Review

I fully agree with the premise of this book. In large companies, the division of responsibilities often leads to fragmented decision-making, making it harder to see how product decisions impact the business as a whole. The unclear roles and responsibilities between strategy, product, and marketing teams can muddy decision-making on crucial issues like pricing.

Taking a holistic view of both product and business inevitably leads to better results. While the grid offers a sensible way to map the territory—and the book is thought-provoking—it's far from a complete solution for GTM success.

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Key Takeaways

The 20% that gave me 80% of the value.

Businesses are systems; you must see the whole, not just isolated parts.Traditional frameworks can cause tunnel vision; the Grid provides a holistic lens. By using the Grid, teams align on a common framework, communicate clearly, and make well-informed, long-term decisions.

Business success hinges on balancing desirability, profitability, and longevity. Each of these goals is influenced by customers, the market, and the organisation, creating nine interconnected factors. Treating the business as a whole system avoids unintended consequences and ensures no element is overlooked.

Each of the nine factors breaks down into three elements, making 27 building blocks total. Understanding these elements clarifies what drives customer satisfaction, competition, revenues, costs, durability, and adaptability. The Grid’s structure helps leaders see how changes in one area ripple through the entire business.

The grid can help in different situations: starting a new business, reviewing an existing business or even thinking decisions through. How you use the grid may differ:

New Business: A successful business is a unique configuration of the elements within the 9 boxes. Don’t neglect the whole and go too deep on one element. Consider each element in turn - starting with your customers’ wants and needs., then work down each column until you’ve covered all the bases. Process steps:

• List assumptions for each factor in the grid
• Test these assumptions directly (speak to customers, prototype, research costs)
• Check if all factors align to form a coherent, viable model
• Revisit until confident in desirability, profitability, and longevity

Reviewing an existing business: Whatever your goal, the logical starting point is understanding where you are now: your current strengths and weaknesses; areas of uncertainty or change and those of relative inactivity or stability. The gird provides a structured way to analyse a business. Process steps:

• Assess current strengths and weaknesses factor by factor
• Identify hidden problems or opportunities by examining each element thoroughly
• Explore how one change affects the others before taking action
• Prioritise improvements that deliver the greatest long-term benefit

For thinking decisions through: The grid helps evaluate new ideas and projects systematically. Drawing from Rumelt's "Good Strategy Bad Strategy", this process involves three key elements.

• The diagnosis: Define the challenge by identifying which grid elements need improvement (e.g., sales volumes, customer retention).
• The guiding policy: develop your approach to overcome the challenge (e.g., increased advertising, improved customer experience). Use the grid to assess each option's holistic impact across all elements, considering best, worst, and likely scenarios.
• Coherent Actions: Implement the policy or gather additional information to make an informed decision.

Process steps:

• Define which factor needs improvement
• Generate multiple possible solutions
• Run each solution through the entire grid for overall impact
• Choose the option that balances trade-offs and aligns with core goals

Summary of Each Element:

Wants and Needs

• Know your customers’ values, goals, and barriers to create offerings that truly serve them.
• Look beyond the obvious: understand their deeper motivations and success criteria.
• Overcome barriers to help them adopt solutions effortlessly.

Rivalry

• Understand your category, territory, and the alternatives or substitutes customers consider.
• Mapping the competitive landscape reveals opportunities, positioning, and threats.
• Anticipate how market shifts and competitor moves affect value perception and pricing.

Offerings

• The proposition, brand appeal, and customer experience must be integrated to create a compelling offer.
• Focus on delivering clear value, reinforcing desired brand associations, and providing memorable, effortless experiences.
• Strive for continuous refinement and alignment with changing customer preferences.

Revenues

• Align revenue models, pricing, and volume targets with the product’s value proposition and customer expectations.
• Price decisions should be dynamic, evidence-based, and value-driven—not arbitrary or purely cost-plus.
• Sustainable profitability comes from balancing price, volume, and customer perception, rather than chasing short-term gains.

Bargaining Power

• Your relationships with customers, suppliers, and regulators shape your strategic options.
• Balance power responsibly; overly aggressive tactics can backfire.
• Adapting to shifts in power and regulations preserves long-term stability and trust.

Costs

• Distinguish fixed and variable costs and seek an optimal cost structure that supports business goals.
• Targeted cost management prevents waste and inefficiency without damaging value or flexibility.
• Keep evaluating costs to ensure decisions support competitiveness, profitability, and adaptability.

