can and do emerge at any time. Having a lightweight front end management process, in addition to the yearly plan, helps to maintain focus on the tasks necessary to launch the projects that will best realize your strategy, without being overwhelmed by other strategic initiatives contained in a comprehensive strategic plan (capital structure, infrastructure, M&A, marketing initiatives, etc.). Having two systems provides your company with a product planning activity that steers your company’s intent, while also providing a real time process to manage investments, ensuring readiness for development. 

The two processes are linked but distinct. Strategy without ongoing management is ineffective; while managing product concepts without adequate strategy and planning is often aimless and counterproductive. The system we advocate, with two related processes, supports planning with execution and increases the reliability of new product development.

Two component innovation system linking planning and management processes

Two component innovation system linking planning and management processes

Milestones and Deliverables for Product Portfolio Planning

Many companies maintain that the front end cannot have specific milestones and deliverables. We disagree. Just as projects within the product development pipeline have gates, reviews and timelines, companies can manage the front end of development in a similar fashion. An orderly front-end management process uses rational decision-making to select the right projects to load into the pipeline. It has milestones and budgets that are the measure of progress because approved budgets unlock new projects. 

To define a yearly, systematic, portfolio planning process:

  • Create two decision points that help to:

    • Manage orderly starting points for projects that arise from the planning process or are new ideas congruent with that plan

    • Ensure that they are staffed properly with the right resources

    • Ensure that the projects will address the key issues that impede fast and predictable development

    • Ensure that there is a meaningful commercial potential

  • Define the placement of these decision points. Select two points in time to review projects at a high level.

    • First Review (move from Pre-Discovery to Discovery): ensures that the project is worthy of forming a cross functional team and outlines the steps to test the hypothesis – this phase is complete when the effort transitions from one individual to a small team, typically 10-15% of the way down the path

    • Second Review (move from Discovery into Development): ensures that the team demonstrates feasibility, defines the broad parameters of the product offering, and addresses risk. This phase should ensure that the team is ready to enter development, that they grasp the major risks, and that the team is within a quarter or two of entering the formal development process.

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Selecting the right governance body for the front-end management process is critical because this body will create the criteria for the decision points around product concepts. The decision-making body should include executives who oversee the critical functions in product innovation and strategy, such as Engineering, Marketing, etc. The governance body for this process may be the same group that helms the yearly strategic planning process, although the latter may include Finance in addition to the other functions. Both bodies require the same skills. Having the same body govern both processes provides management continuity. 

The front end of innovation and product delivery

The front end of innovation and product delivery

A front-end product innovation system also includes a related set of deliverables that proposed programs (products, technologies, and investigations) must pass through in order to ensure that the team has considered both the risks and the proposed program’s alignment with strategy. 

These deliverables in the Discovery phase may include:

  • First Review/Approval: The leadership team reviews the proposed opportunity for strategic fit and approves or denies requests for further investment

  • Market Assessment: Validates and documents the under-served market need

  • Commercial Feasibility Assessment: Describes the target segments, target customers and documents the commercial potential

  • Technology Assessment: Summarizes proposed technologies, missing elements, critical partners, and known technical risks

  • Second Review/Approval: The leadership team reviews the request to enter the product process and approves or denies requests for further investment

Other documents might include:

  • Business Case: Includes relevant estimates for conversion rates, click through rates, activation rates, consumables trail, cannibalization, ASPs, NPV, IRR, payback period, gross profit, and operating profit. Also, may include an explanation of the business risks.

  • Business Assessment: Verifies commercial and, where applicable, regulatory readiness

  • Early Phase Report: Provides evaluation of technological feasibility, manufacturability and costs

  • Updated Portfolio Roadmaps: Prioritizes newly approved projects

Do the Work Up Front

The foregoing list of deliverables shows that a team may perform a great deal of detailed work before a project enters the Development pipeline. Their purpose is to ensure that the very best and most innovative concepts fill that pipeline, and that these concepts have the greatest chance to deliver their expected value on a predetermined schedule. If vague concepts populate the pipeline then the result too often is vague, undifferentiated offerings – created at a huge expense. 

