Aligning Your Product Portfolio

Ingredients

Companies often start out with a single offering, but with growth comes the need to account for variables. Products may turn into “product lines”, with tiered pricing models. Products may also evolve into “product portfolios”, with a set of (hopefully) complementary products that solve problems for a (hopefully) related set of personas and their respective jobs-to-be-done.

Once you reach this point though, as a product leader it is easy to forget about the implicit choice you are making to leave your product portfolio as is and move onto other more pressing matters. A large number of companies have swayed in that direction and returned at a later point to reconsider this choice after it started to hurt them. Problem is, the longer you wait, the harder it is to execute a reimplementation of your product portfolio strategy. It’s better to think this one through early.

Nutanix, and it’s product portfolio problems

Between 2015 and 2018, a tech rocket ship known as Nutanix soared past unicorn-status, jumping in annual revenue from ~$240MM to ~$1.1B. This run included an IPO that raised $237MM, and was the perfect example of a company that had crossed the proverbial chasm and successfully broken into the mainstream market for IT systems. The story of how they built their Killer App around VDI (a technology that enables organizations to allow their employees to remotely access machines hosted in their data centers) is one I laud about with pride (since I worked there) as an example of how superior product management can single-handedly plunge a company into the mainstream against all odds.

However, they made some terrible acquisitions along the way, and did an even worse job at integrating them into the Nutanix fabric thereafter. No doubt, acquisitions are hard and, more often than not, fail to accomplish the promise that they have shown on paper. In Nutanix’s case, however, the challenge was unimaginable. It lied in building a synchronous experience comparable to their otherwise “hyper-converged” experience across a product portfolio that grew from three “core” tightly integrated technologies to twelve different products in a matter of about two short years. And this is no easy feat, not even for Nutanix with all the positive momentum it had.

The acquisitions included companies with technologies and businesses that in theory would help Nutanix evolve from a hyper-converged infrastructure (now an industry-standard term they coined) company to an “enterprise cloud” company. In other words, they were looking to jump from their core offering which converged IT storage and compute devices in data centers, to a mega-offering that encompassed the entire buffet of technologies needed to run infrastructure in an enterprise, including software-defined networking, application orchestration, cloud-native monitoring and cost-optimization. With a twelve-product portfolio, it soon became apparent, not just to the company, but also to it’s customers, that the focus of the company was shifting away from it’s “core”. To make matters more complicated, each of these products that came out of an acquisition were at different stages of maturity and adoption.

It became obvious that the large product portfolio needed to be “integrated” in some way, and made easy for customers to:

  1. grasp what each one did (messaging)
  2. understand how each one fit into the bigger picture (positioning)
  3. use each one without going through a new learning curve (product design and integration)
  4. get additional value out of the whole (product portfolio value proposition design)

However, since this wasn’t built into the portfolio by design, it became tedious to do after-the-fact.

Today, Nutanix has come a long way towards doing away with that broken experience, due to factors like the maturity of the products and market, tons of product integration efforts, and a “solutions-first” marketing mandate. But it has been no trivial affair.

Why aligning your product portfolio matters

Simon Sinek, in Start With Why, has said, among many other beautifully articulated things,

"People don't buy WHAT you do, they buy WHY you do it."

Companies, ranging from startups to publicly traded ones, are time and time again faced with a conundrum of whether to pursue new markets that one of their products or acquisitions has opened up, or whether to focus the product on a market that aligns more closely with the company’s WHY.

As a product leader at Platform9, I recently faced this conundrum myself when working out the positioning for the SaaS-managed Bare Metal product. To give you some context, “bare metal” refers literally to the bare metal servers in data centers, the management of which is fairly complex and tedious when done manually. Several tools like Platform9’s Managed Bare Metal exist to make it easy to manage bare metal – the problem is well understood and it’s a crowded market. For Platform9, this is a new product in addition to their other more mature products that are already doing well in the DevOps market. Platform9’s WHY is seeded in giving organizations the freedom to run applications anywhere (i.e. on public clouds, data centers, edge locations… you get the gist.) They do this by centering around Kubernetes as an orchestration plane, and the audiences they attract with their content marketing and growth efforts are DevOps teams and application developers. These are the relatively “modern” organizations and teams who are looking for modern benefits like portability and efficiency in deployment for their applications. These are the ones to whom the WHY of Platform9 appeals most. Coming back to bare metal – a bare metal management service has it’s appeal in more than just the Kubernetes landscape. Doesn’t really matter what the organization is doing with their data centers – Kubernetes or not – they still have to manage bare metal! Given this, it hurts to think about all the money you’re leaving on the table if you start saying no to nine out of every ten opportunities.

