Plan at the Right Level (Device, Product, or Business)

Underplanning is a common failure mode in high-tech. Companies often plan at the wrong level, dramatically underestimating the resources required for success. It is critical to match the type of plan to the scope of the challenge.

There are three distinct levels of planning:

1. Device Plan

• Scope: Plans only the technical characteristics of a device.
• When to Use: Appropriate for simple additions to a product family that will be sold to an existing customer base through existing channels.
• Danger: Completely inadequate if the product is going to a new market segment.

2. Product Plan

• Scope: Consists of a device plan plus a thorough marketing plan. It details how the product will be differentiated, positioned, promoted, distributed, priced, and serviced for a new market segment.
• When to Use: Necessary when selling a product to a new but adjacent market segment that requires some reorganization of sales channels and a new brand image.
• Danger: Inadequate if the market segment is distant and requires entirely new infrastructure.

3. Business Plan

• Scope: A complete plan that accounts for the millions of dollars required to establish entirely new sales and distribution channels, build a new support infrastructure, and create a new brand image from scratch.
• When to Use: Essential when entering a market segment that is far from the ones the company traditionally serves.
• Danger: Companies often don't realize they are entering a new "business" and mistakenly use a device or product plan, leading to failure. See Market Development Costs Can Dwarf R&D Costs.