Reflecting on the lessons I’ve learned from 2024, it's clear that setting specific, measurable, compelling, and targeted product and company goals is essential. In empowered product team setups, this enables the most effective outcome-focused decision-making through goal setting.

However, starting fresh with frameworks like NCTs or OKRs can feel daunting, especially when the stakes are high, and the expectations for precision and alignment have never been greater.

To address this challenge, it’s worth emphasising why structured goal-setting is indispensable in this era. Frameworks like NCTs inspire collaboration and strategic alignment, while OKRs drive measurable outcomes and accountability.

These tools not only help teams thrive but also ensure that roadmaps and strategies are rooted in clarity, purpose, and adaptability—critical qualities as we head deeper into 2025 with confidence and focus.

Two Tools of the Trade: NCTs vs. OKRs

Two of the most popular goal-setting frameworks in modern product management are:

• NCTs (Narratives, Commitments, Tasks) and

• OKRs (Objectives and Key Results).

Each offers distinct advantages, depending on your organisational needs, team dynamics, and strategic priorities. In this post, we’ll unpack these frameworks, compare their strengths, and explore examples of companies that use them effectively.

NCTs: Storytelling Meets Accountability

What Are NCTs?

NCTs focus on defining:

1. A compelling Narrative;

2. Supported by concrete Commitments; and

3. Broken into actionable Tasks.

They’re designed for teams that thrive on clarity and alignment with a shared vision. One useful tool in creating an effective narrative is to use Amazon’s Press Release method, which we dive deeper into below.

Example: Amazon’s Press Release

Amazon popularised NCTs by linking each goal to a "press release" or "future memo," a simulated document written as if the initiative were already successfully completed.

This approach was highly effective at the time because it allowed teams to visualise the end goal, align on what success looked like, and work backward to identify necessary steps, creating a shared sense of purpose and clarity.

Elements of a Press Release

When crafting a Press Release, consider the following components:

• Clear Summary: Provide a concise overview of the product and the key benefits it delivers. This section should captivate readers who might only skim the document.

• Problem Statement: Highlight the primary issue or gap that the product addresses, contextualizing its relevance.

• Elegant Solution: Describe how the product uniquely and effectively resolves the outlined problem.

• Spokesperson Quote: Include a quote that encapsulates the team’s vision and enthusiasm, as if responding to a media query.

• Easy Onboarding: Detail how users can start using the product and the straightforward steps involved.

• Customer Testimonial: Share a hypothetical customer experience that showcases the product’s benefits in action.

• Call to Action: Conclude with a compelling invitation for the audience to engage with the product further.

In addition to the format, here are some additional guidelines:

• Keep it simple.

• 3-4 sentences for most paragraphs.

• Accompany the press release with a customer and stakeholder friendly FAQ.

For instance, in launching Prime, the narrative might have been something like this:

Sample (shortened) press release with sample statements:

• Clear Summary: Prime is a subscription service designed to redefine convenience by offering free two-day shipping and exclusive perks, saving customers time and money.

• Compelling Problem: Customers often face delays and high costs for shipping, making online shopping less efficient than desired.

• Elegant Solution: Prime provides fast, reliable, and cost-effective shipping, paired with additional benefits like streaming services and exclusive deals, creating an all-in-one convenience solution.

• Spokesperson Quote: "With Prime, we’re transforming how customers experience online shopping. It’s not just a service; it’s a commitment to making their lives easier," said [Your Name], Amazon’s spokesperson.

• Easy Onboarding: Signing up for Prime is as easy as visiting our website, selecting the Prime membership option, and enjoying instant access to free two-day shipping and other benefits.

• Customer Testimonial: "Prime has completely changed how I shop online. I can order what I need and get it quickly without extra shipping costs – it’s a game-changer," said a satisfied Prime customer.

• Call to Action: Start your free trial of Prime today and experience unparalleled convenience and value. Visit Amazon.com/Prime to learn more.

The NCT format would then be included, showing:

Commitments:

• Launch Prime with free two-day shipping by Q4.

• Achieve 80% on-time delivery by year-end.

Tasks:

• Negotiate logistics contracts.

• Build subscription management interfaces.

Strengths:

• Inspires teams: by providing a clear and compelling vision that motivates them to rally around shared goals. This shared clarity helps teams see the bigger picture and understand how their work contributes to broader success.