By placing around hypothesized programs gates with formalized deliverables, teams and decision-makers clarify whatever can be known about them. This approach reduces risk, refines markets, and generates more predictable results, by bringing a measure of precision to the front end.

Accompanied by a formal, yearly strategic planning process, a front-end management process will help load your company’s pipeline with the very best – and only the best – product concepts.

Tools for Product Portfolio Planning

The most striking product innovations are the result of both strategic planning and the careful nurturing of innovative product ideas. And yet companies not only fail to have systematic tools or processes for dealing with both aspects of their future product portfolio – many insist that it is impossible to have any such system. Many teams continue to argue that the pre-development, concept phase is by nature uncertain and that it cannot be improved. 

We hold that you can clarify programs in this phase, reducing both risk and uncertainty. We say that a better approach is to try to bring these concepts, no matter how vague, into some kind of order: create criteria for evaluating them in terms of your company’s vision and strategy, and then create clear decision points that allow your team to select the very best options. 

Below we present seven tools that enable strategic planning for development. They help companies maximize the value of their portfolio of early stage concepts.


Seven Product Strategy Tools:

  • Yearly Strategic Product Plan
  • Product Portfolio Investment Map
  • Technology Roadmaps
  • Product Roadmaps
  • Radar Chart
  • Derivative Chart
  • Comparative Funding Models



Effective strategic planning for development connects long-term goals to the day to day management of product concepts so that the product portfolio reflects the company’s overall strategic direction.

A yearly strategic planning process for new products is a small facet of your company’s overall strategic plan. The larger strategic plan accounts for the totality of capital and assets within the company and how to deploy them. The management of product concepts is a small but crucial part of this yearly strategic process. 

What is a Yearly Strategic Product Plan?

A strategic product planning process links together the company’s vision, usually encompassing a three-to-five-year time horizon, with the strategic steps, over a one-to-two-year horizon, required to realize that vision. It then connects the strategy to product and technology roadmaps – representations that allow decision-makers to see the progression of products and technologies, and their changing relationships over time. 

These roadmaps then need to connect to the yearly budgeting process that prioritizes future products, and provides them with the resources they need at this early stage. It provides the “plan of record” for investments in new product activities on an annual basis.

If your company does not have a clear way of guiding product concepts into development, then the first step is to take your existing annual budgeting process and determine how planning for product innovation fits into it. The strategic product planning process comes after you formulate the overall strategic plan for the year, but before you complete the budgeting process.

What are the Benefits?

  • Creates a strong link between product strategy and product concepts

  • Enables companies to create a realistic budget that aligns with strategic prioritizes

  • Allows companies to better manage early-stage product concepts

  • Demystifies the front-end of development, and creates a clear line between the vision, the product concept, and a budget

What Business Problems Does It Solve? 

The same companies that will micro-manage IT, or spend time simplifying a portion of their manufacturing operations, show little interest in improving the early stage innovation activities that drive future top line growth. Other companies spend time endlessly revising budgets for development projects, while ignoring the annual strategic management of the ideas that are the lifeblood of tech companies. Many companies do not have systematic processes for dealing with both aspects of their future product portfolio.

Having both a formal, long-term Yearly Strategic Planning process and an ongoing, shorter-term front-end management process allows companies to respond to the changes that inevitably occur in fast-paced tech markets. 

A yearly strategic planning process creates a link between strategic direction and product concepts

A yearly strategic planning process creates a link between strategic direction and product concepts

This graphic ensures all stakeholders that their interests are represented in a program. It gives the entire cross functional team a consistent methodology to identify resource gaps. It is also extensible, accommodating companies that reach outside of the corporate walls to create extended project teams. 

What Else You Need To Know 

The mental models with which product developers approach their work is an obstacle to long-term planning. Think of your early stage product concepts as assets to manage. These assets represent as-yet unrealized potential. The aim of a strategic product planning process is to realize the best and most innovative products in a way that aligns with the vision and overall strategy. The outputs from this yearly process become the inputs for a system that then manages products to completion and launches them into the marketplace. Winning companies take control of their future by creating a tight link between their strategic direction and their product concepts. What is at stake is the future of the company’s product portfolio.


