How to think about Product Strategy?

Let’s be real here. The word ‘strategy’ gets thrown around like confetti at a parade. Whether it’s a ‘tech strategy,’ ‘operations strategy,’ or ‘marketing strategy,’ it often feels like you’re about to dive into a never-ending presentation with a file name like ‘Strategy.pptx’ that boasts a staggering 30+ slides on just about everything under the sun.

And let’s not even get started on the enigma that is ‘Product Strategy.’ It’s like the holy grail of corporate mysteries. Everyone seems to have one, but do they really? Why does it usually boil down to a roadmap with a bunch of dates slapped on it? It’s a conundrum that’s puzzled me for a while.

So, what’s the deal with ‘Product Strategy,’ and why is it so darn elusive? To get some answers, I rolled up my sleeves, dove deep into the minds of the brightest folks in the product world, and put together this case study. My hope is that by the time you finish reading this, you’ll be able to toss around the term ‘product strategy’ with the confidence of a seasoned pro.

But before we dive in, I want to take a moment to say thank you for your support thus far. If you find this content helpful, feel free to show your appreciation by Buy Me a Coffee . Now, make sure your seatbelt sign is on because we’re about to take off.

Building the Product Strategy Definition

So, let’s start by admitting that trying to sum up ‘Product Strategy’ in one pithy line is a bit of a disservice to the concept itself. It’s a nuanced beast, and we’ll need to break it down step by step. So, grab your patience because we’re in for a ride:

1. For the big players out there, you’ve got your overarching company mission and vision. Then, at the business unit (BU) level, you might find a vision statement of its own. Sometimes, this BU vision can double as a product vision, but not always. In smaller organizations, product teams might craft their own vision, which could be derived from the company’s or BU’s vision but isn’t quite the same.
2. The size and stage of your company come into play when deciding whether to cook up a separate product vision or stick with the org’s or BU’s vision statement. Once you, as a product unit/tribe/pod, have your Product Vision locked and loaded, Product Strategy is the magic wand that helps you turn that vision into a reality.
3. So, what’s Product Strategy all about? It’s the answer to the question: “What approach do we take to make that Vision come to life?” In simpler terms, it’s all about deciding what problems to tackle, which bets to place (or not place), and the sequence in which we tackle those problems or bets. That’s the essence of ‘approach’ right there.
4. Now that we’ve built up our definition, where does ‘Product Strategy’ slot in? Well, it’s the missing puzzle piece that links your ‘Vision’ (whether it’s the company’s or the product’s) to your ‘Actual Plan’ — your roadmap with metrics. Often, people mix up Product Strategy with the ‘Plan’ (Roadmap/Metrics), but it’s a separate beast altogether.
5. If you don’t have a Product Strategy or, let’s say, you have a “Bad Product Strategy” (like a diet consisting entirely of pizza), then you’ll find yourself in a sticky situation. Your roadmap and metrics might be chugging along, everyone’s happy their features are getting delivered, but no one knows why that particular direction is the right one.

Presenting your Product Strategy

Now that we’ve got a handle on what Product Strategy is, it’s time to figure out how to convey it. In this section, I’ll share three of my favorite ways to do just that. But first, a few ground rules:

• Product Strategy must align with the company or product vision.
• It should consist of strategic bets that the product team needs to validate in order to inch closer to achieving the vision
• It should lay out ways to measure progress through iterative steps.

Method 1: Product Strategy Canvas — Melissa Perri

The concept we will be discussing today is the Product Kata by Melissa Perri.

When we are building products, we have a threshold of knowledge. We cannot start on Day 1 and exactly plan to reach our vision. There are too many unknowns and variables. Instead, we set goals along the way, and then remove obstacles through experimentation until we reach our vision.

This is best explained through an example, so we’re going to use Uber. Let’s pretend you’re a Product Manager working on the platform that allows drivers to sign up.

