One of the most common difficulties I see in organisations is the creation of a product strategy. If this is true of your organisation, you are not alone. In a 2019 audience poll at the Leading The Product conference, attended by over 750 product people, the biggest problem faced by attendees was the lack of a clear product strategy.
Not having a clear strategy can lead to disastrous outcomes:
Scattergun solutions — Only building features for loudest customers/salespeople
Shiny object syndrome — Chasing the ‘cool’ new technologies, or trends
A lack of clarity & focus — Everything in the backlog is important/high-priority)
Top-down management — A heavy reliance on management for decisions, or a reluctance to make decisions in the team
Low team engagement and understanding
Poor customer outcomes
Burning through cash 💸💸💸
… need I add more?
Why Is Product Strategy Confusing?
There are several obstacles that get in the way of developing a clear product strategy. These hurdles often come in sets and tackling them can be complex! Strategy work distracts from more attractive feature work and this often leads to apathy… The result? Strategy dumped in the ‘too hard basket’.
Inconsistent Definition
Ask 5 people to define strategy and you’ll likely end up with 5 different answers. Depending on who you talk to, the definition will range from a broad company vision through to a roadmap or action plan.
My definition of strategy lies somewhere in the middle. A strategy communicates what you need to do to win, and the desired endstate. In the military, this is known as ‘the commander’s intent’.
“The commander’s intent describes the desired endstate. It is a concise statement of the purpose of the operation and must be understood two levels below the level of the issuing commander.”— US Army Field Manual 100–5
Photo by Romain Vignes on Unsplash
Consider your current task. Are you clear of the goal? What would you need to focus on if you were suddenly the last person working on your project?
A strong strategy gives everyone in the team a frame for decision making. In the second world war, the allies utilised a denial strategy — “Destroy the enemy’s ability to wage war”.
This strategy is clear. It enables anyone to make decisions and act in the best interests of their team.
In a product context, a good strategy enables your team to make decisions in the best interest of your product. It gives your team the freedom to use their own knowledge to make decisions. It allows them to determine the most effective adjustments toward achieving your vision.
Business Strategy vs. Product Strategy
Image Credit: Roman Pichler — Tips for growing a product management team
The next challenge is that people mix business strategy and product strategy. Both rely on but also inform each other. The two strategies overlap but also have very different objectives.
Business Strategy
Roger L. Martin is one of the world’s leading strategic thinkers. He and A.G. Lafley outlined a great process for defining a business strategy in their book ‘Playing to win’. They based this framework on Alan’s learnings as CEO of Procter & Gamble.
Image Credit: @abdul.adiz — Playing to win — Book Sumview
They proposed 5 questions for developing a strong business strategy.
1. What is your winning aspiration?
Your winning aspiration is the vision for your business. Your vision should anchor on your customer’s success, not your own. Often organisations make the mistake of setting a vision around profit targets which can have negative side effects.
2. Where will you play?
This decision is the most important of the five questions. It determines which markets and geographies you will target as a business. Will you focus on a broad market appeal with high revenue opportunity, but also high cost? Or will you focus on a niche that delivers high engagement at low cost but with a smaller revenue potential?
3. How will you win?
This question dives into the competitive advantage you will have in your market. Will you win through being the cheapest? or provide the most differentiated product?
4. What capabilities are required?
A set of capabilities required to perform as a business will emerge. A high focus on customer relationship will likely demand a high-quality sales capability. High-volume internet business’ will need a strong marketing capability.
5. What is the management structure required for your organisation?
As people often wear many hats in jobs, you can get creative with your management structure. Many capabilities do not require many people.
Photo by Daria Nepriakhina on Unsplash
Product Strategy
By contrast, a product strategy communicates the priorities of the customer, the solution, and how you will get attention. It outlines the broad steps required to find product-market fit and beyond.
A successful product strategy defines 5 key areas:
1. Customer segments.
A product strategy will identify the many subgroups that belong within a market. The product strategy will also define the priority of those customer segments. Will you start by targeting many segments or focus on each segment one at a time?
2. Customer value proposition.
A product strategy will start with the job to be done, the pains, and the gains of each customer segment. These three items enable a product team to outline a strong value proposition.
3. Key features.
A product strategy includes the key features required to deliver the core value proposition for your customer segments. The product strategy will not define every single product feature. But the key promises you make as a product team should be well defined.
4. Price.
How you price a product will have a major impact on the success of the product. Price communicates many things, such as value, quality, cost, and positioning. The perceived importance and level of the pain experienced will be vital to pricing. Your price needs to align with your target market. Price too high and it might mean that you end up with only premium customers. Price too low and you might sacrifice customer loyalty.
5. Channel & Relationship. Your channel and customer relationship describe how you will sell your product. Your channel strategy specifies how customers will interact with your business. Your relationship with the customer will also differ depending on their needs. Some customers prefer a close relationship with an organisation akin to a family business. Others prefer the relationship provided by online stores such as Amazon.
I’d love to write more on what a good strategy looks like — but there are already so many excellent blogs out there… Check out former Netflix CPO Gibson Biddle’s great 12-part series, or watch the recording of my recent meetup with Ken Sandy.
Inadequate Communication
Another cause for strategy failure is the lack of communication once a strategy is set. Teams regularly complain about a lack of strategy only for the complaint to be dismissed.
Strategic thinking is often seen as a task performed by management. As such, strategy is often performed behind closed doors.
As a result, employees often lack the key details behind decisions. They also lack the context to make autonomous decisions themselves. This can have a terrible impact on employee engagement.
“81% of employees would rather join a company that values open communication over one that offers great perks such as free food, gym memberships, and health plans.”
Effective communication is not simple, it requires planning and thought.
Multi-Tiered Strategy
The final complexity that I see organisations struggle with is a multi-tiered strategy. Like an onion, a strategy can have many layers. You can apply each of the two strategies at a team level, business unit level, and also at an enterprise level. At each level, the same principles apply but with a broader outlook the higher up you get in the organisation.
At a product level, you may have several large features which take the form of sub-products and contribute to a single business model. Each business may belong to a business unit which needs to balance a portfolio of investments and dependencies. An enterprise organisation may also have several different business units.
Whatever your structure, the decisions made at the bottom of the tree should roll up to deliver the objectives of the enterprise. This is harder to achieve than it looks.
Where to start?
If you’ve found yourself in a situation where there isn’t a clear product strategy, don’t worry. Setting a strategy will take some heavy lifting, but there are some steps you can take to make sure you don’t fall into these traps.
1. Be clear on which strategy you’re designing
Are you designing a business strategy or a product strategy?
2. Ensure your strategy cascades down and also rolls up
Does your product’s strategy align with the strategy of your enterprise, or business unit? Look at ways to align your business and product strategies. You might consider utilising OKRs as a means for cascading objectives through your organisation.
3. Visualise your strategy
Utilise tools such as the business model canvas and value proposition canvas to communicate your objectives. Ensure you tell the story of how the components of the business model interact, and the part they play. Communicate how the business model changes over time (i.e. in a freemium, or bait-and-hook model).
4. Communicate your commander’s intent.
Always communicate why the tasks or features are important. Let a team know why how their product fits into your business’ plans, as well as the enterprise’s objectives. Consider communicating goals and letting the team decide the best way to solve them.
5. Link your roadmap to the different layers of strategy.
My final advice is to link your product/solution roadmap to a customer goal, or strategic objective — I made a useful canvas for this task. Product roadmaps often lack detail about why features are needed or placed in the order that they are.
As market needs change or you uncover new information, you require the ability to adapt and change your product roadmap. Don’t box yourself into an unrealistic delivery plan for features no one needs.