Read more about the  Strategic Product Planning process and how to construct one.

TOOL #2 

Product Portfolio Investment Map: Tying Product Strategy to Execution     

Product development projects are not all the same. Some represent slight modifications to an existing, time-tested product, a workhorse for your company. Other projects might represent startling, new-to-the-world ideas that disrupt everything. Most others fall somewhere in between.

With a limited budget, how can a company best allocate development investments? What is the right mix of investments? How should this investment mix change, based on the risk tolerance and maturity of the company? Creating a Product Portfolio Investment Map can help.

What is a Product Portfolio Investment Map?

A Product Portfolio Investment Map is a snapshot of investments that shows the relative emphasis on various classes of new product development projects. Typically, these investments are grouped together according to the amount of risk each project assumes. For example, a company might organize its projects as follows: 

● Core products

● Adjacent products

● Transformational products

Tying roadmaps to product strategy and the product portfolio

A core product introduces a modification to an existing offering. It is sold to existing customers and leverages existing product technologies. Adjacent products are conceptually and functionally the same as existing products, but they serve a market that is new to the company; or they may consist of a substantial modification to a product, expanding the market the company has already entered. A transformational product innovates in both products and markets simultaneously and accordingly has the highest risk and also the highest potential return.

For example, a consumer bicycle company might continue to improve the usability of its bikes for the general market, through a stream of incremental innovations, such as adding disk brakes or electronic gear shifting. This is core innovation. However, if the company wishes to expand, it might try to market existing bikes to the professional bike messenger market, or it might create a battery powered bike. The first project introduces market risk, the second approach introduces product risk. 

A transformational product for the consumer bike company might be a ground-up design of a cargo transport bike for professional bike meal deliverers. This project would involve a clean sheet design, while marketing to a new audience. It introduces both market and product risk simultaneously.

The Product Portfolio Investment Map drives an intentional and deliberate allocation of R&D and Marketing investments that realizes a risk/reward mix as determined by overall corporate strategy.  By diagramming these investments along market and product risk dimensions, the map displays the relative investment in the various types of initiatives. It allows a company to adjust the portfolio according to its strategy and risk tolerance. The plot displays the various types of initiatives according to the risk they introduce, in order to show how investments fit with your company’s risk profile. 

According to recent research, a stable company in a mature industry might allocate 70% for core projects, 20% for adjacent projects and 10% for transformational products. This is a relatively low-risk approach. A tech startup might allocate less than one half of its development investment in core products since the company does not have a large established market and is willing to absorb greater risk. A startup might have 40% invested in the core, 40% in adjacent, and 20% in transformational initiatives. Tailor the ideal investment profile to your company’s type, its maturity, and its appetite for risk.  

What are the Benefits?

  • Enables a company to intentionally formulate its budget in alignment with overall corporate strategy

  • Confirms that the product portfolio reinforces the right risk profile for the company

  • Provides a snapshot of the current portfolio and reveals any gaps (for example, a lack of focus on transformational products)

  • It’s best practice: most organizations of some size have a model like this

What Business Problems Does It Solve? 

Some companies struggle with getting the right mix of products. This tool enables a company to derive the desired allocation mix based on an analysis of the existing portfolio. As the budgeting changes, a company can shape the relative investment based on its preferred risk profile. 

Execution Product Roadmap displays key dependencies

Execution Product Roadmap displays key dependencies

Product or market risk are not the only possible dimensions. Modify the plot to reflect the dimensions that are most important to your company’s growth. Whatever dimensions you choose, a portfolio map allows your company to make new investments that align with your vision.

The map also creates connection between the corporate strategy – usually the first step in the yearly planning process – and the budgeting process, which usually concludes it.

Product Portfolio thinking creates the right mix of core, adjacent and transformational products. (Adapted from Bansi Nagji and Geoff Tuff, “A Simple Tool You Need to Manage Innovation,”,  Harvard Business Review , May 2012.)

Product Portfolio thinking creates the right mix of core, adjacent and transformational products. (Adapted from Bansi Nagji and Geoff Tuff, “A Simple Tool You Need to Manage Innovation,”, Harvard Business Review, May 2012.)