Customer Base

• Build awareness, then convert and retain customers through consistent value and clear messaging.
• Measure acquisition, retention, and customer lifetime value to identify growth opportunities.
• Good communication, emotional resonance, and meeting evolving needs foster loyalty and ongoing engagement.

Imitability

• Protect your business from copycats using legal measures, durable advantages, and ongoing innovation.
• Combine IP rights, unique structures, brand strength, and network effects to stay ahead.
• Continuous evolution, rather than resting on past success, ensures long-term differentiation.

Adaptability

• Ensure enough cash, slack capacity, and flexible structures to respond rapidly to market shifts.
• Recognise the business life cycle and avoid complacency; continually question your direction.
• Embrace uncertainty, experiment with new ventures, and adapt before external changes force your hand.

Deep Summary

Longer form notes, typically condensed, reworded and de-duplicated.

Introduction

• Author also wrote: Ten Principles Behind Great Customer Experience

Whenever something is composed of interconnected parts - whether it’s a body or a business - its overall behaviour can’t be determined by looking at those parts in isolation. When you’re dealing with a system, analysis will only get you so far. You need synthesis in equal measure.

• In practice, most decisions are made at ground level (a departmental view) without a holistic understanding of the business. This limited perspective often leads to unintended consequences, as decision-makers fail to see how their choices affect the broader system.
• Look at the business as a whole - and you’ll be able to make bigger decisions.
• Many of our business frameworks don’t fit together.
• The Grid is a decision-making framework designed to help us think holistically about our business, recognising that every part is interconnected rather than operating in isolation.
• Traditional approaches often break down a company’s components separately, leading to shortsighted decisions and unintended consequences. In contrast, the grid treats the business as a single, evolving system influenced by its environment, allowing leaders to manage trade-offs, identify changes over time, and make decisions based on future direction rather than a static snapshot.
• It is useful for teams and individuals at all levels of expertise, helping them communicate and collaborate more effectively by establishing a common frame of reference.
• The grid complements other methods, such as the lean start-up approach, without requiring formal adoption. Instead, it supports a more holistic, dynamic, and inclusive way of making better, more informed decisions.

Part 1: Fast Track

Chapter 1: Constructing the Grid

The grid is a framework which combines three essential business goals:

• Desirability (customers want what you offer)
• Profitability (you earn more than you spend)
• Longevity (you stay viable over time).

Each is influenced by three layers of change: customers, market, and the organisation itself. Together, these create nine interconnected factors. Neglect any one of them, and the business risks failure.

Desirability involves understanding if customer needs are met, how appealing the offerings are, and how competitive you remain compared to rivals. Profitability depends on generating enough revenue, controlling costs, and having the bargaining power to balance what suppliers and customers demand. Longevity relies on maintaining or growing a customer base, keeping aspects of the business hard to copy, and preserving adaptability to weather unexpected changes.

All nine factors are linked, so a shift in one element may affect another. With imitability comes more competition. Cutting costs might reduce adaptability. Overlooking any box can lead to wasted effort, like building a product no one wants or allowing competitors to outmanoeuvre you.

Many familiar elements—technology, culture, processes—aren’t listed as separate boxes. Instead, they manifest through these nine factors. A new technology might lower costs or improve offerings but could also affect adaptability or brand experience. Culture might push a team to prioritise revenue over sustainability, or vice versa.

This perspective stresses balancing all nine factors rather than over-optimising one area. Success comes from seeing the enterprise as a whole and coordinating every effort toward strengthening these interconnected elements.

The Nine Boxes:

1. Customer wants and needs (desirability)
2. Rivalry (desirability)
3. Offerings (desirability)
4. Revenues (profitability)
5. Bargaining power (profitability)
6. Costs (profitability)
7. Customer base (longevity)
8. Imitability (longevity)
9. Adaptability (longevity)

Chapter 2: The Elements of the Grid

The framework breaks down business success into nine factors, each with three underlying elements that influence outcomes and shape decisions. Every factor interacts with the others, and neglecting one can undermine the whole.