Vision Imagine you’re a Product Manager working on the platform that allows drivers to sign up for Uber. The CEO has boldly declared that Uber’s vision is to become the affordable and efficient alternative to both car ownership and public transportation. (This part is real; everything that follows is hypothetical).

Challenge So if we understand the Vision correctly, Uber wants people to use them as their sole source of transportation. They would first want to look at why other people are taking other transportation methods now instead of Uber. They may go out and interview people and find that in certain cities where Uber isn’t as popular, there is a very long wait time to get a car. They would compare this to other problems and determine how big it is in comparison. Let’s say it’s the biggest challenge at the moment. So the first goal they may want to tackle is decreasing the wait times in cities where it’s exceedingly long. Let’s say anything over 10 minutes on average is too long, and we want to decrease that down to 5 minutes or less, because we’ve seen in cities with those wait times, people are 80% more likely to use Uber.

This is now our Challenge: Decrease wait times in cities where it is over 10 minutes to less than 5 minutes by January 30, 2018.

Target Condition Now, as a Product Manager, your task is to dig deeper. What’s causing these excruciatingly long wait times? It might turn out that there simply aren’t enough drivers in those areas. This leads to your new metric of focus: the acquisition of new drivers.

Our goal for our team should be measurable and achievable, something like: We want to onboard at least one driver for every 50 people in each city by January 30, 2017.

The Product Kata consists of four main stages:

1. Understand the customer’s needs: It all begins with identifying the problems customers face and understanding their needs. This involves thorough research and analysis.
2. Set the product vision: The product vision is a beacon of light, a crystal-clear statement that outlines what the product is and how it will benefit the customer.
3. Identify the product goals: These are specific, measurable objectives that your product team must pursue to bring the product vision to life.
4. Create the product roadmap: The roadmap is like your treasure map, marking the path to success with specific features and functionalities that must be developed to achieve your product goals.

Method 2: Product Strategy Cycle — Roman Pichler

Building a product strategy can be challenging if the process is not carried out systematically. Instead of seeing strategy and execution as separate pieces of work carried out by different people, the two should be closely connected. To do this, a product strategy cycle can be implemented to systematically link the product strategy with the product roadmap, the product backlog, the development work, and the key performance indicators (KPIs).

The validated strategy forms the foundation for developing a realistic, actionable product roadmap. The roadmap, in turn, directs the product backlog and helps discover the right product backlog items. These are transformed into product increments and eventually a product.

Strategic decisions guide the implementation of product backlog items, and insights from the tactical work lead to changes in the product roadmap and strategy. This ensures consistent decisions, and it avoids a strategy-execution chasm where strategic and tactical decisions are disjointed. In the worst case, such a chasm results in the development teams doing a great job of building the completely wrong product.

Method 3: Product Strategy Stack — Ravi Mehta

The Product Strategy Stack is a framework for developing and executing successful product strategies, comprised of four layers:

• Company Mission — The world your company sees and the change it wants to bring to that world.
• Company Strategy — The logical plan you have to bring your company’s mission into being.
• Product Strategy — The logical plan for how the product will drive its part of the company strategy.
• Product Roadmap — The sequence of features that implement the Product Strategy.
• Product Goals — The quarterly and day-to-day outcomes of the Product Roadmap that measure progress against the Product Strategy.

An example of the Product Strategy Stack in action is comparing Quora and Google. Quora’s mission is to share and grow the world’s knowledge, while Google’s mission is to organize the world’s information and make it universally accessible and useful. Both companies have similar missions but operate out of completely different company strategies. Google’s strategy involves indexing the Internet to provide easy access to knowledge when a user searches for it, while Quora’s strategy involves accessing knowledge in a structured question-and-answer format. In turn, each company’s product strategy and roadmap are aligned with its respective company strategy.

Method 4: Strategic Choice Cascade — Roger Martin

Frequently, an organization’s decision-making process is influenced by its approach to strategy. While some organizations have a clear and structured strategy that empowers their managers to make informed and confident decisions, others do not. The difference lies in how an organization approaches strategy.