• Drives cross-functional alignment: by establishing a unified narrative that ensures different departments and stakeholders are working cohesively toward the same objectives. This reduces misunderstandings and siloed efforts.

• Works exceptionally well for exploratory or big-bet initiatives: by fostering a sense of purpose and direction, particularly in ambiguous or high-risk scenarios. It encourages innovation and calculated risks by offering a structured framework to tackle uncharted challenges.

Challenges:

• Stories: Requires excellent narrative skills.

• Data: Can be difficult to quantify success.

There are some ways you can overcome the challenges, but it may require a bit more of your time when prepping the narrative for the company. The mitigations include:

• Enablement: Invest in training sessions or workshops on storytelling and narrative development to enhance team skills.

• Training: Pair narrative or story telling experts with product teams to co-develop initial NCTs.

  Note: I’ve found tools such as the PipDeck Story Teller Tactics as a highly quick and effective way to craft compelling narratives that sell themselves!

• Measurements: Use proxy metrics or qualitative success indicators (e.g., pulse stakeholder feedback via survey) to complement narratives where quantifiable data is unavailable.

OKRs: Laser-Focused Metrics

What Are OKRs?

OKRs originated at Intel in the 1970s, introduced by Andy Grove as a method to align teams and drive measurable progress. The framework gained wider popularity when John Doerr, a venture capitalist, shared it with Google, helping them scale effectively during their early growth years. Today, OKRs are used by companies like Google, LinkedIn, and Spotify to maintain focus and accountability.

For more on OKRs and examples from real world experience, explore John Doerr's book, Measure What Matters. It’s a fantastic read and a foundational PM book for all objective setters (everyone!).

OKRs combine high-level Objectives with measurable Key Results to drive focus and accountability. They’re a favourite of fast-paced, metric-driven organisations, but can often also be a hindrance when implemented poorly.

Why Are OKRs Often Implemented Poorly?

While OKRs have proven their value in driving alignment and focus, they are often implemented poorly due to a lack of understanding of their core purpose. The framework is intended to create clarity and alignment, but it can devolve into a simple checklist of outputs, rather than focusing on meaningful outcomes that align with strategic goals.

Examples of Poor OKRs:

• Objective: "Build a new landing page for the marketing campaign."

  • Key Result: "Complete the landing page design by March."

  • Issue: This OKR focuses on the completion of a task (output) rather than measuring the success or impact of the campaign (outcome).

• Objective: "Improve team collaboration."

  • Key Result: "Hold 10 team meetings this quarter."

  • Issue: The KR measures activity without demonstrating whether collaboration has actually improved.

To learn how to create effective OKRs that avoid these pitfalls, teams must ensure they connect Key Results to measurable outcomes that reflect progress toward meaningful objectives.

To learn how to create effective OKRs that avoid these pitfalls, teams must ensure they connect Key Results to measurable outcomes that reflect progress toward meaningful objectives. Creating a KPI tree, as discussed in my previous post: "The Key Elements of Product Strategy," can be a powerful tool here. By visualizing how each Key Result ladders up to broader strategic goals, teams can ensure alignment and focus.

This approach also helps in clarifying the link between individual contributions and overall company success, making goal-setting both actionable and inspiring.

Example: Google

Google famously adopted OKRs to scale effectively throughout its organisation. For their core business of online advertising, an effective OKR might be defined as follows:

Objective: Increase the efficiency and effectiveness of Google AdWords

Key results:

1. Increase click-through rate on Google AdWords by 15%

2. Reduce cost per click by 10%

3. Improve ad relevance score by 20%

Note: that these Key Results are more effective in an empowered Product team setup because they do not specify solutions or deliverables without outcomes. The outcomes are mentioned head-first, allowing autonomy for teams to define the best path to reach the desired outcome.

Strengths:

• Provides measurable targets: that help teams clearly understand what success looks like and track their progress over time. This ensures alignment and reduces ambiguity in goal-setting.

• Encourages prioritisation and focus: by requiring teams to identify the most impactful objectives and key results. This avoids distractions and ensures resources are allocated effectively.

• Ideal for organisations that value data-driven decision-making: as it fosters a culture of accountability and evidence-based evaluation of progress.

Challenges:

• Overemphasis on metrics can lead to short-term thinking: where teams prioritise immediate results over long-term strategy and sustainability. This can undermine the broader purpose of OKRs.

• Risk of setting overly aggressive or irrelevant key results: results can either demotivate teams due to unachievable targets or misalign efforts with the organisation’s strategic goals.