What Else You Need To Know?

Conceptually, the Product Portfolio Investment map is a snapshot of your product portfolio. Unlike Platform/Derivative Maps or Product Roadmaps it does not show a sequence of products or events over time. It takes a picture of where your product portfolio is now, while Roadmaps indicate where you want to go.

 Often it is very difficult to clearly categorize development initiatives as either core, adjacent or transformational. There tends to be a certain amount of subjectivity around these categorizations which may introduce error. 

Try to create criteria for the various types of initiatives and keep the dimensions consistent. Inconsistent definitions may lead to development managers gaming the system. For example, if they’re rewarded for performing transformational product development, they may try to fit too many projects into that category. Create definitions of market and product innovation and scrutinize your categorizations of the product portfolio with care.


Read more about a Product Portfolio Investment Map and how to create one.


Technologies form one stream of activities, while product timetables form another. Our Technology Roadmap template ties these two streams together by indicating which core technologies are sufficiently mature to incorporate into a product release.

What is a Technology Roadmap?

Technology roadmap anticipates the appropriate set of technologies for a given product timetable

Technology roadmap anticipates the appropriate set of technologies for a given product timetable

In the figure, the technology elements are in the first column, followed by a timeline, and then a rating of the importance of the technology. Finally, the roadmap depicts your position relative to your competitors.

In a horizontal bar-chart format, your technologies are indicated by groups of elements, linked together logically, forming major architectural blocks that depict the key technologies at the highest levels. For example, for a laptop computer, the groups could include CPU, display, storage, power management, and mechanical components. Break down the underlying technology components in each group and represent their lifetimes as a bar over time, with the estimated delivery date as the most important element displayed.

The second portion of the Technology Roadmap is the product timeline, which is a horizontal bar chart that shows the launch target for each product at monthly or quarterly intervals. It shows the deadlines for technology proof-of-principle demonstrations needed to develop the product.

The beauty of this Roadmap is that it allows for a larger perspective on technologies. You can anticipate the appropriate set of technologies for a given product timetable by looking at a vertical line drawn from the product through to the technologies below. The Technology Roadmap is a living document that you should update as technologies and products shift over time.

What are the Benefits?

  • Allows teams to determine the technologies they will incorporate into a product

  • Describes where competitors have a technology advantage over you and vice versa

  • Helps anticipate risks by improving forecasting

  • Illustrates potential areas of exposure and areas of untapped competitive advantage

  • Shows which technologies come from outside the company to highlight critical dependencies

What Business Problems Does It Solve? 

A technology strategy, as embodied in a Technology Roadmap, has a critical role in determining competitive positioning. All businesses, even service businesses, can obtain competitive advantage by having a well-defined technology strategy that leads to offerings that delight customers. 

The Technology Roadmap also helps prevents unfortunate surprises from a delayed component, since you have a system with alternatives ready to go.

What Else You Need To Know

Technology Roadmaps are difficult to construct and require some time. Scanning to identify the proper technology is time-consuming. It also requires a deep understanding of customer value and what distinguishes you from your competitors.

Technology roadmaps are most effective when they influence corporate strategy. The map is of no value if you do not communicate it to management.

Also, this roadmap provides an important input to the yearly strategy process. But creating a Technology Roadmap is not a one-time event. Update the map on a regular basis and review it with management every quarter. The discussion and critical thinking that go into the creation of a Technology Roadmap can produce more value than the roadmap itself.


Read more on Technology Roadmaps and how to construct them.


Articulating a common vision for product success is rarely accomplished – at least not in a manner that ensures that all stakeholders really understand it. A company can generate a product plan from a variety of sources that have functionally-focused views on what problem they are trying to solve. But such views are subjective and not very helpful for setting product strategy. A solid Product Roadmap creates an objective view since it is created cross-functionally and supported by the CEO. 

What is a Product Roadmap?

A Product Roadmap is a graphical representation of a set of related products over time, typically two product cycles or 24-36 months. It has a monthly granularity, but often shown with quarterly resolution. The vertical axis is strategically the most important as it displays the products, how they relate to each other, and how they might relate to the competition in ways that matter, such as price, performance, or feature levels. Although one of the most common vertical axes is cost, it can also be performance, or a key feature.

