{"id":2418212,"date":"2021-11-04T11:51:45","date_gmt":"2021-11-04T15:51:45","guid":{"rendered":"https:\/\/www.valuewalk.com\/?p=2418212"},"modified":"2021-11-04T11:51:45","modified_gmt":"2021-11-04T15:51:45","slug":"why-we-need-radical-product-thinking","status":"publish","type":"post","link":"https:\/\/www.valuewalk.com\/why-we-need-radical-product-thinking\/","title":{"rendered":"Why We Need Radical Product Thinking"},"content":{"rendered":"<p>A <a href=\"https:\/\/www.valuewalk.com\/teslas-fsd-software-revolutionary-or-vaporware\/\">vision-driven<\/a> product begins with a clear picture of the change you want to bring to the world. This vision must then permeate every aspect of the product\u2019s design.<\/p>\n\n\t<div id=\"MG-placeholder\">\n\t<style>.first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important}\n\n\tform.ebook-styles .error,\n\tform.ebook-styles #error {\n\t\tcolor:#d00;\n\t}\n\tform.ebook-styles .formfields h1,\n\tform.ebook-styles .formfields #mg-logo,\n\tform.ebook-styles .formfields #mg-footer {\n\t\tdisplay: none;\n\t}\n\tform.ebook-styles .formfields {\n\t\tfont-size: 12px;\n\t}\n\tform.ebook-styles .formfields p {\n\t\tmargin: 4px 0;\n\t}\n\t<\/style>\n<div style=\"background:#eee;display:block;overflow:hidden;margin-bottom:24px;padding:40px;\">\n<div class=\"two-thirds first\">\n<p style=\"font-size:22px;margin:0 0 10px;\">Get The Full Ray Dalio Series in PDF<\/p>\n\t<p style=\"line-height:1.4;margin-bottom:0;\">Get the entire 10-part series on Ray Dalio in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues<\/p>\n\t<form action=\"https:\/\/valuewalk.us4.list-manage.com\/subscribe\/post?u=c3eb7a1d092fc854772c834e0&amp;id=f6f5bdb8b5\" method=\"post\" id=\"mc-embedded-subscribe-form\" name=\"mc-embedded-subscribe-form\" class=\"validate\" target=\"_blank\" novalidate>\n <div id=\"mc_embed_signup_scroll\">\n \n\t\t\t\t<div class=\"af-element mc-field-group \">\n\t\t\t\t\t<div class=\"af-textWrap c1\"><input type=\"email\" value=\"\" placeholder='Email Address' name=\"EMAIL\" class=\"required af-element email\" id=\"mce-EMAIL\"><\/div>\n\t\t\t\t\t<div class=\"af-clear\"><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"af-element buttonContainer\">\n\t\t\t\t\t<input type=\"submit\" value=\"Subscribe\" name=\"subscribe\" id=\"mc-embedded-subscribe\" class=\"button\">\n\t\t\t\t<\/div>\n \n \n\t<div id=\"mce-responses\" class=\"clear\">\n\t\t<div class=\"response\" id=\"mce-error-response\" style=\"display:none\"><\/div>\n\t\t<div class=\"response\" id=\"mce-success-response\" style=\"display:none\"><\/div>\n\t<\/div>    <!-- real people should not fill this in and expect good things - do not remove this or risk form bot signups-->\n    <div style=\"position: absolute; left: -5000px;\" aria-hidden=\"true\"><input type=\"text\" name=\"b_c3eb7a1d092fc854772c834e0_f6f5bdb8b5\" tabindex=\"-1\" value=\"\"><\/div>\n    \n    <\/div>\n\t<\/form>\n\t<script type='text\/javascript' src='\/\/s3.amazonaws.com\/downloads.mailchimp.com\/js\/mc-validate.js'><\/script><script type='text\/javascript'>(function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true);<\/script>\n<\/div>\n<div class=\"one-third\">\n<img decoding=\"async\" src=\"https:\/\/www.valuewalk.com\/wp-content\/uploads\/2021\/10\/Ray-Dalio-1.jpg\" alt=\"Ray Dalio eBook\" style=\"width:100%; height:auto\">\n<\/div><\/div><\/div><!-- End Mailigen Signup Form -->\n<p style=\"text-align: center;\"><a href=\"https:\/\/valuewalkpremium.com\/q3-2021-hedge-fund-letters\/\" target=\"_blank\"><em><strong>Q3 2021 hedge fund letters, conferences and more<\/strong><\/em><\/a><\/p>\n<div class=\"ca-widget\" data-token=\"m4bce0adee6c\"><\/div>\n<p><script async defer src=\"https:\/\/secure.money.com\/embeds\/embedder.js?v=1\"><\/script><\/p>\n<h2>Tesla\u2019s Model 3 vs GM\u2019s Chevy Bolt<\/h2>\n<p>For a great case study on how a vision-driven product is fundamentally different from an iteration-led one, consider the comparison between Tesla Inc (NASDAQ:TSLA)\u2019s <a href=\"https:\/\/www.valuewalk.com\/consumer-sentiment-changing-towards-electric-vehicles\/\">Model 3<\/a> and General Motors Company (NYSE:GM)\u2019s Chevy Bolt. Sandy Munro, a well-known automotive expert, shared a detailed comparison of the Model 3 and the Bolt after taking apart the two cars and painstakingly analyzing each component. Munro summarizes his findings in an <em>Autoline After Hours <\/em>interview, describing the Bolt as a \u201cgood car.\u201d But he was far more excited by the Model 3. \u201cTesla has the best design for electronics, the best harness design, the best driving experience, the best motor. . . . Everything apart from the skin is brilliant.\u201d His only criticism of the Model 3 was the body\u2014an area where Tesla has admitted to having problems.