Choosing the Right Framework

The choice between NCTs and OKRs depends on your goals:

• Use NCTs when tackling complex, exploratory challenges that require storytelling and cross-functional buy-in.

• Use OKRs for focused, data-driven initiatives where progress can be quantified.

For instance, a startup exploring product-market fit might prefer NCTs, while an established SaaS company optimizing churn rates might lean on OKRs.

Both frameworks are rather similar in that they specify large goals and ways to achieve them in different communication formats. To help you identify which one suits your company and culture better, start asking yourself some key questions:

• For the case of using NCTs:

  • Are you launching a new initiative or exploring an uncharted market where ambiguity is high?

    • NCTs excel in scenarios where a clear and inspiring narrative can align diverse stakeholders around a shared vision.

  • Does your project require strong cross-functional collaboration?

    • The narrative component of NCTs helps bridge gaps between departments by providing a cohesive story that clarifies each team’s role in achieving the goal.

  • Is your goal to motivate and inspire teams to pursue bold, innovative solutions?

    • NCTs can energise teams by painting a vivid picture of future success and setting meaningful commitments.

• For the case of using OKRs:

  • Are your goals clearly defined and supported by measurable data?

    • OKRs are best suited for teams that thrive on quantitative results and have well-established metrics to track progress.

  • Does your organisation emphasise accountability and efficiency in achieving targets?

    • OKRs drive focus by ensuring every team member understands their specific role in reaching key results.

  • Are you scaling or optimizing proven initiatives where precision and tracking are critical?

    • OKRs’ measurable nature makes them ideal for iterative improvement and operational excellence. you launching a new initiative or exploring an uncharted market?

Actionable Steps for Product Managers

Getting started with NCTs or OKRs can feel overwhelming, especially if your team or organisation is new to structured goal-setting frameworks. The challenge lies in choosing the right approach and ensuring that it aligns with your strategic objectives and team dynamics. Without guidance, teams may end up over-complicating the process or defaulting to poorly defined goals.

To simplify this journey, start with three simple steps to provide a practical starting point and ensure clarity and direction from the get-go:

1. Evaluate Your Context: Are you driving innovation or optimising existing processes?

2. Define Success: Is it about inspiring teams or achieving measurable outcomes?

3. Experiment: Are you able to test both frameworks in different time periods using the same team, for different initiatives, and adapt based on results?

Final Thoughts

Both NCTs and OKRs are powerful tools, but their effectiveness lies in thoughtful implementation. By understanding their differences and tailoring them to your needs, you can set your team up for success in 2025. Start the year with intention, and let your goals guide you to impactful outcomes.

What frameworks do you use to set goals? Share your thoughts below! 👇

Building product strategy can be one of the most challenging yet rewarding aspects of being a product manager. The task isn't just about crafting a vision—it's about aligning stakeholders across various levels of the organisation while backing up your strategic choices with solid data and evidence. This complexity is even more daunting when you're new to your role, where the pressure to deliver is high but the path forward may seem unclear.

From my time working in both early startups to late-stage scale-ups and enterprise, I've encountered five key reasons why building a product strategy is so challenging from the get go:

• Misaligned stakeholder expectations – Different departments often have varying goals, making it impossible to create a unified product strategy that satisfies everyone.

• Conflicting business priorities – Balancing short-term revenue goals with long-term product vision can create tension, especially when leadership demands immediate results (e.g., be profitable, now!).

• Lack of reliable data or metrics – Without access to strong data, product managers are left to make assumptions, which weakens the justification behind strategic decisions.

• Pressure to deliver short-term wins over long-term vision – The need to show quick results can lead to compromises on the broader, future-oriented strategy.

• Navigating organizational politics and power dynamics – Internal politics and the influence of key stakeholders often overshadow data-driven decisions, making alignment harder to achieve.

The importance of strategy cannot be understated. The fast you develop your strategy, the faster you avoid being stuck in what I call the “Strategy Misalignment Spiral”.

Our 🔒Strategic Product Execution series helps product leaders efficiently plan and convert strategy into action and outcomes. One post at a time.

 If you’re a free subscriber and you’d like to upgrade to receive them you can do so below! Or you can find out more about paid access here.

The Unfortunate Case of the Strategy Misalignment Spiral

When a business or product lacks a clear strategy, teams often find themselves caught in a horrible downward spiral that leads only to the demise of team morale, productivity, and product performance.