• Wants and needs: values and beliefs, goals, barriers
• Rivalry: category, territory, alternatives/substitutes
• Offerings: proposition, brand appeal, customer experience
• Revenues: model, price, volume
• Bargaining power: customer leverage, supplier leverage, regulation
• Costs: fixed, variable, capital expenditure
• Customer base: awareness, acquisition, retention
• Imitability: legal protection, durable advantages, competitor lag
• Adaptability: cash reserves, scalability/capacity, complexity/rigidity

Chapter 3: Using the Grid in Practice

The grid can help in different situations: starting a new business, reviewing an existing business or even thinking decisions through. How you use the grid may differ:

New Business: A successful business is a unique configuration of the elements within the 9 boxes. Don’t neglect the whole and go too deep on one element. Consider each element in turn - starting with your customers’ wants and needs., then work down each column until you’ve covered all the bases. Process steps:

• List assumptions for each factor in the grid
• Test these assumptions directly (speak to customers, prototype, research costs)
• Check if all factors align to form a coherent, viable model
• Revisit until confident in desirability, profitability, and longevity

Reviewing an existing business: Whatever your goal, the logical starting point is understanding where you are now: your current strengths and weaknesses; areas of uncertainty or change and those of relative inactivity or stability. The gird provides a structured way to analyse a business. Process steps:

• Assess current strengths and weaknesses factor by factor
• Identify hidden problems or opportunities by examining each element thoroughly
• Explore how one change affects the others before taking action
• Prioritise improvements that deliver the greatest long-term benefit

For thinking decisions through: The grid helps evaluate new ideas and projects systematically. Drawing from Rumelt's "Good Strategy Bad Strategy", this process involves three key elements.

• The diagnosis: Define the challenge by identifying which grid elements need improvement (e.g., sales volumes, customer retention).
• The guiding policy: develop your approach to overcome the challenge (e.g., increased advertising, improved customer experience). Use the grid to assess each option's holistic impact across all elements, considering best, worst, and likely scenarios.
• Coherent Actions: Implement the policy or gather additional information to make an informed decision.

Process steps:

• Define which factor needs improvement
• Generate multiple possible solutions
• Run each solution through the entire grid for overall impact
• Choose the option that balances trade-offs and aligns with core goals

Part 2: Deep Dives

Wants and Needs

Understanding customers’ wants and needs is fundamental to the success of any venture. You need to know:

• Who are they? What are their values and beliefs?
• What are they trying to achieve? What are their goals?
• What’s standing in their way? What barriers do they face?

Values and beliefs determine what customers find appealing, and these are tied to their identity and social groups.

Goals guide why they choose certain products or services: their overarching super objectives, often subtler subtextual aims, and how they measure success.

Every product or service should be thought of as a means for the customer to achieve an objective. As marketing professor Theodore Levitt remarked, ‘People don’t want to buy a quarter-inch drill. They want a quarter-inch hole.’

Consider customer goals from three perspectives:

• the super objective: the overarching goal that drives all their other behaviour
• the subtext: what are they thinking but not saying? what goals didn’t they mention?
• the success criteria: how do you know if the customer has achieved their goals successfully

If your product or service is the answer, what is the question and who is asking it?

Barriers, meanwhile, stand in their way, ranging from operational and technological hurdles to experiential and financial obstacles. Recognising and dismantling these barriers is essential to driving adoption.

Responding effectively means understanding how customers define themselves, what they care about, and what needs changing to make an offering resonate. It means discovering their underlying motives, ensuring your solution fits their deeper aspirations, and making it effortless to adopt. By focusing on these factors, it’s possible to create offerings that align with customers’ values, help them achieve meaningful goals, and overcome any obstacles.

Key Questions

Values and beliefs

• How do customers describe or identify themselves?

· How can we reflect that image through our offerings?

• What values do your customers want to express through their product choices?

· What beliefs do they have about the category? · What beliefs do they have about your brand?

• What beliefs need to change for your offering to succeed? How will you do this?

Goals

• What are your customers’ super objectives?

• What hidden goals or subtext does your customer have?

• How do you know if your customer has achieved their goals successfully? What are their success criteria?

Barriers

• What equipment does your customer already have that you must work with? Does this make a barrier? What ways of working might your offering impact?

• Can you reduce the effort required to get customers started with your product or service?

• What financial barriers stand in your target customer’s way? Can you find a way to dismantle them?