Despite the perception that defining a good strategy is difficult, it is actually quite simple. In essence, strategy is a set of integrated choices that enable a brand to uniquely position itself for sustainable competitive advantage and superior value creation. The key to crafting a successful strategy is to answer five fundamental questions in a logical sequence:

• What is the organization’s winning aspiration?
• Where will the organization play?
• How will the organization win?
• What capabilities are necessary?
• What management systems are required?

These choices and their interrelated connections can be viewed as a cascading process in which the choices at the top set the context for those below, and the choices at the bottom refine and influence those above:

1. What are our goals and aspirations? Becoming concrete about how success is measured. What exactly does the company or leadership want to achieve, and over what time period?
2. Where will we play? In which markets will we focus, where we know there are sufficient ideal customers for our current and future offerings? This could be segments of a market, industries, or geographic markets. Important: What are the 27 markets and customers we are choosing not to have as a focus?
3. How will we win in chosen markets? What aspects of our business will enable us to get customers to purchase from us? What is it about our offering that has sufficient perceived value, and how will we convince new customers? What will we choose not to do? [Note: This is often where companies can find new ways to innovate]
4. How will we configure it? How will we set up the business in order to achieve success? Which structures, assets, networks, processes, KPIs, and management frameworks will be used to track success?
5. What priority initiatives? Where are the gaps in our current business from where we are now to how we want to configure to achieve success? Which initiatives do we choose as having a higher priority now, and which current initiatives should be stopped as they are not contributing towards the future strategy anymore? What does our project and innovation portfolio look like?

Types of Strategy

1. Cost Strategy ?? Position your product as the ‘most value for money’ such that it can attract customers to try it. This is an easy way to acquire customers in a market where prices are in general high.
2. Differentiation strategy?? If you can’t acquire customers based on just the price, you could build differentiating value in your product (innovative features) such that customers want to try your product because of the additional value it provides. Set yourself apart.
3. Market-oriented strategy ?? This one is my favorite. In a world where ‘copying pricing and features’ has become easy, no one can beat a well-researched insight. This kind of strategy relies on great customer research to unearth truths that only your company knows, and hence you’re able to build or pivot into a direction that is unique i.e. feel the pulse of what the market wants.
4. Platform-based strategy ?? This strategy refers to creating a platform — rather than just a product — so that more products can be built on top of it OR more integrations with 3rd parties could be done to increase overall value.
5. Quality strategy ??? You could do the exact same thing that everyone is doing BUT with higher quality, reliability better customer service, great user experience, and functionality.
6. Time-based strategy ? Faster you roll out features and test your assumptions, the more competitive you stay in general. Companies that adopt this strategy quickly adapt to what user needs and hence keep on creating value.
7. Focus Strategy ?? Rather than addressing the same customer segments that your competitor is addressing, you could just focus on one niche and solve that persona’s problems only. This is a great way to gain the loyalty of the niche before expanding to others.
8. Service Strategy ? Some business models are more operational and customer service happy. You could differentiate your product in such industries by doubling down on your service offerings i.e. great customer service (pre and post-purchase), great logistics, great return process, and so on.

How do you know if you have a good product strategy?

Once you have defined /stated/ written your product strategy, it is worth doing some ‘quality checks’ on it. Here are some questions you could ask yourself these questions:

1. Does the Product Strategy remain constant in the short and medium term (Up to 1 year at least)? (While still being open to evolution in the super long term i.e 2nd and 3rd year onwards)
2. Was the Product Strategy developed in collaboration with diverse stakeholders?
3. Did the Product Strategy have customer’s needs at the center, even before business goals?
4. Does the product strategy answer how to reach the Vision? and ALSO informs product teams how to prioritize their ‘Plan = Roadmap + Metrics’ + and what NOT to prioritize.

If the answer to all of the four above is YES, you have got a great product strategy going!

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