Product Roadmaps are living documents that serve as a repository for project plans. They depict the flow of products across their lifecycle. Normally they focus on products that are in active development. At its very best, a Product Roadmap is a visual explanation of a company’s strategy that helps align Engineering, Marketing, Sales, Support, and the C-suite. Besides being a visual tool to communicate strategy, a Product Roadmap can inspire innovation because it signals the key areas that are your product’s strongest differentiators. It can also improve execution because it helps to communicate platform and derivative strategies, and how they unfold over time. 

What are the Benefits?

  • Provides a clear, visual representation of product strategy and the relationship between products (time, performance, product family)

  • Inspires the organization to think about supporting innovations that drive the parameters that differentiate your product in the marketplace

  • Inspires the organization to see how they might create derivative products from platforms

  • Sets expectations for when the organization will deliver products/services to market

  • Serves as an organizing principle for decisions around technology requirements, resource allocation, and product positioning

What Business Problems Does It Solve? 

Often individuals and managers in organizations say that there is no strategy; or if it exists, they say it is poorly communicated. In a pinch, we would suggest that a roadmap can communicate product strategy. Product Roadmaps allow for better strategic alignment and, as a result, greater engagement. They also help the executive management team and Product Marketing with managing the inputs to the development team. A Product Roadmap provides an active plan for what should be next on deck for development. 

Product roadmaps enable innovation in several dimensions: 

  • First, they can communicate through the vertical axis what is important to the outside world. For example, the highest performance product in a product family is shown as the top timeline, with other products below it.

  • Second, they provide a strategic context for engineers, researchers, and other creative individuals to create concepts that support, complement, and extend the strategic intent of the roadmap

  • Third they help illustrate gaps in product lines which can be filled through innovation or by partnerships

Finally, in the world of global development, Product Roadmaps communicate the international launch strategy so that the organization plans the timing for entry into different markets and anticipates regulatory needs, language, communication symbols, and standards as required.

Execution product roadmap articulates a common vision for product success

Execution product roadmap articulates a common vision for product success

What Else You Need To Know

Unfortunately, Product Roadmaps often serve two masters and fail both. On one hand, the sales team uses them to close a sale because they’ve inserted the customer’s key wish into the product plan. On the other hand, Product Management uses them to assure the CEO that they plan to support her vision, even though Engineering has not looked at them. This totally misses the point of a well-executed Product Roadmap, which is to integrate stakeholders into a common, shared vision and provide useful, actionable guidance to the organization.

Although some organizations (typically B2B) use it as a sales tool, we recommend you do not communicate it outside of the company. Use it to focus the company on the sequence of products under development over time. If it is communicated outside the company, make sure the discussion is covered under an NDA, and be very careful not to promise something at some date without confirmation from development.

The Product Roadmap must anticipate and depict changes in the market, in competitors, in performance levels, and in your own set of products. In most industries you must anticipate what your competitors will have when you launch your product twelve months from now. But be careful not to focus too much on the competition. It is much more important to focus on supporting your vision and your unique selling proposition than trying to second guess your competitors’ every move.


Read more on Product Roadmaps and how to construct them, and then download the template and instructions.


As a developer, you will face product selection alternatives, choices that involve tradeoffs. The Radar Chart addresses the need for differentiation and supports the creation of a total product that meets visible and invisible needs. 

The product Radar Chart presents a rapid, graphical, and fresh approach for evaluating alternative product concepts. Using the Product Radar Chart for individual product assessments – comparing the feasibility of competing product ideas – brings transparency and consensus to a process often marked by unclear reasoning and self-serving opinions.

What is a Radar Chart?

In development, limited resources (time, money, or staff) force tradeoffs both at the level of the product portfolio and within individual products. Lacking a methodology for evaluating potential products, companies often make decisions based on unsubstantiated factors such as convenience, the enthusiasm of the lead engineer, or the rank of the executive who cheers the loudest. 