Rivalry

The competition influence how we define our category, understand our territory, and identify alternatives and substitutes. When we appreciate these dimensions, we can spot opportunities, avoid becoming stuck in shrinking markets, and choose territories or product mixes that improve our odds. By analysing entry and exit barriers, clarifying our positioning, and watching how customers perceive what they get for what they pay, we gain strategic insight. Mapping the market, locating vacant positions, and understanding how shifting rivalries affect pricing and profits can guide more effective decision-making.

• Rivalry includes indirect competition and subtle shifts in power.

• Understanding your category means knowing the baseline features customers expect and how these expectations evolve. A clearly defined category helps customers compare you to known reference points and simplifies marketing. Category growth or decline influences how you invest in product development and positioning strategies.

Entry and exit barriers can keep some rivals out, but they can also limit your own flexibility.

Changing territory (geographical area) may open new opportunities or force revisiting pricing, logistics, and branding. Different territories have different norms, regulations, cost structures, and customer expectations.

Alternatives are direct rivals offering similar solutions; substitutes fulfil the same need differently.

Mapping rivals onto a “what you pay vs. what you get” grid reveals gaps and possible spaces to move into. Positioning is relative; what feels premium in one context can seem overpriced if a new competitor arrives. Customer perception of value depends on understanding their baseline for quality and price.

Strong alternatives or substitutes pressure you to differentiate or rethink your approach.

Rivals can set new standards that raise customer expectations for features, service, or price.

Ignoring shifts in demand, territory conditions, or substitute growth leads to missed opportunities. Keeping an eye on emerging competition helps you prepare for future threats or reposition proactively.

Sometimes multiple product lines within the same business can compete with each other, causing confusion. Cutting unnecessary options can clarify your offering, reduce complexity, and enhance perceived value.

Strategic focus, guided by an understanding of rival landscapes, avoids dilution of effort and wasted resources.

Key Questions

Category

• What categories do your products or services belong to? Are they clear to the customer?
• Is demand for the category growing or shrinking?
• What entry and exit barriers exist for the category? Are they changing?

Territory

• Is your territory large enough to support the business you want to run?
• Which territory would offer the greatest demand for your offerings?
• If you were to change or expand your territory, how might it affect the rest of the grid?

Alternatives and substitutes

• What are the direct alternatives your customers will choose between? What are their strengths and weaknesses?
• What substitutes do customers have? Are they a growing concern?
• Is your own range a problem? Can customers easily choose between your offerings?

Offerings

A successful offering integrates three interdependent elements—proposition, brand appeal, and customer experience. These must work together to provide value that resonates with customers’ values and goals, surpassing alternatives and creating memorable experiences that lead to loyalty and advocacy.

Proposition

• An offering's core is its proposition: a clear, concise statement describing why the product or service is a good choice.
• Offerings deliver various kinds of value: sign value (status and identity), functional value (help achieving goals), financial rationales (cost-benefit), quality, effort reduction, stress reduction, sensory pleasure, social appeal, control, and emotional appeal.
• Functional value ties directly to customer goals and success criteria, so understanding these is crucial for shaping features.
• Financial considerations influence how customers judge worth versus cost; balancing these with non-financial benefits can create stronger propositions.
• Quality reassures customers, reducing risk and increasing trust, especially if it lowers maintenance or replacement hassle.
• A strong proposition outperforms alternatives by being distinct, surpassing industry norms, and focusing on truly relevant benefits.
• Eliminating weak or irrelevant rationales and focusing on a few strong differentiators helps stand out from rivals.

Brand

• Brand appeal taps into emotions, identity, and social cues, shaping how customers perceive and remember the product.
• Sign value can set a product apart by reflecting customers' self-image or values.
• Sensory experiences can enhance a product's appeal. Design details, aesthetics, and branding cues reinforce overall quality.
• Social proof (endorsements, testimonials, reviews) boosts credibility and trust.
• Emotional appeal, from joy to relief, can transform functional products into cherished experiences.
• Aligning brand associations with the proposition and customer experience reinforces credibility and consistency.

Customer Experience

• Customer experience encompasses every interaction. Making these frictionless, memorable, and aligned with expectations is key.
• Effortless solutions and intuitive interfaces make customers feel competent and empowered, reducing cognitive load.
• Reducing stress and uncertainty (e.g., tracking deliveries, ensuring reliability) increases desirability.
• Control over usage—timing, settings, personalisation—fosters autonomy and satisfaction.
• Managing the "zone of tolerance" in customer experience—where interactions are adequate but not remarkable—creates opportunities to engineer positive peaks. Beginning and ending on a high will make your experience memorable.