The reality, though, was that we’d end up investing our sales and technical resources trying to make organizations who weren’t modern application teams, and who didn’t get our WHY, successful, often times failing to make it to the finish line anyway. It made more sense to converge, and start thinking about not just the positioning, but the product itself, as a part of an end-to-end experience that, when delivered well, would be tangible proof of Platform9’s WHY.

Today, Platform9 Managed Bare Metal is positioned as a bare metal management service that makes deploying Kubernetes on bare metal seamless. All of a sudden, prospects just get it. Employees just get it. Platform9 enables organizations to run applications anywhere, even on the hardest substrate of all – bare metal. Just like that, a product that needed a ton of explanation and competitive positioning to be considered has now become one that moves our cause forward. It enables us to tell our story to a wider audience. The product has leveraged our WHY, and our WHY has been reinforced by the product.

Nutanix had to retrofit a WHY into a HOW when people at KubeCon 2018 in Seattle were asking what on earth an IT company was doing at a developer conference. It also led to the IT crowd asking why on earth Nutanix wasn’t focused on it’s core anymore.

On the other hand, Apple can make inroads into any market. Apple’s WHY is clear – to help people challenge the status quo. Smart phones, smart watches, (a self-driving car?) .. it’s all a HOW that is proof of the WHY. Their products converge beautifully, not necessarily always into each other, but always into their WHY. To my earlier point, convergence doesn’t always have to be building everything yourself, it could manifest as products that integrate with each other, are positioned together, or mesh into the same ecosystem. The important thing is for them to resonate with interspersed parts of the same melody to the intended audience.

Learn from Microsoft: Align around vision, not technology

Satya Nadella breathed new life into Microsoft when, within just a few months of taking on the reigns as CEO, he crafted the journey of moving the focus of the company off of Windows. As Ben Thompson highlights in this great article, he emphasized in a memo to Microsoft employees:

“At our core, Microsoft is the productivity and platform company for the mobile-first and cloud-first world. We will reinvent productivity to empower every person and every organization on the planet to do more and achieve more.”

In the years that followed, we saw Windows get siloed off into a division inside Microsoft, effectively freeing other parts of Microsoft to operate independently without being “Windows-first” or “Windows-only” products and services.

Up until this point, Microsoft was a company that was aligning itself around Windows, which was a strategy that worked well for them for the decades prior. But as the technology and the world around it evolved, and with the advent of mobile devices and the “cloud”, strategizing around selling Windows licenses was reaching it’s inevitable end. For seemingly the first time in decades, Windows and Microsoft were on divergent paths. The path of aligning the rest of Microsoft around Windows was no longer the same as the path of aligning the company around the vision of “empowering every person and every organization on the planet to do more and achieve more”. Windows was never the WHY, it was always the HOW; the tangible means of achieving Microsoft’s vision (their WHY). People and organizations bought into Windows and it’s ecosystem because it empowered them to be more productive. In the modern, “mobile-cloud” world, Windows licenses were no longer the best path for people and organizations to achieve productivity. There were other, better means to achieve that end. Recognizing this divergence and acting on it with enough urgency, was what got Satya and Microsoft into the leadership position they are in today.

Aligning your product portfolio is important, but it is even more important to align it along the problem space, or the WHY. Not a specific technology or product. It will always be tempting to align your products along your cash cow product, but if growth is the name of the game, which it is when it comes to most technology companies, the WHY is what will stay with you a lot longer than today’s HOW.

Alignment starts with positioning

While the topic of how to go about aligning a product portfolio is worthy of it’s own detailed piece, I will say that it starts with positioning.

  • To whom does your WHY matter?
  • Under what market conditions are you uniquely poised to be the leader?

Once you’ve identified such a non-trivial market, the trick is in crafting a story that leverages your product portfolio and aligns with the company’s WHY. Nutanix began the journey of aligning their products to their vision of making infrastructure invisible, by adopting a “solutions-first” approach, and then leading into product consolidations (Beam’s cost analysis and Netsil/Epoch’s monitoring are now baked into their infrastructure management plane, Prism.) While it has taken them a few years, they are looking well-poised to reinvent themselves all over again.

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