Product Radar Chart for three potential products

Product Radar Chart for three potential products

The Radar Chart offers a way to evaluate and communicate the many factors that go into product and portfolio decisions, by graphing the key dimensions of a product or concept versus its alternatives. Use the chart at the beginning of the development project, when the development team is evaluating alternative concepts or presenting alternative products to management for approval. Rank each alternative on a scale of one to ten, with the center of the chart representing a value of zero and the outer edge of the spokes representing a value of ten. 

Value to the customer is always the most important parameter. Strategic value, how closely a product maps to the company’s strategy, figures heavily in the equation. So does investment intensity, the level of resources required to develop and market the product. Each factor is weighted to create a summary score. Each organization needs to ascertain which factors are relevant to its business success, and how they should be weighted. 

What are the Benefits?

  • Identifies mismatches between your current strategy and current capabilities

  • Enables informed decisions about investments in new products, based on fit with strategy and customer value

  • Helps compare how different products fulfill various requirements

  • Informs tradeoffs among various products, and among features of a given product

  • Helps communicate tradeoff decisions to corporate managers

What Business Problems Does It Solve? 

Companies usually generate far more ideas than they can afford to pursue. At the corporate level, the question then becomes prioritizing the many potential features or performance levels. These choices have far-reaching consequences both for the immediate bottom line and for corporate identity. The products a company chooses to develop ultimately determine what kind of company it becomes. 

The same tradeoff questions arise at the individual product or project level after you have researched customer needs, generated requirements, and brainstormed potential solutions. How do you decide which among the products’ many potential capabilities are worth developing? 

The Radar Chart lets you visually represent a multitude of attributes for product decision-making in a way that is richer and more versatile than the lists of features or target performance specs typically used for such evaluations. It is an ideal tool for communicating and facilitating discussions of the inevitable trade-offs in managing a product portfolio.

What Else You Need To Know

Because the Radar Chart makes customer value the central driver of all other aspects of the business, using the chart assumes that you have a method in place to assess it. Ideally, this is a fact-based process that relies on collecting and analyzing data without preconceptions about what customers want. 

Another key to using the Radar Chart is to make a list of constraints particular to your business or product that will become the spokes of the chart. These might include common constraints such as competitive sustainability, technical risk, and innovation, or more particular ones such as the degree of control your organization can maintain during implementation. 

Finally, you can use the Radar Chart not only for new-to-the-world products, but also for incremental extensions of existing products, and even for non-product improvements, for example in customer service or support.


Read more about the Radar Chart and how to construct it, and then download the template and instructions.


The Platform/Derivative distinction is a key to product strategy. According to David Robertson, a platform is “the collection of assets that are shared by a set of products.” The Derivative Chart depicts these sets of related products over time. This is the most powerful type of Product Roadmap because it highlights relationships between derivatives. It maps products precisely and describes their positioning. 

What is a Derivative Chart?

The Derivative Chart is a technology/design-driven diagram of related products with underlying common design components. While a Product Roadmap shows the portfolio of products under development, which may or may not have common technologies the Derivative Chart shows the lifecycle of the platform and its family of derivatives. It also indicates the relationships between the various derivatives. These relationships may pertain to cost, performance, quality, or feature density.  

What are the Benefits?

  • Maximizes the financial impact of innovation by optimizing the value of derivative products

  • Reduces average time-to-market by maximizing reuse

  • Builds alignment in the organization by focusing development on a few, very valuable design foundations

  • Reduces development costs by leveraging the platform

What Business Problems Does It Solve? 

Platform thinking and the Derivative Chart represent a way of optimizing innovation. Usually, the platform is the result of many years of research and development, and codifies all the efforts resulting from one or more innovative concepts. A platform’s greatest benefit is that it maximizes the revenue and business impact of an invention.

Besides having tremendous benefits to sales and profit, the Derivative Chart also helps reduce engineering expenses, while increasing speed and agility. When you leverage the significant design work embodied in a platform, your subsequent product variants will require much less engineering time – and less calendar time – to bring to market. Your new product process becomes much more efficient.

