Products don’t reach success out of sheer luck. Many think that all it takes is a great idea and a talented team. It certainly helps having those, but the startup graveyard is full of ideas by talented teams that have failed. Surviving in a competitive market is tough when only 7 out of 10 businesses won’t make it to their 10-year mark.
A product represents the results of carefully constructed planning, which stands on several pillars, such as vision, strategy and goals. While the vision is abstract and driven by a great deal of uncertainty, goals are very precise and tangible. Somewhere in-between these contrasting worlds lives product strategy. The strategy outlines how to turn the vision into reality while focusing on empowering teams to solve complex problems. It’s the cornerstone of team autonomy, helping them determine what the real problems are and how to solve them.
Creating a product strategy requires having a solid product vision. The vision describes what value the product intends to deliver to the customers in the 2-5 years horizon, thus giving us a direction to follow. Your strategy will then lay out the right path to reach the vision, helping you decide where to dedicate appropriate efforts.
It's best not to think of the project vision in terms of a utopian goal, or to define it in the smallest details. It should be about a realistic long-term intention that is still challenging to achieve.
A good example comes from Slack, the communication platform. Since the beginning, their strategists have been aware that, in the future, email communication will be gradually replaced by faster and more interactive forms of communication; and the platform wants to make sure they are a part of that future.
“It is almost inevitable that centralized internal communication systems will gradually replace email for most organizations over the next 10-20 years and we should do what we can to accelerate the trend and own it.” – Stewart Butterfield, CEO of Slack
Once the vision is defined, the strategy can be created. Beware that product strategy is not a document you write down based on a business case and proceed to strictly follow. It's a path towards the vision, usually consisting of 3 elements: focus, insights and action steps.
Not everything we do is equally important. Investing efforts in unnecessary initiatives can turn out to be very costly in the end. In today's world, we are surrounded by various possibilities and opportunities, and it's very easy to let yourself go and commit to useless ones. That's why I believe that the basis of a good product strategy is the ability to say NO.
“Good strategy requires leaders who are willing and able to say no to a variety of actions and interests. Strategy is at least as much about what an organization does not do as it is about what it does.” – Richard Rumelt
If your company has gone through the struggle of not being able to choose its battles, you probably have experienced at least one of these symptoms:
- Too many critical initiatives;
- Excessive reactivity (e.g. the need to react to every competitor);
- Continuous generation of activities instead of achieving goals;
- Focus efforts on non-essential low-impact initiatives.
So the big question is "How do you focus your efforts to move the needle?" Unfortunately, there is no clear answer. However, Marty Cagan of SVPG recommends limiting the number of things your product team is working on at any given time. If you don’t have these limits, work piles up at bottlenecks and you end up constantly switching context. As a result, you get fewer things out the door.
When creating a yearly strategy, it’s usually useful to narrow down your focus to:
- Vertical market (e.g. financial services, manufacturing, telecommunications, etc.)
- Specific customer type (e.g. B2C)
- Geographical location (e.g. focus on local market)
- Channel (e.g. digital channels)
- Set of key results (e.g. invent an autonomous car)
You may choose a focus from the list, a combination of them, or just look for something that makes sense in your context, potentially informed by your own insights.
A good example is Tesla that operates in the automotive vertical market. In the oversaturated car market, they decided to focus on sustainable forms of transportation, which they transformed into the production of electric cars for the mass market. This specialization has enabled them to produce the most unique electric cars and gain a competitive advantage.
“(...) Our goal is to accelerate the advent of sustainable transport by bringing compelling mass market electric cars to market as soon as possible (…)” – Elon Musk
Another example might be Google, the search engine, whose vision is to “Provide the most relevant and reliable information available". For this reason, they decided that it would be very important for them to focus on mastering the connections and relationships between information on the web, which culminated on their decision to build The Knowledge Graph. Currently, Google Search covers over 90% of search queries and it's clear that the results are relevant and reliable.
Market and business knowledge are necessary not only to decide where to focus the efforts, but also for planning your tactics and action steps towards the vision.
What data do I recommend looking at?
- Quantitative reports: It can show you certain patterns in shopping behavior, e.g. that small customers shop more often in smaller volumes than large ones and you can adjust your behavior or sales strategy accordingly; or what would be a good product for up-sell with some particular service; and so on.
- Qualitative reports: Useful to describe existing problems or reveal new opportunities. Popular techniques are customer surveys and interviews.
- Technological news: On one hand, it can show you trends but on the other hand it can show you new possibilities or threats, e.g. making better recommendations with AI is definitely a new possibility, while not having an optimized cart for mobile devices is a threat.
- Sectoral information: Another way to gather trends and guidance, but in your own section. For example, in the newspaper business, when you see the decline in newspaper sales and decline of newspaper subscriptions you probably wouldn’t invest in creating new printed media or newspapers.
- Shared knowledge: Make use of publicly (not always free) available data from researchers or public institutions.
Unfortunately, again, there's no golden formula that would help us simply create a solid product strategy from this data. But the basics is to use the available data to orient ourselves and find one or two critical insights upon which we may build the strategy.
Google Search illustrates this pillar quite well. On mobile devices, people are able to both type and dictate, which led Google to discover that people not only search for keywords but also for complex sentences. This realisation taught them that a rise in complex searches requires them to be able to know the context of indexed information.
To build a realistic future, all your decisions should be guided by data and insights. Turning the checking of the data into a ritual or automatising its extraction process can help you avoid gut-feeling decisions that steer your product towards the wrong direction.
“Good strategy … does not pop out of some ‘strategic management’ tool, matrix, chart, triangle, or fill-in-the-blanks scheme. Instead, a talented leader identifies the one or two critical issues in the situation – the pivot points that can multiply the effectiveness of effort – and then focuses and concentrates action and resources on them.” – Richard Rumelt
When you have decided about your focus and said NO to all impactless initiatives it’s time to prepare your action steps. These steps reflect your focus on meaningful and measurable goals and are your yearly strategy.
Personally, I prefer creating a yearly strategy in the form of OKRs, but they deserve a separate article. As an alternative, you may use a roadmap, but be careful not to focus on product features, instead of issues that you try to resolve over a period of time. A good roadmap should be able to answer the following questions:
1. What do we need to resolve to move closer to our vision?
2. How will we know that we have succeeded or failed?
As I wrote in the introduction to this article, the strategy describes the way of realizing the vision and its main purpose is to empower teams to solve complex problems. This should be your ultimate intention.
If you're facing some troubles setting up your product strategy, we can help you make better strategic decisions.
Some more resources to help you on your journey to mastering product strategy:
- How to write a product vision statement – Productboard
- Guide: Set goals with OKRs – Google
- Good Strategy/Bad Strategy: The difference and why it matters – Richard Rumelt