I’ve now seen this spiral in different forms through my career, both as a consultant and as a product manager and leader. The spiral looks something roughly like this:

Reactive Decision Making

Without a clear product strategy, teams make decisions reactively, constantly shifting priorities to address the latest stakeholder demands or firefighting urgent issues. This leads to…

Wasted Resources

Reactive decision-making results in focusing on features and initiatives that do not align with long-term goals or deliver significant value. As a result, time, money, and talent are wasted on projects that do little to move the needle. This leads to…

Stakeholder Misalignment

As more resources are wasted on low-value efforts, frustration grows among stakeholders. Different departments push for their own priorities, leading to misalignment and conflicting demands across teams. This leads too…

Short-Term Wins Over Longer-Term Vision

In response to misalignment and growing stakeholder pressure, product teams focus on delivering short-term wins to appease immediate concerns. This compromises any long-term planning and perpetuates the cycle of reactive decision-making. This leads to…

Erosion of Team Morale

Constantly shifting priorities and delivering low-impact results take a toll on team morale. The product team and their stakeholders can feel disconnected from a larger purpose, leading to disengagement and burnout as they struggle to find meaning in their work.

Increased Reactive Decision-Making

As team morale declines, the product team becomes even more vulnerable to external pressures and firefighting. The lack of proactive strategic direction forces them into deeper reactive decision-making, perpetuating the downward spiral.

Avoid The Downward Spiral By “Leading Upwards”

There are some concrete ways to catch your teams from heading further down the spiral. I break this down into five key steps:

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Fortunately for me, I’ve had a great run using fantastic products and services that usually meet or exceed expectations. You know what these experiences are like:

Uber: Quick Convenient Journey

Touching down at a foreign airport, only to find your Uber immediately, taking you door-to-door to you intended destination. Meanwhile, everyone else is queueing for a more expensive taxi.

• Pain: Unable to get to your hotel fast to enjoy the rest of your day.

• Gain: Fast and cheap ride to hotel with ease.

Amazon: Last Minute Purchase

Solo parent at home, acquiring that one grocery item that you couldn’t find at-home, needed to bake a perfect cake for your kid’s birthday. Delivered same-day, just-in-time for you to place in the oven before guests arrive.

• Pain: Unable to find a scarce ingredient needed for a crucial event.

• Gain: The most convenient way to buy your required ingredients, without leaving your child without supervision.

Wise: Foreign Cash and Currency

Converting foreign currency overseas that is required immediately after you land at the airport. You withdraw from the nearby ATM at the airport with minimal fees.

• Pain: Expensive foreign exchange fees from untrusted parties. Risky to carry local cash to bring on a plane trip before exchange.

• Gain: Local currency immediately available to you with no risk and low fees.

Rarely, I've encountered distressing experiences that I hope no one, myself included, ever faces again. Let me share one such ordeal: a dismal food delivery mishap that no product manager should subject their users to.

The Tale of The Penang Curry: Lost in Delivery

A few years ago, with family visiting and time scarce, dining in became the plan. Turning to a local food delivery app, a familiar tool from my overseas jaunt, I hunted for a meal, armed with vouchers from a previous order mishap.

Spotting a nearby restaurant, a 15-minute drive away, I opted for delivery to entertain guests at home. Promised a 35 to 45-minute wait, our hunger grew as time elapsed with no sign of our meal.

Emotions ran high: family tired and hungry, myself, a tad stressed, primarily vexed with the delivery app. Tracking the vehicle's progress, hope flickered as the icon stalled just minutes away.

Contacting support yielded little relief. A chatbot's hollow responses led to a futile conversation with an agent, promising action but delivering only frustration.

One hour passed, no food in sight, patience wearing thin. The revelation of the driver's car trouble dashed any remaining hope. Offered a voucher as compensation, I declined, opting for an immediate refund and severing ties with the app for good.

I decided to draw out my experience after that whole ordeal, using a basic journey map, based on Positive, Neutral, and Negative sentiment. See below:

…and yes, I haven’t installed the app since. I’ve found better alternatives!

How Could This Have Been Better?

The experience with the food delivery app left me with an extremely bitter taste, prompting a retrospective on how it could be improved. I left plenty of feedback in my chatbot: I sincerely hope that someone picked it up for their backlog!