A well-integrated approach ensures proposition, brand appeal, and customer experience reinforce each other, making it easier to exceed customer expectations.

Continuous refinement based on feedback and changing market conditions ensures the offering remains relevant and competitive.

Key Questions:

Proposition

• What aspects of existing alternatives can you improve upon, and will the target customer care?
• Is your combination of rationales sufficiently distinctive from those of your rivals?
• Where can you surpass industry norms? Where can you outperform alternatives?

Brand appeal

• What associations do you want people to have with your brand? What associations have they formed independently?
• Do you express your brand values consistently?
• Where are the gaps between your brand image and brand reality?

Customer experience

• Do your customers' journeys end on a high?
• How might setting better expectations improve customer satisfaction?
• If your customers were in charge for a day, what one thing would they change?

Revenues

Product success isn’t just about setting a price; it’s about choosing the right revenue model, managing price strategically, and growing volume in ways that strengthen both brand and profits. Think beyond cost-based or simplistic pricing tactics and look for opportunities to align pricing, revenue models, and volume targets with a product’s overall value proposition.

Profitability emerges when revenues consistently exceed costs.

Different revenue models (e.g., subscription, pay-as-you-go, licensing) must align with customer behaviour and product usage. A poorly chosen revenue model can limit desirability, brand appeal, and future flexibility.

Small price adjustments can lead to disproportionately large changes in profit. Value-based pricing focuses on what customers are willing to pay, rather than cost-plus or competitor-based methods. Pricing should be a strategic consideration early in product development, not an afterthought.

Ongoing price management (instead of "set and forget") adapts to market feedback and opportunities.

Avoid training customers to expect discounts; it erodes perceived value and long-term margins.

Clear value communication justifies prices and reduces price sensitivity or reliance on discounts.

Chasing market share at the expense of profit often backfires—quality revenue is more important than pure volume.Volume growth must fit the brand's position. High-end products might not benefit from selling more units if it dilutes exclusivity. Increasing volume involves identifying whether frequency, quantity, or new customer acquisition drives sustainable growth.

Use insights from the rest of the grid to pinpoint which factors (like customer experience or proposition tweaks) can boost volume.

Tailored offerings (e.g., multiple product versions at different price points) can capture different customer segments without losing brand integrity.

Improving customer experience increases conversions, thus raising sales volume without sacrificing brand or margin.

Awareness matters: even a great product struggles if customers don't know it exists.

Quick fixes like price slashes or aggressive promotions can undermine long-term strategy and brand perception.

Experimentation (e.g., A/B testing) reduces guesswork in revenue, pricing, and volume decisions.

Integrating revenue model choice, well-considered pricing, and volume strategies creates a balanced approach to lasting profitability.

Key Questions:

Revenue model

• Which revenue model is best suited to monetising your offering?

• What restrictions does your current revenue model put on your offering?

• How might your revenue model be limiting the desirability of your products or services?

Price

• Are you selling your product or service at the optimum price? How do you know?

• Do you manage prices on an ongoing basis, or set them and forget about them?

• How might discounting be impacting your profitability?

Volume

• Do your volume targets reflect your brand position?

• Which elements of the grid offer the greatest potential to increase your volumes?

• Do you have a broad enough range of metrics to identify the real opportunity areas?

Bargaining Power

Bargaining power— relationships with customers, suppliers, and regulators shape a company’s position. Both cooperation and competition matter, power is not just about immediate gains. Overusing leverage can lead to long-term harm, while thoughtful, fair interactions foster sustainable success. Bargaining power influences every part of the business and must be managed with both practical strategy and moral consideration.

Bargaining power is not static; it depends on factors like switching costs, product importance, and available alternatives. The more a customer contributes to your revenue, the stronger their negotiating position. If switching away from a supplier or customer is easy, your bargaining position weakens, and vice versa.

Highly important offerings (e.g., life-saving products, mission-critical tools) give you more power, but must still be handled ethically.

More competitors mean less leverage; scarcity of alternatives strengthens your position.

If customers or suppliers can perform your function themselves, your power erodes (e.g., they don't need you).

Diversifying your customer and supplier base reduces dependency and the risk of any one party dictating terms.