<\/p>\n<p>Munro gives an example of <a href=\"https:\/\/www.valuewalk.com\/tesla-stock\/\">Tesla<\/a>\u2019s vision-driven innovation: a smaller, cheaper, and more powerful engine. He says he had heard about the Hall effect in electric motors, which can make the motor 40 percent faster, but had never seen it used in electric vehicle (EV) engines. In his teardown comparisons to date, Tesla was the only carmaker using the Hall effect for its engine. It required Tesla to invent a new manufacturing process to glue together magnets of opposing polarity under high stress. Munro had never seen anything like Tesla\u2019s magnets before and couldn\u2019t figure out how anyone could mass-produce them.<\/p>\n<p>Compare that to his description of the approach GM took to build the Bolt: \u201cGM doesn\u2019t have a lot of money to spend on designing every vehicle from scratch. So they started with a Spark chassis, outsourced the battery, and got a car to market quickly.\u201d GM was iteration-led and found a local maximum in the Bolt.<\/p>\n<p>The difference between how Tesla and GM approached the race to build commercially viable electric cars is evident in the vision behind these two cars. Tesla\u2019s Model 3 was driven by a radical vision of building an affordable car that didn\u2019t require a compromise from the driver to go \u201cgreen.\u201d When GM designed the Chevy Bolt, it was driven by the vision of beating the Tesla Model 3 to market with an EV that would have a range of more than 200 miles between charges.<\/p>\n<h2>Radical Product Thinking<\/h2>\n<p>Tesla designed the Model 3 as a mechanism to create the change it wanted to bring to the world (accelerating the transition to electric cars by making them more affordable)\u2014that\u2019s Radical Product Thinking. This clear purpose was translated into every aspect of the car. One team designed a more efficient electric motor using the Hall Effect; another designed a new magnet with varying polarities; another figured out a process to manufacture this innovative magnet. The connection across these roles and tactical activities is that the items were all thinking about a radical product, driven by a common vision. As Munro summarized his view on the Model 3, \u201cThis car is totally different. This is not inching up. This is revolutionary.\u201d<\/p>\n<p>Thinking radically about a product is often reflected in the organization\u2019s structure. Take the cooling system in the Model 3, a single system that cools the entire car, including the batteries, cabin, and motor. It was designed as a single system to be as efficient as possible. In the Bolt, as in traditional cars, separate systems cool the different areas of the car. As Munro points out, at <a href=\"https:\/\/www.valuewalk.com\/worm-capital-3q21-commentary-the-aggregation-of-marginal-gains\/\">GM<\/a>, each of these systems is someone\u2019s domain and fiefdom. While creating a single cooling system has been talked about a lot in Detroit, it would require \u201ccrossing over too many lines.\u201d At Tesla, the radical vision transcended organizational boundaries.<\/p>\n<p>GM was able to find local maxima\u2014it got a new model to market quickly, and it was a pretty good car at a lower price point. But Tesla found the global maximum, a breakthrough vehicle that has been outselling the Mercedes C-Class, BMW 3 Series, and Audi A4 combined.<\/p>\n<p>Tesla used iterations to <em>refine <\/em>how to get where it was going. Tesla\u2019s first iteration, the Roadster, ran on battery packs made of 6,831 off-the-shelf lithium-ion cells used in laptop batteries. Today Tesla\u2019s Model 3 battery packs contain cells that were developed by the company with Panasonic. Munro views Tesla\u2019s batteries as the best among the EVs\u2014they provide the longest range and fastest charging times while occupying the least space. The company continues to iterate on its product. Tesla has acknowledged issues in manufacturing the Model 3 and continues to improve the design of the body and manufacturing processes.<\/p>\n<p>GM, in contrast, used iterations to <em>define <\/em>where it was going. By starting with the same chassis as the Spark, even the same layout of the engine in the front, GM was preserving what it knew best (gasoline cars) and guaranteed that the Bolt would be evolutionary but not revolutionary.<\/p>\n<h2>GM Launched Its First EV Well Before Tesla<\/h2>\n<p>\u201cBut wait,\u201d you might say, \u201cTesla had a lead on EVs. Given more time (and iterations), wouldn\u2019t GM have found the same global maximum that Tesla found?\u201d Fortunately, we can use historical evidence to answer this question: coming up with a visionary solution wasn\u2019t a matter of iterating for long enough. It turns out GM had launched its first electric vehicle, the EV1, in 1996, well before Tesla was conceived.<\/p>\n<p>GM leased the <a href=\"https:\/\/www.valuewalk.com\/kevin-decamp-100-bagger-tesla\/\">EV1<\/a> as a market test to customers in California, who loved the product. In fact, when GM wanted to shut down the program, citing liability issues and discontinuation of parts, customers sent checks to GM asking to buy their leased cars at zero risk to the company. GM didn\u2019t even have to commit to servicing the cars\u2014 their owners wanted to keep using them regardless! GM returned the checks and chose to shut down the product line because an electric car has fewer moving parts and requires fewer parts to be replaced in the car\u2019s lifetime\u2014the EV1 would have cannibalized the spare parts business.