Earlier this year, I was invited to audit a well-known product company. I began by asking the CEO: Which organizational capabilities do you see as most critical for your strategy? He named:
- Encouraging and creating breakthrough innovations.
- Launching cutting-edge products.
- High adaptability
- Diverse product lines.
- Short time-to-market for new products
Clearly, the company's strategy focus was product-.
What the audit revealed
Then we interviewed many team members. Here are some quotes we heard:
- Team Lead: “My goal is that teams commit and deliver what they promised.”
- Product Owner: “Teams must perform, do what they are committed to.”
- Scrum Master: “Team performance commitments are not met.”
- Developer: “When I asked ‘What is the strategy?’ they answered, ‘Well, the backlog is big — what other strategy is needed?’”
From inside, the company operated with an operational focus, even though the CEO proclaimed a product-centricity. When teams are pressured for predictability and increased velocity innovation is often squeezed out. Without psychological safety and room for failure, innovation can’t thrive.
The trap many strong companies fall into
I’ve seen this pattern often: organizations trying to be all things at once — product-led, customer-led, and operationally excellent. This conflict of strategic focus often leads to internal contradictions and frustration.
To understand why, let’s recall the concept of three strategic focuses from The Discipline of Market Leaders that we used in our approach Creating Agile Organizations.
Three Strategic Focuses
Every commercial organization tends to lean toward one of these:
- Product-centric — excel at products, best features, shortest time to market. Value comes from innovation and differentiation. Examples: Apple, Dyson, P&G.
- Operationally-centric — excel at efficiency, reliability, cost, and consistency. Value comes from low cost, quality, streamlined processes. Examples: McDonald’s, IKEA, Toyota.
- Customer-centric — excel at understanding and serving customers deeply, building relationships and loyalty. Value is in tailored solutions and retention. Examples: IBM, Ritz-Carlton, USAA.
You can’t be best at everything
I see with many clients a push to succeed in all three domains. But true leadership comes from choosing one and committing to it. Tracy and Wiersema studied 160+ companies and concluded:
“Companies that try to excel in all domains often end up excelling in none.”
The conflicts that derail strategy
When you try to combine conflicting focuses, bad things happen:
- If you demand efficiency in a place that needs innovation, you kill experimentation.
- If you try to custom-serve every client while pushing for standard products, you lose your uniqueness.
- If you emphasize cost reduction while also chasing product innovation, you bleed margins trying to customize.
Let’s examine real-world cases.
Prediction kills innovation: 3M
In the early 2000s, 3M adopted Six Sigma deeply — not just in operations but in R&D. Researchers were forced to use metrics, reports, planning, and control even in early experimental stages. The result: the share of revenue from products newer than 5 years fell from roughly 30% to ~21%. Innovation was stifled, and the company had to later relax Six Sigma rules in R&D to restore creative space.
The “Spotify model” disaster: McKinsey
One of the most cited failures is the Spotify model push — a case where McKinsey, despite being a customer-centric consultancy, tried to sell a one-size-fits-all model to clients. Many organizations adopted it blindly as a template. But Spotify many times admitted no fixed model ever existed — it was a set of evolving practices adapted to context. The result: organizations got org theater — labels and roles without much value.
“Adult” burger vs brand DNA: McDonald’s
In 1996, McDonald’s launched Arch Deluxe, a burger targeting adults, with a $200–300M marketing blitz. They tried to shift toward premium, forgetting their brand and operations were built on mass, speed, affordability. It flopped, and the product was pulled by 2000. This is a prime example: attempting to marry multiple strategic focuses can destroy the foundation of your success.
Conclusion
If your strategic focus is unclear — or worse, internally conflicting — your organization spends energy fighting itself rather than growing. Every decision should reinforce your chosen discipline, not dilute it.