Regulations can shift power dynamics overnight, altering what's profitable, legal, or accessible.

Governments use rules, subsidies, taxes, and licenses to shape markets, influencing every box of your grid.

Bargaining power can also appear in unexpected places, like tax rules or intellectual property laws.

Building and maintaining trust with partners can yield better outcomes than squeezing them for short-term gain. Overplaying your hand may generate resentment, damaging brand reputation and future negotiations. True influence often comes from delivering genuine value and prioritising mutual benefit over exploitation. Ethical use of power means considering long-term consequences rather than just immediate profit.

Providing desirable offerings reduces buyer resistance and dependency on forceful tactics. Fostering a balance of cooperation and competition helps maintain stability in supplier and customer relationships. Avoiding monopolistic or overly dominant behaviour prevents backlash from both customers and regulators.

Adapting quickly to changing regulatory environments protects against sudden shifts in power.

Checking how power affects each element of the grid (from desirability to adaptability) can reveal hidden risks and opportunities.

Thinking ahead and nurturing a positive reputation means that when power shifts, partners remain willing to support you.

Key Questions

Buyer and supplier power

• Do you choose suppliers with bargaining power in mind?

• What factors are affecting your customers’ bargaining power?

• How might changing rivalry affect your bargaining power?

Rules and regulations

• How does the regulatory landscape impact each of the nine boxes of your grid?

• Are there any upcoming regulatory changes?

• How might they affect each of the boxes on the grid?

The power paradox

• Might your decisions be creating resentment amongst your buyers or suppliers?

• What might the long-term consequences be?

• Is the risk worth the reward?

Costs

Distinguishing between fixed and variable costs, setting targets, reducing waste, and making informed investment decisions can significantly improve the financial health of a product or service. Understanding cost structures allows you to influence pricing, volumes, and strategic positioning. The grid framework helps show how cost decisions interact with other business elements, ensuring that savings or investments support overall goals rather than undermine them.

Costs aren't just expenses; they shape what you can offer, how you price, and the volumes you need to achieve. Fixed costs (e.g., salaries, rent) remain constant regardless of production levels, while variable costs (e.g., raw materials) fluctuate with output.

Understanding the difference between fixed and variable costs is key to finding break-even points and assessing profitability scenarios. Reducing fixed costs increases flexibility and resilience, while managing variable costs helps maintain healthy margins.

Target costing involves setting production goals aligned with desired profitability, guiding design and operational decisions.

Eliminating waste (overproduction, waiting, defects) ensures that resources are spent on creating customer value, not inefficiencies.

Cost structure affects competitiveness; leaner operations can respond better to changes in demand or market conditions.

Tracking and understanding costs at a granular level helps identify savings opportunities and avoid guesswork. Regular reviews of cost structures can prevent the slow creep of unnecessary spending or "cost bloating." Lowering costs without hurting product quality or brand appeal is challenging but pays long-term dividends. Cost management isn't about slashing budgets arbitrarily; it requires strategic thinking to avoid undermining other parts of the business. Consider how changes in cost structure impact other grid elements, such as rivalry, adaptability, or imitability.

Simple tools like contribution margin analysis reveal how each sale contributes to covering fixed costs and generating profit. Outsourcing can change cost structures dramatically, but must be weighed against risks like reduced uniqueness or less control. Align capital expenditures (long-term investments) with strategic goals, using careful evaluation to ensure a good return.

Prioritising cost-reduction efforts based on impact and ease of implementation prevents wasteful resource allocation.

Accurate, timely financial data enables informed decisions, ensuring cost controls support rather than hinder innovation.

Thinking about constraints (like production bottlenecks) can help determine the smartest areas for cost-saving investments. An ongoing cost-conscious mindset, rather than periodic cost-cutting sprees, fosters a healthier, more sustainable operation.

Ultimately, cost decisions should enhance the overall customer experience and product proposition, not just margins.

Key Questions

Fixed costs

• What are the biggest fixed costs within the business and could they be reduced?

• Are headcount costs under strict control?

Variable costs

• Do you hold people accountable for cost reductions?

• Where could you eliminate waste from your operations?

Cost structures

• What is the optimum cost structure for your business, considering your offerings, price point and volumes? How might that change over time?

• How does your cost structure impact the other elements of the grid, like rivalry, imitability or adaptability?

• How might your current cost structure be limiting your strategic options?

