A Practical Guide to Product Strategy

There is no universally agreed upon framework for “Product Strategy” - Google it and you’ll get hundreds definitions what it is and what it isn’t. It can be as granular or as high level as you want. Some people do the strategy exercise to tick a box. I don’t. I find strategy workshops incredibly helpful in forcing you to schedule time outside of the daily execution hamster wheel to think about the north star. What are we building towards? Is it useful, and to whom? Are the plans still pointing to that north star or have we been sidetracked? Should we sidetrack deliberately, based on new information on the customer, market, technology trends?

There are many ways to do this. This is my personal amalgamation of what I’ve seen excellent product leaders execute. You don’t have to do it all. But asking even a few of these questions pushes your product development from reactive to strategic. Let's break down the process into digestible steps.

Step 1: Know Your Vision & Mission

VISION:

A vision is the highest-level description of what your company wants to be. LinkedIn wants to “create economic opportunity for every member of the global workforce.” IKEA’s vision “is to create a better everyday life for many people.” Nike wants to “bring inspiration and innovation to every athlete* in the world.” (*If you have a body, you are an athlete.)”

Vision is fuzzy on the details and big on inspiration. It intends to motivate employees, excite consumers, and boil down your philosophy into an extremely brief sentence. Product Visions are short and sweet. They don’t need ongoing updates because they’re also (relatively) timeless. Google wants “to organize the world’s information and make it universally accessible and useful.”

MISSION: 

The mission talks about how the company will make that vision a reality.

These aren’t exactly actionable business plans, but they at least give some sense of how a vision might be realized. From a mission statement, you can then create a strategy, and that is where the product comes into play.

Product missions are also extremely brief. Think StubHub’s “Where fans buy and sell tickets.” Everyone reading it understands the big idea behind the product, but it isn’t limiting how to fulfill that mission.

Missions spell out your purpose and what you want to do with your team. It can come before in-depth customer research as it’s not specifying implementation.

Step 2: Understand Your Market

Know your battlefield.

Market Trends: Identify broader trends affecting your industry whether you exist or not. How are these trends influencing customer expectations?

Competitive Trends: Analyze what competitors are doing well. What strategies are they using that might threaten your position, or what gaps in their offerings can you exploit?

Do you know your Total addressable market (TAM), serviceable available market (SAM), and serviceable obtainable market (SOM). These metrics will help you gauge the scale of your opportunity and set realistic targets. Check out this Founders Pocket Guide To Market Size.

Step 3: Understand Your Ideal Customer Profile (ICP)

Who are you building this for? Revisit this often, as you should be getting more and more specific as your company matures. Also, as you mature you need to be explicit about who you’re NOT going to serve.

Questions to ask your team:

• Who is the type of customer we truly understand better than anybody else in the marketplace, and who is the customer we truly care about?

• When customers churn, why are leaving and what complaints are most common?

• When we win, why do customers choose our product? What features do they use and love most?

• When we lose a deal, why do we lose? Feature gaps? Pricing? Not deemed important enough problem?

Visual from April Dunford

What these questions should be leading you towards answering:

• What is the thing we do better than anybody else?

• Who we are, who we build for, what problem we solve for (1 slide)

Step 4: Know Your Competition

Map out your competitors along axes of quality, feature functionality and price. Who are your direct and indirect competitors? This visual comparison will help identify where your product stands in relation to the market.

It also shows you where there is a white space in the market (ie. maybe the entire market is focused on high quality, premium offerings…. but what about the customer that needs 50% of the features at a more competitive price point? Who is servicing them?)

Step 5: Map Assets, Constraints, USPs & Gaps

Remember, the end goal of this is to develop a product strategy that is a coherent plan in how you will apply your strengths in a leveraged way against a core important problem.

• Assets and Constraints: List resources that give you a competitive advantage, and identify constraints that limit your product development. How can you leverage these assets or mitigate these constraints?

• USPs and Gaps: Clearly define what makes your product unique (Unique Selling Points) and where it falls short (gaps). This will guide development priorities.

Reflect: What is your biggest challenge today? Pick One

Having worked through the prior questions, what is the greatest challenge your company faces today? Examples: path to profitability, increased competition and price pressure, buyers not perceiving our product as ‘mission critical’, losing to competition, product offering being commoditized, predatory pricing / bundling from competition, etc

Step 5: Fill Out The Canvas

The Product strategy canvas is a tool designed to be repeatable and flexible. Drawing inspiration from various models I’ve seen PMs use, here’s a framework I’ve mish-mashed together for my own purposes that works for me.

By focusing on three critical areas (the state of the business, market and product), you can concentrate on quick wins and low hanging fruit.

To make the most of this canvas, create a copy and try to fill in each section. If you don't know the answer, capture the name of someone who does. Once all inputs are filled in, you should have enough insights to decide on what your team(s) will focus on, in other words, to create a product strategy.

• 12-18 Month Vision: Where do you want your product to be in the next 12-18 months. Identify major milestones.

• Key Customer Problems: Choose up to three major customer problems or market needs that your product will focus on solving.

• Differentiation: Define how your product will differentiate from competitors in the coming years. Will it be through innovation, customer service, price, or technology?

• Detail specific areas of product development that will receive the most attention over the next 18 months. Why are these areas chosen, and how do they align with your overall strategy?

Step 7: Define Your Product Principles

Tensions and tradeoffs exist and it's important to acknowledge them and make them transparent. Product principles are extremely hard to define (so give yourself a break, and keep iterating on them). They should act as guardrails for product development and serve as the foundation for the product decision-making process in the future when you have conflicting ideas, asks etc.

Example: We’re going to trade-off quality to invest in learning what the right product is that we should be building.

Step 8: Roadmap!

Congratulations! You have done a ton of work and made it to the roadmap.

You should feel confident in explaining your roadmap to your leaders with this level of work.

You know exactly why every item is on the roadmap and why certain items are in the backlog or deprioritized. You can explain the why behind the scheduling of feature delivery (because you understand your capacity, constraints, assets). Your roadmap should articulate a vision, a strategy and a clear direction you are heading in.

And remember, roadmap is directional and not ever set in stone :)

Always be pivoting with the market and customer shifts. Stay agile and stay strategic my friends!