Product Strategy as an enabler to highly aligned, loosely coupled teams (5/n)

I've finally mustered the courage to write about one of my favourite topics - product strategy (along with product discovery and decision-making) - and interestingly enough, the trigger point was the last episode on Barry O'Reilly's podcast Unlearn, where he spokes with Jeff Gothelf about making your resources available, so the more you offer the more you will receive.

The reason I mentioned the above is for 2 reasons:

1. I'm not an expert on this topic, but like many readers, I've been part of teams that had the responsibility of crystallising a product strategy defined by others. Nonetheless, throughout my career, I've deliberately tried to foster the enthusiast skepticism within the team to ask the right questions, with the aim of connecting the product strategy with the work the team is doing
2. I'm not going to reinvent the wheel, but I would like to offer a point of view where I combine different well-known leaders' point of view that hopefully you can take and start applying in your own job

TL;DR:

• Cohesion: The sum should always be greater than the parts. Your strategy should be a cohesive story starting from the Business Impact and Customer outcomes, followed by "The Work" teams do. All three fit together and they build on top of each other
• Coherence: Make sure your strategy is externalised so that product team knows how "The Work" they are doing is connected to "Customer Outcomes" and "Business Impact"
• Tradeoffs: Clearly define the parameters of your product strategy – learn how to say no in order to set obvious boundaries and avoid bloat
• Intent: Be humble enough admitting you don't know the future, so be ready to adapt your thinking along the way (be comfortable with being uncomfortable)
• Activities: Culture eats strategy for breakfast, but without strategy you risk starving (having a clear product strategy supercharges your efforts). Be crisp defining your unique activities (unfair advantage) and your similar activities (things you must do)

I'm going to assume..

• your team is staffed with competent people with the necessary range of skills
• some sort company and product strategy has been defined, although you might not be part of defining it, rather you're at least responsible of executing it

1. The misunderstandings about Strategy

Once upon a time, there was a boss who ran a company, who showed up the first day of the year, with a one year budget and mandate all their departments - or silos - to execute upon his orders. Although this may resemble some history of the medieval times, with knights, merchants, and dragons; there are companies who are comfortable playing the game of certainty (around how to win the game) and punishment (if you don't execute as it was told you to).

I don't need to tell you and you have probably figured it out already that there is something fundamentally wrong with that approach. You might say (applying the previous analogy to organisations), that nowadays, CEOs don't make decisions about strategy in a vacuum, they surround themselves with the most capable executives, CPO, CTO, CMO, you name it, and define the strategy. Also, they are aware of the imperious need from product teams of being impeccable at execution - which is another way to say they need to deliver it. With all of this being true, the reality tells us another story.

As you may start noticing, both efforts, defining and executing must go hand in hand. On one side. the fact that companies define a poor (or don't even have) product strategy, as Marty Cagan well said, generates two results: "there is a depressing amount of wasted effort; and second, they are not putting enough concentrated brain power behind the most important things in order to achieve the results their company needs.". On the other side, even if you focus on the most important things, if you don't have the muscle to make it real and concrete, it's just wishful thinking.

1~ One of the common misconceptions I've seen when executing a product strategy, as the concept of empowered teams spread across, has been outlined in the book The Art of Action. In the 2nd chapter of the book Bungay explains that there is a concept that manifests itself - call Friction - when human beings with independent wills try to achieve a collective purpose in a fast-changing, complex environment where the future is fundamentally unpredictable (Does this ring a bell?)

Friction gives rise to three gaps: the knowledge gap, the alignment gap, and the effects gap

The instinctive reaction to the three gaps from our CEO of the previous example, would be to instruct their Product Managers to demand more detail. We gather more data in order to craft more detailed plans, issue more detailed instructions, and exercise more detailed control. This not only fails to give latitude to the team to execute the product strategy and provides the safety space to come up with ideas to implement it, it usually makes it worse.

2~ The second, and not least important misconception is the following one: imagine for a moment that you grant to your teams the autonomy to make your product strategy real and the freedom and independent thinking to adjust if something goes awry. Nonetheless we are assuming they know what we must achieve and why.

Most of the time, when you ask your executives, What is your product strategy? The typical answer is wish list of features like:

• To create [platform | backend | front | script] that allows the user to [feature | capability]

Most companies, as Melissa Perri well said, fall into the trap of thinking about product strategy like a plan written in stone to build certain features and capabilities. The problem is that when we treat a product strategy like a "static" plan, it will almost always fail. Plans do not account for uncertainty or change. They give us a false sense of security. “If we just follow the plan, we’ll succeed!”

These product initiatives aren’t bad, they are just communicated at the wrong time and with the wrong intentions. When we lock ourselves into planning to build a set of features (ehem, Roadmaps), we rarely stop to question if those features are the right things to build to reach our goals. We stop focusing on the outcomes, and judge success of teams by outputs. - Melissa Perri

Unfortunately, there is no guarantee of success here.