<\/p>\n<p>While GM had come up with an EV well before Tesla, their iterations weren\u2019t vision-driven and it settled for the local maximum. Ironically, GM\u2019s cancellation of the EV1 program led Elon Musk to start Tesla and eventually build the visionary Model 3.<\/p>\n<h2>Tempting Local Maxima<\/h2>\n<p>Despite their shortcomings, local maxima are often tempting because they can help you optimize for your corner of the chessboard. They can help you maximize profitability and business goals in the near term, as GM did by scuttling its EV program.<\/p>\n<p>Since the 1980s the ideology of shareholder primacy, where a company\u2019s primary goal is to maximize <a href=\"https:\/\/www.valuewalk.com\/returning-shareholder-value-during-crisis\/\">shareholder value<\/a>, has become entrenched in business culture. Academics argued that managers would best serve companies (and society) by working to maximize shareholder value. Often this means delivering financial results every quarter to meet shareholders\u2019 expectations of profits and growth\u2014 you\u2019re incentivized to optimize for just a few pieces on the chessboard.<\/p>\n<p>Startups too have similar incentives for a short-term focus. To demonstrate progress to investors and raise your next round of funding, you need to show quick results in terms of financial metrics or key performance indicators (KPIs), for example, the number of users, revenues, and growth. Irrespective of the size of the organization, the success of a product is typically measured on a single dimension: financial KPI.<\/p>\n<p>Reprinted from <a href=\"https:\/\/www.amazon.com\/Radical-Product-Thinking-Mindset-Innovating\/dp\/1523093315?tag=valuewalkllc-20\" rel=\"nofollow\" target=\"_blank\">Radical Product Thinking<\/a> with the permission of Berrett-Koehler Publishers. Copyright \u00a9 2021 by R. Dutt.<\/p>\n<hr \/>\n<p>About the Author<\/p>\n<p><a href=\"https:\/\/www.radicalproduct.com\/\" rel=\"nofollow\" target=\"_blank\">Radhika Dutt<\/a> is the author of <em>Radical Product Thinking: The New Mindset for Innovating Smarter<\/em>. An entrepreneur and product leader, she has participated in four acquisitions, two of which were companies that she founded. She has built products in industries including broadcasting, media, advertising technology, government, consumer, robotics, and wine. Dutt advises organizations from high-tech startups to government agencies on building radical products that create a fundamental change instead of optimizing the status quo. She also teaches entrepreneurship and innovation at Northeastern University\u2019s D\u2019Amore-McKim School of Business. Dutt cofounded Radical Product Thinking as a movement of leaders creating vision-driven change and is a frequent speaker at business events and conferences around the world. She graduated from MIT with a bachelor\u2019s and master\u2019s degrees in electrical engineering and speaks nine languages, currently learning her tenth.<\/p>\n ","protected":false},"excerpt":{"rendered":"<p>A vision-driven product begins with a clear picture of the change you want to bring to the world. This vision &#8230; <a title=\"Why We Need Radical Product Thinking\" class=\"read-more\" href=\"https:\/\/www.valuewalk.com\/why-we-need-radical-product-thinking\/\" aria-label=\"More on Why We Need Radical Product Thinking\">Read more<\/a><\/p>\n","protected":false},"author":21915,"featured_media":2069966,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"no","_lmt_disable":"no","_mi_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[7],"tags":[122574,647864],"states":[],"acf":[],"modified_by":"Umair Tariq","_links":{"self":[{"href":"https:\/\/www.valuewalk.com\/wp-json\/wp\/v2\/posts\/2418212"}],"collection":[{"href":"https:\/\/www.valuewalk.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.valuewalk.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.valuewalk.com\/wp-json\/wp\/v2\/users\/21915"}],"replies":[{"embeddable":true,"href":"https:\/\/www.valuewalk.com\/wp-json\/wp\/v2\/comments?post=2418212"}],"version-history":[{"count":0,"href":"https:\/\/www.valuewalk.com\/wp-json\/wp\/v2\/posts\/2418212\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.valuewalk.com\/wp-json\/wp\/v2\/media\/2069966"}],"wp:attachment":[{"href":"https:\/\/www.valuewalk.com\/wp-json\/wp\/v2\/media?parent=2418212"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.valuewalk.com\/wp-json\/wp\/v2\/categories?post=2418212"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.valuewalk.com\/wp-json\/wp\/v2\/tags?post=2418212"},{"taxonomy":"states","embeddable":true,"href":"https:\/\/www.valuewalk.com\/wp-json\/wp\/v2\/states?post=2418212"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}