Like an iceberg is two-thirds hidden, the product strategy forms the invisible foundation for any successful product. We discussed product management in the previous article. The product strategy drives your product management efforts by providing a disciplined, guided framework for effective and efficient execution to achieve your business goals. This article will discuss product strategy, the elements of a successful product strategy, and how you can put together a valuable and practical strategic framework to achieve your product goals.
Table of Contents
Two Dimensions of Effective Product Strategy
The product strategy’s fundamental aspect is to guide your product development efforts by aligning your resources, capabilities, timelines, and commercials with your broader product vision and required characteristics, including features, functionalities, and User Experience (UX). This dimension of strategy aims at developing the product and getting it to the market. Therefore, this dimension is the “development” dimension of the product strategy.
The other dimension of the product strategy is to ensure alignment with the overall corporate strategy. Your product strategy and product goals should support the enterprise strategy and business goals. Otherwise, the dissonance would adversely affect them both. This strategic “alignment” dimension would be more abstract than the development dimension.
Only when both these dimensions are balanced, your product can provide sustained value to your customers and business over the long term. Of course, there will always be some friction between these two, and one will take precedence over the other. But as long as these fluctuations average out, you can be confident of long-term success.
Elements of the Product Strategy
The starting point for any product strategy is to decide what you want to achieve through the product? The answer to this question goes beyond the revenue and profits considerations and points to a much more significant outcome. Typically, the product vision is this starting point that addresses the more critical result we want to achieve through the product. The seed for the product vision lies in the idea you have. When you filter this core idea or aspirations through the realities of human needs, market conditions, and technical possibilities, you get a set of concrete, valuable product goals that form your strategy’s foundation.
Many frameworks provide you with concrete elements and structures that you can use to formulate your product strategy. Most of them have a common thread or pattern with one or two characteristics that make them unique.
Mintzberg’s Five Ps
Henry Mintzberg focused on deliberate and emergent strategies in this framework and provided five elements that you should consider when developing a wholesome approach.
Plan
What action will you need to take to fulfill your vision? What activities will you perform and when? The planning aspect is perhaps the most straightforward part of strategy building. However, without the due thought for another aspect, the plan alone will not succeed.
Ploy
The ploy is primarily the competitive aspect of your strategy. So what would you do to gain a competitive advantage? For example, organizations might create barriers of entry for competitors by patenting their innovations.
Patterns
While Plan and Ploy elements are examples of deliberate strategy development, the patterns element is emergent. The patterns emerge when you focus on making best practices part of your product. For instance, by focusing on design principles, like minimalism, you can elevate the user experience. Over time, the pattern of minimalism may become your competitive advantage. Such focus on best practices becomes part of your strategic landscape.
Position
The element of position refers to how you want your customers and target market to perceive you on the value chain. For example, Apple’s ploy is to provide a high-end experience at a higher cost through the tightly closed ecosystem. On the other hand, Google’s ploy is to create an ecosystem based on their search engine by capturing the breadth of the market through cost-effective or even free services and applications.
There is a brand positioning framework that marketers widely use. You can use the same framework for product positioning for your target audience. With this framework, you can decide how you would position your product. As a Leader, where do you create such an innovative product that none of your competitors can catch up to you? Or, as a challenger, where do you develop a compelling alternative to the leader? You can also position your product as a follower, where you follow the leaders’ and challengers’ innovations but create a competitive advantage through lower costs or other similar options. The final positioning choice is to be a “nicher,” where you entirely monopolize a small market segment. Products like Hey focus on privacy-conscious users and charge for an as ubiquitous service as an email.
Perspective
The perspective relates to the cultural and mindset aspects of organizations and people involved and product development and management. For example, a risk-friendly culture may quickly release new functionalities to test market and user reactions but be ready to change the course if it doesn’t work out. A risk-averse approach, on the other hand, will work oppositely. This element also deals with different areas, including geographies of interest and target markets that you want to pursue.
Roger Martin and A.G. Lafley’s five questions of strategy
Martin and Lafley shared five questions about the strategy in their book “Playing To Win: How Strategy Really Works.” According to them, the system is the answer to these five questions.
- What is the aspiration behind product development? The purpose of your product.
- Where will you play? What is your target market segment? Which geographies would you target?
- How will you win? How would you gain a competitive advantage?
- What capabilities must be in place? Do you have the resources, skills, and knowledge to develop the product?
- What are the management systems required? The methods and measures that enable the capabilities and support the choices.
Source: How Strategy Really Works
Jim Kalbach developed a UX Strategy Blueprint. However, product strategists have widely used it even for product strategy, as it captures elements from both these frameworks.
Strategy Blueprint by Jim Kalbach, CC BY-NC-SA 4.0
Melissa Perri has developed another great tool that is simple and effective for developing the product strategy.
How To Approach Product Strategy Building?
Develop A Realistic Vision
Vision is the foundation of the strategy, and hence if it is not practical, the strategy will not yield results. That is why getting your product vision right is critical.
The vision becomes effective if it has the potential to impact and influence a broad set of people. Identifying the actual needs of the people your product can affect is the first step of building a compelling vision. Identifying your target audience and identifying their needs will help you determine your Product-Market fit. A concept that reflects this fit has a greater probability of being a successful one.
There are three significant characteristics of a compelling product vision;
- It is based on a long-term goal
- It is inspiring so that it can guide the team
- It is understood and accepted by the entire team
Roman Pichler has created an excellent tool, the Product Vision Board, that helps you capture these inputs that influence the product vision.
romanpichler.com/tools/vision-board
Define your target conditions
A product is about changing the status quo, but your efforts will be fruitful only if you are clear about where you want to reach. What do you want to happen once your potential customers use your product? How do you want to affect their life?
Your product strategy will create a bridge between the current status and your target market in your problem space.
Make it collaborative & cross-functional
It is a fact that diverse inputs help develop a robust, creative strategy that will provide practical guidance for your downstream product development efforts. In addition, the inclusion of diverse experiences and subject matter expertise on your product teams makes the process more resilient by including various challenges and possible responses. The resilience, in turn, reduces the long-term risks for your product.
Ensure That The Strategy Is Agile
Traditionally, product management strategy is viewed as static and long-term. Yet, at the same time, it is necessary to ensure consistency and the focus of efforts, rigidly following every detail even when complete external changes reduce the strategy’s effectiveness.
Most of these changes may not affect the high-level strategy, but the details will change. Legal, economic, technological, or social changes may alter the challenges in front of you, and subsequently, some of the action points from your response plan may change. Rigidly sticking to the strategy once created will render it useless. Roman Pichler calls it “Continuous Strategizing.” Apart from the market conditions and trends, this approach also considers how the product itself performs. It also finds customer feedback, what your competition is doing, and the changes that might be taking place in your company.
To Sum Up
Product strategy is a critical component that links your idea and product vision to the product roadmap. Your product strategy is the set of guidelines to determine what shape your product idea would take to achieve your strategic and operational goals. It is derived from a clear understanding of your company’s mission and vision, your firm’s strengths and weaknesses, as well as an understanding of the market environment in which your company operates.
While the strategy provides you with an excellent idea of the direction you should take, how you execute it is far more critical. If efficient execution does not complement a sound strategy, your end objectives might be troubled. We will discuss more processes and product management elements in future articles, so stay tuned while working on it.