So, what now?

2. The (most accurate) definition

Now that we have outlined the most common misconceptions about strategy, I would like to give it try at having a common definition to thing about product strategy. There are many definitions out there, more than the ones i can account for, I've collected the ones (including the source) with the aim of clarifying the previous mentioned misunderstandings:

“A good strategy is a coherent mix of policy and action designed to surmount a high-stakes challenge.” - Richard Rumelt

"A route to continuing power in a significant market - Hamilton Helmer"

“How will your product delight customers, in hard to copy, margin-enhancing ways?” - Gibson Biddle

"Strategy is a framework for decision making, a guide to thoughtful purposive action" - Stephen Bungay

If you reflect a little bit on all definitions, especially on the words and phrases underlined, there is an inherent component that is present in all of them: It is the evolution of an original guiding idea under constantly changing circumstances. Depending on the nature of the uncertainties in the environment, a strategy can set direction by giving a compass heading or a destination, or both. Product strategy does not guarantee success, but shifts the odds in one's favor.

After a thoughtful discussion with my friend Unai Roldan, we came to the same conclusion but we frame it in another way, that attempts to encapsulate the key ideas behind all definitions which is:

"A cohesive declaration of intent carried out within a timeframe with the aim of realising the product vision"

Let's unbundle this a little bit:

• Cohesive: all the activities that you define in your product strategy must be connected with the company strategy. Imagine that your company strategy is to focus on providing to travellers a place they can belong to, instead of just traveling or visiting it. Your your product strategy might include some unique experiences in the city you visit (unique activities) and a place to stay and live (similar activities). But imagine if your product strategy includes also a the possibility to book a dentist in that place or ordering food. Does the latter sound coherent with the company strategy? (More about this later)
• Declaration of intent: this might be the most controversial point on the definition. The idea is simple, your strategy should be a reflection of how you intend to achieve your mission, and what are the outcomes and activities, that you believe that are going to help us to achieve that mission. The word intent, inherently, conveys uncertainty and a belief - based on data, market research, intuition - that those are the right things to focus on - that might include the things you build, how you decide to position yourself in the market. Behind uncertainty underlies the idea of boundaries, those concrete and imaginary walls that mark the (fuzzy) line between what you are going to do and where to stop, there is no ambiguity. A great example is my current company (Nexthink), where we are highly focused on helping IT Departments to improve employees' digital experiences, we could have easily thought that HR would be a potential fit adding initiatives to tackle problems like wellbeing and performance reviews (which can be considered in the realm of employee experience), just because it just makes sense, but would that really be something we want to do now?
• Carried out: your product strategy must be a living thing, not only because you can change after reviewing it, but is must be executed. This is the point where the rubber hits the road and the cadence and feedback loops will tell you how well your strategy is performing and learning about the hypothesis you might have made explicit. So yes, there has to be a horizon to make your strategy real, and you need to assess whether you're progressing or not.
• Realising an outcome: you might have heard this thousand of times, but it doesn't hurt much if I tell you one more time that your job as a product person is to solve problems either from the customers or for the business. There are thousands, if not million, of things you can deliver in order to do that. Nonetheless if your product strategy is not addressing those problems, goals, pains, needs, wants, the best you can aspire to be is a well-oiled feature factory

3 .How to do it

There are myriad of ways of developing and executing a product strategy, but I'll highlight a couple of principles that I believe are key when creating and deploying a product strategy:

The map is not the territory: even if you're playing within a very stable industry the odds of keep doing the same and have success are very low. Users' behaviours, for good or bad, have become more volatile than ever. Therefore we cannot think of our product strategy as setting in stone and remaining stable, but something that would challenge the status quo and something that propels our competitive advantage over the competition. For this reason, product strategy emerges from experimentation towards a goal, and I love the Product Strategy Canvas to visualize it:

This is basically stating that you have a goal you want to achieve, and you don't know all the steps towards that goal. The only thing you know is there is a challenge you will need to overcome and you're going to make little steps to reach it (this is inspired by the idea of Toyota Kata). As a conclusion, don't try to craft certainty. You 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, then remove obstacles through experimentation until we reach our vision.

2Cs (Coherence and Cohesive) to connect the Business success with "The Work": there is nothing more motivating, for the people doing the work, that knowing how their efforts contributes to impact customers and help the business to reach their goals. That creates also alignment, because you know what things the organisation decided to focused on and then have the leeway to come up with better bets and options that can address that particular need (autonomy):

Having a coherent product strategy that connects the business goals with the team work:

1- It helps prioritize and accelerate informed but decentralized decision-making

2- It helps teams align and communicate

3- It enables teams to focus on impact and sustainable, product-led growth

Measure strategy effectiveness: for each product strategy your teams will be focused on experiments to prove or disprove each theory. Each of those strategies must have a clear proxy metric to determine if the high-level product strategy is delivered, or not. With this we're saying that we're not experimenting for the sake of it, we need to deliberately know if we're reaching the outcome we're aiming for.