Firstly, better communication and transparency regarding the delay would have alleviated frustration. Timely updates from the support team or the delivery driver could have managed expectations and provided reassurance during the wait.

Secondly, a more efficient and responsive customer support system would have been useful. A seamless transition from automated responses to human interaction, coupled with proactive problem-solving, could have salvaged the situation. Empowering support agents with the authority to take immediate action and resolve issues swiftly would have prevented much of my dismay.

Lastly, investing in driver training and contingency plans for unforeseen circumstances such as car breakdowns could prevent similar incidents in the future. Maybe they can give the order to another driver who can pick it up off them? Who knows. Ensuring drivers are equipped to handle emergencies would have upheld a level of service reliability and trust.

Ultimately, by prioritising near real-time communication, customer service, mitigations and operational preparedness, the food delivery app could have turned a disastrous experience into an opportunity to build loyalty and trust. After all, they should have known I would have been at risk of churning: I had a voucher already from the missing items in a previous delivery!

Reasons Why Feedback Is Often Ignored

Amidst the ever-evolving market dynamics and customer preferences, many businesses struggle to effectively harness customer feedback as an invaluable resource to learn from. This is due to mainly 3 reasons:

1. Lack of Customer-Centric Culture

Sometimes you may find yourself in an organisation where customer focus is spoken about, but never really lived in the values of the employees.

Usually there are some tell-tale signs that indicate this lack of customer-centric culture, which also cause a much more wider problem: “organisational entropy”, which is the natural tendency of organizations to become disordered, inefficient, or resistant to change over time.

Take a look at the below, and see if any of them apply to your organisation:

1. Poor Communication Channels: Product managers do not establish clear channels for collecting and communicating customer feedback within the organization, leading to a lack of awareness and understanding of customer needs among team members.

2. Siloed Structures: Departments or teams within the organization may operate in isolation, making it difficult to share and utilize customer insights across the entire organization.

3. Bureaucratic Hurdles: Complex approval processes and bureaucratic red tape can slow down the implementation of customer-driven initiatives, leading to delays in responding to customer feedback.

4. Resource Constraints: Limited resources, whether financial, human, or technological, can hinder the organization's ability to invest in tools, training, or initiatives aimed at capturing and leveraging the voice of the customer.

5. No Action On User Feedback: management disregard user feedback and continue to make decisions based on assumptions or internal preferences.

6. Limited Customer Engagement: your team members or peers don’t speak to customers proactively on opportunities, instead only reacting when feature requests are escalated.

7. Disregard for User Experience: Product managers prioritize technical specifications, sales demands or internal processes over-optimizing the user experience, resulting in products that are difficult to use or navigate, or are inconsistent with design systems or UX best practices.

2. Fragmented / Unmeasured Feedback Channels

Feedback from customers come from all kinds of channels, many of which may not be easily transposed into meaningful insights or data pipelines in companies. Many organisations do not invest in synthesising the multiple inputs into meaningful insights or outcomes.

Consider the following sources of feedback:

• Marketing or CRM:

  • Website Behaviour: how your users interact with your website, either the sales and marketing collateral, or the product itself

  • Live Chat: how your users chat and interact within live chat, as well as any reviews or ratings provided

• Customer Care

  • Customer Support Interactions: call data or recordings of common or recurring issues, as well as emails received

• Platforms:

  • App Reviews: user feedback on the service from app store reviews, whether positive or negative, as a source for improvement

  • Social Media Listening: mentions and comments about the service on social media channels

• Research:

  • Survey data: qualitative and quantitative feedback from email or in-app surveys

• Product:

  • In-App Feedback: data supplied in feedback forms of in-app experience

  • User Interviews: Conduct interviews to understand user experiences.

  • Data Analytics: Use data to track user behaviour and identify areas for improvement.

Integrating these touch points and channels into meaningful insights can be difficult, especially for organisations that have a low appetite to invest further, limited by shorter-term profitability goals where return on investment and payback thresholds are low.

3. Purely Capitalist Pursuit Towards Profitability

Your company’s pursuit of profitability may often take precedence over other considerations, including actively listening to customer feedback. Businesses, particularly those under pressure to deliver short-term financial results, may prioritize initiatives that directly contribute to the bottom line, relegating feedback integration to a secondary or tertiary concern.

This profit-centric mindset can manifest in various ways:

• Short-Term Focus: Businesses may prioritize initiatives that promise immediate returns, such as cost-cutting measures or quick product releases, over longer-term investments in customer feedback analysis and product refinement.