Cost reduction

• Are your management accounts good enough for you to make informed decisions about costs?

• How might a decision to reduce costs impact the rest of the grid?

Capital expenditure

• What is the key constraint in your business? How would your investment impact it?

• What is the benefit of the expenditure? How does this translate into cash over the lifetime of the investment?

• What would the return on investment be?

Customer Base

Build and sustain a healthy customer base.

A customer base doesn't appear on its own; customers must first become aware of your product. Awareness means ensuring people know you exist and understand what sets you apart. Clear, compelling communication—often tested by a simple "logo swap" to see if it's distinctive—is crucial. Emotional appeal and a concise, memorable message help customers grasp why they should care.

Once aware, customers must be prompted to act; triggers, timing, and consistent presence all influence acquisition. Acquisition isn't just about one-time conversions; it's about understanding who buys infrequently and why.

Retention involves keeping customers satisfied so they don't leave for alternatives; loyalty is about minimising reasons to switch. Techniques to boost retention include loyalty programs, personalising the product, and reducing barriers to stay.

Emotional resonance can strengthen both acquisition and retention; customers often respond more to feeling than fact. Continuous presence and consistent brand messaging help engrain your offering in customers' minds.

Retention is not guaranteed by satisfaction alone; customers may still switch if a better alternative emerges.

Metrics are essential. Without measuring awareness, acquisition, and retention, you can't improve effectively.

• Tracking acquisition costs helps identify whether marketing spend delivers enough new customers to be profitable.
• Monitoring churn (retention rate) highlights if customers are leaving too quickly and can signal product or proposition issues.
• Customer profitability metrics show which segments are worth pursuing or retaining.
• Customer lifetime value (CLV) estimates the long-term financial contribution of each customer, guiding where to invest.
• Net Promoter Score (NPS) measures how likely customers are to recommend you, indicating potential word-of-mouth growth.
• Word of Mouth Index (WoMI) refines NPS by checking how likely customers are to discourage others, capturing hidden detractors.
• Acquisition and retention costs reveal if it's getting harder to gain or keep customers, indicating changes in market conditions.

By comparing these metrics over time, product managers can identify patterns, refine strategies, and find the biggest opportunities for growth.

Key Questions

Awareness

• Would you pass the logo swap test? Is your product easy to recognise?

• Can you clearly explain your product in a couple of sentences?

• Does your communication reinforce your rationales?

• Do your communications have an emotional appeal?

Acquisition

• Should acquiring new customers be a stronger priority for you?

• What proportion of your sales comes from light or infrequent buyers?

Retention

• What techniques will have the greatest impact on retention?

• Can you improve satisfaction enough to create true loyalty?

Acquisition and retention metrics

• Are you measuring the right things?

• What are the metrics telling you?

• Where do the greatest opportunities lie for your business?

Imitability

If customers value your product, competitors will try to copy it. A product’s long-term survival hinges on how hard it is to imitate. Consider imitability from the start: if a competitor can easily replicate your features, you’re vulnerable.

There are three broad strategies to reduce imitability:

• Legal protection (patents, trade secrets, copyrights, trademarks)
• Building durable advantages (unique cost structures, brand ecosystems, network effects)
• Maintaining competitor lag (constantly innovating so rivals chase a moving target)

Legal protections are complex but can deter copying. Patents and trademarks help establish IP rights, but they can be expensive and hard to enforce. Trade secrets keep valuable knowledge hidden internally. They avoid disclosure costs but provide no recourse if someone independently discovers your secret. Copyrights arise automatically for original creative works but can be tough to enforce, especially online. Trademarks differentiate your product and brand, aiding recognition and trust. Product managers should ensure their brand elements are distinct and protected. Managing IP well involves knowing what you own, clarifying who has the rights, and enforcing policies. This prevents internal confusion and missed opportunities. When choosing an IP strategy, product managers can fully exclude rivals, partially exclude (license), or grant open access to certain IP for strategic gain (e.g., creating a standard).

Durable advantages come from cost advantages, network effects, location, integrated systems, scale economies, and customer retention. Product managers should design products and ecosystems that are tough to replicate in full. Combining multiple durable advantages (e.g., a strong brand plus network effects) is more powerful than relying on one alone.

