McKinsey has analyzed 2,400 of the largest companies over the past fifteen years and calculated the relative impact of forty variables on outsized growth in economic profit. Economic profit is a function of ROIC and revenue growth, the twin strategic and financial goals for any company, as discussed in the prior article.

1) Strong R&D investment

If you’re in the top 50th percentile of all companies in your industry in the ratio of R&D to sales, you have a 21% chance of moving from the middle of the pack to the top quartile of performers. In terms of raw ability…


And they both matter about equally

In discussions I’ve had, there has been disagreement about the right goals to set for companies; therefore, there’s been disagreement about the role that strategy should play.

Two of the most common mentalities I’ve come across are “let’s skip any real innovation investments — we need to improve the bottom line this quarter” or, “let’s grow revenue at all costs.” Both are wrong and both represent a loss of focus on the right long-term goal.

The goal of companies = long-term value creation driven by solid strategy.

Long-term value creation is a function of…


Which Ones Do You Have? Are You Maximising Your Use of Them?

The money was there, all that latent power… something waiting to be born, something sleeping. He cradled the unformed dream in his hands and wondered who to give it to.

— Ben Fountain, Brief Encounters with Che Guevara

Sources of advantage are a major component of Step #3 of the “4 Steps to Develop a Strategy”. As I wrote there, “true sources of advantage are ones you can invest in and they become stronger over time. As you increase their value, you can then leverage them for more products, which further strengthens them.” In other words (with apologies to bank…


It’s been my experience that you learn much more when serving your first couple of clients that any other point in your product’s or company’s trajectory.

Before we signed our first customer in a recent company of mine, for example, we had a data request with clean columns in a well-thought out layout. But when the first data came in from our pilot sites, our grand visions immediately deflated in exasperation. Whatever product connectors we had built had to be rebuilt. …


Lessons for founders, startups, and entrepreneurs on what a strategy is and how it can evolve

Image by author

This example is from Jessica Livingston’s interviews with startup founders, Founders at Work. What her interviews reveal overall is that buyers, value pools, and approaches can change in startups’ early days as founders validate market needs and better assess their abilities to serve those needs.

It’s clear that most founders think deeply about the buyer, the value pool, their unique approach to addressing it, and make conscious decisions to evolve the elements as needed. In contrast, the technological insight and/or the source of differentiation / competitive advantage they leverage tends to remain constant throughout the evolutions.

PayPal is an interesting…


This is Part 17/18 in the series “How to Build an Innovative New Product or Company” on the topic of how to scale up a product and company that is working for its early customers

Scaling has many challenges, but they are ones you might call “champagne challenges”. Not dissimilar from diamond earrings scratching your new iPhone, scale challenges are the function of some success.

Humans do a particularly terrible job scaling things that work in small quantities. …


Image: FreeImages.com Content License

This is Part 18/18 in the series “How to Build an Innovative New Product or Company,” on the topic of how to measure the value and ROI your product is having for your buyers and users.

Consider a product that helps prevent patient falls in a hospital. It is a bed alarm that alerts the nurse when a patient is shifting their weight, so the nurse can assist the patient who may be trying to stand up, thus reducing the risk a fall will occur.

Further imagine that, before implementing “Fall Safe,” a particular hospital had 5% of patients fall…


From a users’ perspective, the value in having the messages they experience from your website and other places in the marketing and sales process aligned to what they experience when they use your product is self-evidently valuable. It’s one of the most powerful ways to encourage usage and adoption.

But as a business builder, thinking through the long arc of the story and making sure you are using the best ideas from each step throughout will help you organize your team’s thinking around a consistent direction.

In my current company, we built our marketing and sales materials early on. We…


Image: Ricardo Arce on Unsplash

This is Part 16/18 in the series, “How to Build an Innovative New Product or Company,” on the topic of using quarterly, bottoms-up, transparent objectives and key results (OKRs) as an organizing principle.

OKRs are a simple data-driven organization platform created by Andy Grove of Intel and championed by Google, among many other well-organized companies in recent years. John Doerr was the glue between Grove and the rest of us, and Doerr has been OKR’s greatest evangelist. I collected many of the ideas here from his book, Measure What Matters. …


Source: Gerd Altmann from Pixabay

This is part 15/18 in the series “How to Build an Innovative New Product or Company” on the topic of engaging your users’ “fast systems” to transition from occasional to continual usage of your product.

A recap of a point I made in step No. 4 of the Four Steps to Develop a Strategy:

Let me be clear: No user will use your product unless it helps them solve a problem or accomplish a critical job they are trying to solve (even if it solves a buyer’s problem, and the buyer is their boss). To get product usage, you need…

Tim Darling

I’ve spent the last 15 years building new products and companies using a combination of data/analytics/AI and strategy.

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store