Platform Derivative Chart highlights relationships between products in a family

Platform Derivative Chart highlights relationships between products in a family

What Else You Need To Know

Creating a coherent platform strategy is not easy. First, you need an innovation significant enough to spawn a family of products. Often organizations create an advanced development group to create the next generation of platforms. 

The second challenge is coming up with a system engineering strategy that allows the platform to create derivatives easily. This is a challenge for your principal engineer or product architect to create the total product from an innovative technology. This total product must be easy to modify, so there must be a set of defined interfaces where you can easily add or change supporting components. 

Finally, you need to be patient. Platform development is more like research than development; the timeframes are more unpredictable, and the risks are higher compared to standard development efforts. We recommend that you use the winning strategy of setting aside an allocation of 10% of the product development budget to creating new platforms. Do not put the platform project in the formal development process until you eliminate the most significant risks.


Read more about the Derivative Chart and how to construct it, and then download the template and instructions.


Most businesses today are looking to take advantage of innovation to drive revenue growth, but they lack methods to fund the R&D expense necessary to support expansion. 

The Comparative Funding Model visualization tool allows managers to see into the future and justify investments in new areas or relative disinvestment in others. It also allows management to communicate this information to shareholders and to the enterprise.

What is a Comparative Funding Model?

Business units that have substantial sales in relatively mature product areas are called “sources.” They source revenue allocations to other business units called “sinks” because they are not yet self-sufficient, and need to draw on funds generated from sales in more mature areas. If you don’t do this, then the funds required for new product investment have to come out of profits. The sum of the sources plus the sinks yields the overall average. 

This tool helps shift the debate about funding new innovation areas from the political to the strategic. By looking at your funding levels over time, it is possible to communicate to business unit managers how the budget represents a tradeoff. It enables a company to make strategic allocations in the future based on models and experience rather than politics.

What are the Benefits?

  • Translates strategy into a financial model

  • Communicates this model to stakeholders to support the vision

  • Helps clarify financial tradeoffs that are required to fund new business areas

  • Helps forecast the moment when business units turn from consumers to producers of development allocations

What Business Problems Does It Solve? 

The challenge is growth. In mature domestic markets, growth is difficult because market segments in general are saturated, so you need innovation to take market share from your competitors. Otherwise, you need to generate a whole new market approach. That means creating a market of one. Another challenge is that businesses are underpenetrated in new markets across the world. In some cases, domestic businesses have not expanded to Europe and Asia, and in others they have not properly penetrated the BRIC (Brazil, Russia, India, and China). 

Funding growth is a question of resource allocation. Businesses must allocate resources from their existing lines of business and point them toward new areas. In order to maintain profitability, businesses must reduce expenses in some areas to offset investments in others. The Comparative Funding Model allows managers to see the reallocation today and forecast when these new areas will begin to be self-funding.

Comparative Funding Model allows managers to justify investments in new areas

Comparative Funding Model allows managers to justify investments in new areas

What Else You Need To Know

Don’t underestimate the investment you need to sufficiently fund startup programs. Create a business plan for the new investment area with at least a three-year horizon. Your business plan also needs to look at all the investments – including those in Development, Marketing, Sales, and capital costs – required for the success of your programs. Management needs to approve the plan and use it to set the required initial budget. Then, determine the businesses they will use to source the required investment. 

Finally, consider how businesses can modify the plan to reflect the changing environment, as these programs often take more time than anticipated. This becomes easier year after year as your track record grows.


Read more about Comparative Funding Models and how to construct them, and then download the template and instructions.

An effective product strategy provides a tactical framework to develop and execute it. Key elements to include in a product strategy are: 

  1. The Product Roadmap

  2. The product delivery process

  3. The operational goals and key metrics for measuring product delivery progress and success

In considering each of these elements, your management team should address external factors including:

  • Competition

  • Market

  • Customers

  • Intellectual property

  • Regulation

  • Geography

It should also address internal factors including: 

  • Competencies

  • Existing product lines

  • Infrastructure

  • Business model

The role of strategy in innovation and time-to-market is to define the degree of risk tolerance in your organization and the relative emphasis on speed. You can accomplish your innovation goals by setting your tolerance for risk and then agreeing on the allocation of funding for exploratory ideas. You can communicate this tolerance through the Product Roadmap in terms of funding targets, such as new generation platforms, derivative products, and incremental products within the larger context of marketing and sales objectives. In most cases, this funding comes at the expense of other lower-risk/lower-revenue projects. 