As Gib Biddle would say:

"As a simple rule your proxy metrics should be a stand-in for your North Star product metric. First, you seek a correlation between your high-level metric and the proxy metric. Later you work to prove causation."

You can make decisions quickly, but it might take you a while to isolate the right proxy metric. It takes time to capture the data, to discover if you could move the metric, and to see if there was causation between the proxy and the north star metric.

Given a trade-off of speed, and finding the right metric, we focused on the latter. It’s costly to have a team focused on the wrong metric. - Gibson Biddle

Protect your product from feature creep: this point entirely is based on the article my friend Pablo pointed out, from Intercom, when he was reviewing the first draft of the article. In a nutshell, in order to have an effective product strategy you need to know your unfair advantage over the competition. In other words, what thing is hard to copy or makes your value proposition unique.

The other thing you need to articulate are similar activities. Given the game you're playing, what are the things you must provide to be considered as an alternative in the market you're targeting.

Both, the unique advantage and similar activities should be connected and therefore coherent. They should fit together. I love the message from Des Traynor (Intercom co-founder) about this:

You end up with a position that has a lot of “ands” in it – “we’re blah, blah, blah and we also do blah, blah, blah.” You’ve told yourself that each of those “ands” is a differentiator, but in practice they’re differentiators that have nothing to do with the thing you actually are. So it makes you different, but not in a good way.

As the title of this point, you must learn to say no - or making tradeoffs - to some shiny objects. The best way to illustrate this is this quote: “Thus far you shall come, but no farther.” You strategy should also define what are the things you're not going to do.

Last but not least, a great product and company strategy have a clear timeframe and you understand why it is. And it’s outcome-focused and measurable. The outcome should be something more centered around the business health, or customer value, or growth, rather than a bunch of features line up in a timeline.

Context, not control : this point might not useful to create a product strategy per se, but it's important when you ask the question, what does my product strategy should enable, besides coherence, cohesion....?. By communicating the strategy, aid by principles and values, and other inputs, it provides the tools the teams need to make (good) and fast decisions.

I love the idea behind this quote from Bob Moesta. Although it's used for explaining another concept, I do believe that product strategy should provide you with the context to create value, therefore the importance of context is critical to understand what things are required from us (product teams) based on the "conditions" of the territory.

Don't get me wrong, I think that truly empowered teams are giving the autonomy to execute their actions, based upon a shared WHAT do we do and WHY (alignment). That's why leadership has two jobs when it comes to product strategy: the first one is making sure the product strategy is communicated properly and is understood by all the people executing it. Second, they should create the right space to opportunities and hypothesis about the future to emerge (never underestimate the power of an empowered team) and the freedom of executing (autonomy again).

A very quick exercise to understand if people are able to articulate your product strategy, just run the Random Ticket Game or the 1-3s approach (credits to our dear John Cutler).

I believe context provides a great opportunity to put strategy “front and center” and accelerate both results & learning. But it's going to depend on how much your culture infuses the way you reflect upon your product strategy.

This quote from Antoine Saint Exupery comes to mind every time I think about context

4. What to consider - an example

In early versions of the article Blanca suggested, "it would be good if you can add an example of would product strategy would look like using a real company". I would say it wasn't easy, but "challenge accepted".

This is the mental model I've used to structure everything that was mentioned throughout the article (just for 1 company with one product):

This is not a comprehensive view at all. Behind the company strategy we could also have the most relevant KPIs (ARR, Revenue, TCV, ACV, MRR, Churn) along with a forecast showing its expected trend. I can imagine a company considering a "strategic" partnership with another company to reinforce a specific chunk of its offering. A myriad of things are hidden behind "The Work" like assumptions, hypothesis, experiments.

I wanted to dig into a company we all know, it's highly like that we have been users of it, and that has been hit very hard by the COVID-19, so that we can understand how the product strategy has been adapted to the new conditions of the people they are serving and the industry and market they operate.

I just wanted to finish the article with a great TED talk from Astro Teller, where he catches a glimpse on some of the things that are going to happen when you define and execute your strategy.

Enjoy!!!

I would like emphasize the incommensurable help from people like Vanesa Tejada, Pablo Gil, Unai Roldán, Eduardo Ferro, Blanca Lanaspa, that challenged me to rethink the way of saying, structuring, and crafting the message.

Sources

Gibson Biddle - Intro to product strategy

Marty Cagan - Product strategy

Melissa Perri - Escaping the Build Trap

Stephen Bungay - The Art of Action

Richard Rumelt - Good Strategy / Bad Strategy

The North Start Framework

Intercom on Product: The intersection of company and product strategy