Competitor lag means staying ahead by constantly evolving. Firms that rest on their laurels become easy targets for copycats. Shifting the playing field—revenue models, product attributes, bundling/unbundling—can confuse and slow down competitors. Identifying future opportunities involves spotting the problems today’s solutions create and addressing them early, often through new technologies or business models.

In markets with network effects, early adoption and quick growth matter. The more users you have, the more valuable your product becomes, making latecomers struggle to catch up.

Product managers dealing with network effects must encourage easy onboarding, deliver a quantum leap in value, harness existing users to attract new ones, and scale community by community. Winning in a network-effect market often requires deep initial investment (e.g., subsidies to one side of the market) to jumpstart adoption.

The key to outlasting imitators is flexibility and the courage to pivot before others catch up. Ultimately, staying inimitable is not just about building legal and operational moats; it’s about staying nimble, addressing emerging customer problems, and evolving faster than competitors can respond.

Key Questions

Legal protection

• What intellectual property do you own?

• What policies or procedures protect your intellectual property? Do people follow them?

• Which IP strategy best serves your current goals? Full exclusion, licensing or open access?

Durable advantages

• Do you have a competitive advantage? If so, how durable is it?

• How might you combine the sources within the chapter to create a durable advantage over rivals?

Competitor lag

• How can you avoid going head to head with market leaders, so they will ignore you?

• Would bundling or unbundling make it harder for rivals to copy you?

• What problems are current popular products creating? How might you solve those?

Network effects

• Is the desirability of your offering impacted by network effects?

• How could existing customers help drive the growth of the business?

• Which communities should you target to generate early interest?

Adaptability

Adaptability in business is like surfing: you must anticipate and harness incoming waves of change rather than resist them. Markets evolve and learn to pivot quickly to avoid stagnation.

Maintaining sufficient cash is essential. Without cash, a business can’t seize new product opportunities or survive unexpected setbacks. Profit and cash flow differ: you can be profitable on paper but run out of cash. Consider free cash flow, not just profit margins. Working capital management is key: decisions about payment terms, inventory levels, or rapid product expansion can drain cash and limit adaptability.

Product teams should understand how their choices (e.g., adding product variants) affect cash flow and the firm’s ability to respond swiftly to trends.

Scalability and capacity matter. If you cannot scale production or distribution quickly, you’ll struggle to meet rising demand for a successful product.

Relying solely on efficiency can create rigidity. Product managers need slack (e.g., spare developer cycles or flexible suppliers) to accommodate new features or market shifts. Complexity in product or organisational structures reduces agility. As a company grows, it can become less responsive to user feedback and market shifts.

Companies move through phases: early dynamism, steady growth, eventual conservatism, potential decline, and finally the need for reorganisation. Product managers should recognise these phases and strive to stay lean and adaptive.

Past success often breeds complacency. Remain curious, open to criticism, and willing to retire outdated features or product lines. Over-optimism and dismissing new alternatives can prevent a team from adapting before competition overtakes them.

Always question your trajectory. Are you improving product fit or just refining what’s already working without planning for the future?

Don’t ignore early warnings. Even if a competing solution initially seems inferior, consider how it might improve and threaten your position.

Spend time with customers and frontline teams. Firsthand insights drive better product decisions and encourage timely course-corrections.

Continue developing new product ideas even when current offerings are at their peak. Future growth depends on early investments in next-generation solutions.

Experiment with multiple opportunities because not all will succeed. This encourages a portfolio approach rather than putting all eggs in one basket. Be willing to let go of failing products. Constructive abandonment frees resources for more promising projects.

Give new opportunities the structure and freedom they need. Don’t force them into existing cost or brand frameworks if that hinders their potential.

Ultimately, adaptability depends on aligning all elements (cash, capacity, complexity, strategy) so the organisation can respond quickly and effectively to change.

Key Questions

Cash position

• How might you improve your cash position?

• How can you reduce working capital?

• Are employees aware of how their decisions impact your cash position?

Scalability or capacity

• How easily can your business scale up or down?

• Is there enough slack in your operations to allow you to respond to change?

Complexity and rigidity

• What stage of the adaptive cycle is your business in?

• Does it look like you’re heading to the next?

Maintaining adaptability

• Are you falling prey to one of the four dangerous trajectories of the Icarus Paradox? If so, which one?

• Have you fallen into the trap of the first version – dismissing new alternatives because they lack the polish of your own?

• Should you be working on the next big thing already? If not now, when?