The product strategy also defines the relationship between innovation, time-to-market, and customer satisfaction. All organizations would like to be known as market leaders in all three areas, but very few are.

However, there are many ways for an organization to be a leader in both time-to-market and innovation. Product strategy should indicate the relative priority between these two, which helps teams with their tradeoff decisions. This sounds easy, but it is one of the more difficult challenges for management because the future is not predictable, and many metrics are unknown. 

Product strategies do not have to be complicated or onerous, but they do need to communicate an actionable vision that will support you in delivering products that provide a differentiated experience in the marketplace. One company we worked with had the following concise product strategy: “We render great visual experience in the smallest package possible.” That one sentence was sufficient to orient the company’s products.

In working with our clients we’ve found that organizations can increase the effectiveness of strategic product planning by adapting the best practices we’ve described. Our website has templates, examples and instructions for using these tools. Download templates and instructions and customize them for your own projects.

Our tools cover not only development strategy but also include tools for cross functional teams, execution and management. Or contact TCGen for further access to our proven best practices, tools and techniques.


TCGen provides custom training and consulting for product companies 

Customized Solutions

We work closely with you to develop an approach that works for your company – whether you are large or small, a start-up or an established firm. We develop the project plan along with you to create an engagement that achieves measurable product development goals.

Assessment & Planning

Our proprietary project history and assessment process yields deep insights for your organization. We identify the root causes of bottlenecks and develop solutions that reduce organizational impediments and speed products to market.

Predictive Metrics

Expertise in metrics is a hallmark of TCGen. We rely on measurement to motivate change and monitor progress in product organizations. We measure the right behaviors to ensure that the changes take hold and continue to produce lasting results.

Sustainable Best Practices

Your investment in TCGen earns increased organizational capability. We not only implement Best Practices but we also teach you how to build on the improvements so that your company is prepared for the next challenge.


TCGen improves your company’s product development engine, driving growth. TCGen’s Principals have a track record as practitioners and managers at blue chip companies, developing innovative products enjoyed by millions of customers. We own a suite of product development Best Practices, that we tailor and teach to managers and teams.

Our transformations scale to fit your organization's culture. Our product strategy and product portfolio management technologies help accelerate product development schedules, improving predictability and new product success rates.


TCGen Principle & Founder, John Carter

John Carter has been a widely respected adviser to technology firms over his career. John is the author of Innovate Products Faster: Graphical Tools for Accelerating Product Development. As Founder and Principal of TCGen Inc., he has advised some of the most revered technology firms in the world:

• Abbott, Amazon, Apple
• BOSE, Cisco, Fitbit
• HP, IBM, Roche

He specializes in the value creating aspects of product development – from the strategy and innovation processes, through product definition, execution and launch. He has helped companies cut time to market, rapidly scale their product program, and improve innovation with customer led insights, leading to greater profitability, reduced costs, and improved customer satisfaction. 

John currently serves on the Board of Directors of Cirrus Logic (CRUS) a leading supplier of mixed signal semiconductors where he is involved with company strategy and sits on the Compensation and Audit Committees. 

He was the founder of Cambridge-based Product Development Consulting, Inc. (PDC), a consultancy advising Fortune 500 companies in the areas of research, development, and marketing. During his time there, he worked with Apple to create the Apple New Product Process (ANPP) which is used in all product divisions. He has been an invited speaker at MIT and Stanford University, and a member of the faculty at Case Western’s Executive program.

Before starting PDC, John was Chief Engineer of BOSE Corporation. John is the inventor of the Bose Noise Cancelling Headphones and shares the original patent with Dr. Amar Bose. He was one of the initial contributors in BOSE’s entry into the automobile OEM business and led the product and business development of BOSE’s patented noise reduction technology for the military market.

He earned his MS in electrical engineering from the Massachusetts Institute of Technology and a BS in engineering from Harvey Mudd College in Claremont, CA.