Product strategy is the detailed outline demonstrating what your product aims to achieve. It includes how you plan to create the product, how it will impact buyers, and how it helps achieve your business goals.
A great product strategy sets the tone for the tactical and/or technical things that need to be done so that the customer can get the best value from the product and the business can also thrive.
A product strategy consists of 3 crucial elements:
1. Vision (a vivid image of the future)
2. Goals (time-bound measurable goals that address a specific problem you aim to solve, usually with a tangible way of measuring progress)
3. Roadmap (a visual communication tool to see what it takes to achieve the vision in X years)
Once you have a solid strategy set, you can then build the actual product.
It is the responsibility of the product leader to drive the team to connect the dots between the business goals and the product work. Do not leave any room for assumptions.
A good way to start is to draft at least two different strategic approaches that could achieve the business goal.
For example, will you increase revenue by bringing in new paying customers or getting existing customers to pay more? If new customers, from which market?
Then, hold back, and think of the top customer problems you want to solve. For each problem, think of methods that you could achieve business goals while solving that problem. What is the best approach?
You may need to work with the CEO to present a strategy built around the customer problem & and the solution approach that you think works best.
Once you agree, go about your framework. Take note of the main action points that handle all issues.
You may also test your approach for a couple of months and then revise it based on the outcomes.
Characteristics of a Good Product Strategy and a Bad Product Strategy
Every excellent product strategy should have the following characteristics:
1. Your strategy should have an identification of target customer segments and non-target segments. It shouldn’t either ignore customer segmentation or attempt to cater to all customer segments.
2. There should be an honest assessment of the market, the competition, and the product’s current position. Poor strategy either downplays the competition or ignores these factors altogether.
3. It should have an all-round and detailed clarity on customer needs. Your strategy must be intentional and creative about tackling the right subset of those needs.
4. Your strategy should be intentional about whether to play head-to-head against incumbents or to play on a different turf entirely. It shouldn’t default to one of these stances without a rigorous assessment of options and industry trends.
5. Your product strategy must take root from the company’s existing advantages (companion products, distribution channels, partner relationships, etc.).
6. An excellent product strategy increases chances of success by largely relying on the company’s long-lasting advantages. Deficient strategy relies on factors that might be a current source of advantage but are over time more susceptible to getting neutralized by the competition.
7. You should identify the principal and lagging indicators of success, whether they are metrics or milestones.
8. Take cognizance of the importance of execution. It prompts org-wide decisions and action by mapping the proposed product choices to a high-level action plan and associated risks.
9. Your product strategy should provide company executives with a fresh insight into the domain and the product. Quit conforming to executives’ pre-existing opinions about what should be done with the product.
10. Make your strategy vivid, rigorous, and actionable instead of visionary and ambitious, employing technical jargon and Apple Pie positions.
11. It should emerge from deep, nuanced thinking, but be articulated such that it’s easy to remember and repeat.
12. Always optimize for long-term business results instead of near-term consensus.
It is not easy to create a good strategy, but it is well worth the effort.
Must-read books:
1. Understanding Michael Porter, by Joan Magretta
2. 7 Powers, by Hamilton Hemler
3. Good Strategy / Bad Strategy, by Richard P. Rumelt