• Quarterly Targets: The pressure to meet quarterly financial targets set by investors or stakeholders can lead businesses to allocate resources primarily to activities that generate immediate revenue, rather than those focused on improving customer satisfaction or loyalty through feedback implementation.

• Cost Considerations: Investing in comprehensive feedback analysis tools or hiring dedicated personnel to manage customer feedback channels may be perceived as costly endeavours, particularly for businesses operating on tight budgets or facing financial constraints.

• Market Competition: In highly competitive markets, where companies are vying for market share and profitability, there may be a reluctance to divert resources towards feedback integration efforts, especially if competitors are not visibly prioritizing similar initiatives.

As a result, VoC is overshadowed by short-term financial goals, hindering the ability of businesses to fully leverage feedback for continued innovation to create sustainable advantages.

6 Steps to Establishing Voice of Customer

So in light of all these challenges, we ask ourselves:

How can businesses leverage the voice of the customer to not only drive product innovation, but also foster sustainable growth and success?

Below, I offer 6 key ways to move towards a more sustainable measurement, synthesis, and action for Voice of Customer.

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A keen Sales Representative pitching a B2B solution to an enterprise customer discovers a significant opportunity that dwarfs all other sales deals by 2-3 times.

However, to secure the deal, certain features not currently supported by our core product are required, potentially requiring months of work.

The Sales Rep urgently contacts you, the Product Manager, via Slack, asking if these features can be prioritized for delivery within 30 days.

However, our roadmap is already full of planned initiatives for over the next 2 quarters or more.

Upon meeting with the Sales Rep, it's revealed that the prospect wants to finalize the deal in 7 days with a commitment to launching the requested features.

So you are now tasked with the question:

PMs collectively suffer the pain of context switching and constantly reviewing and setting priorities. Unfortunately, this pain gets far worse, especially when:

• Escalation splash zone expands: the request is mentioned multiple times but different stakeholders, all increasing in seniority until the Top-level Management demand answers (and they want them yesterday!).

• Competitor intensity is high: Ignoring this opportunity could allow competitors to further their differentiations on your product, increasing their market share at the expense of yours.

• Internal politics is rampant: another department has already complained that their technical initiatives that save cost and retain customers have not been paid attention to.

As stakeholder demands increase in urgency and complexity, product managers risk decision paralysis: a state in which we are unable to make a decision due to being overwhelmed by too many options, conflicting information, or the fear of making the wrong choice.

If We Get Paid For This Custom Product Development, Why Does It Matter?

It can be extremely tempting to accept new requirements for new revenue. After all, if a handful of small features is all you need to deliver, the revenue should be enough to justify… right?

Well, the answer is often not as simple as you think, for a few key reasons:

• Hidden costs: Fulfilling customised development requests often requires significant resources, including time and financial investment. This can divert resources away from core product development and delay roadmap commitments that are already aimed at revenue uplift.

• Complexity Overload: Bespoke customer demands can introduce complexity into the product architecture, leading to increased maintenance costs, technical debt, and potential compatibility issues with future updates or releases.

• Misalignment with Strategy or Vision: Tailoring products to individual customer requests may lead to a divergence from the product's core vision and strategic direction. This can dilute the value proposition and hinder scalability and market competitiveness in the long term.

• Huge Dependency Risks: Over-reliance on customized solutions for individual customers can create dependencies that limit the ability to scale and adapt the product for broader market needs. This can hinder your organisation’s agility in responding to evolving market changes and competitive threats.

Ultimately, it comes down to trade-offs, where a PM needs to ask themselves:

• What shorter and longer term impact does this incoming request have to our business?

• If we make variances to plan, how do I explain this to stakeholders we’ve previously committed to?

The Different Stakeholder Perceptions Of Product Roadmaps

Roadmaps are perceived very differently depending on the stakeholder.

• In a B2B/B2G context, Salespersons often perceive a roadmap to be a list of deliverables by delivery date. They often require precision and certainty to manage client expectations and sales pipelines. Any slippage from plan and they lose trust in Product.

• In a B2C context, customer care or customer success teams may also demand precise commitments, often due to feedback received from existing customers. Sometimes a product may have bugs that are never prioritised due to lesser impact than planned initiatives or complexity to fix.

There’s a few risks with perceiving a roadmap as a list of commitments and dates:

1. Limited Flexibility: Treating roadmaps as sales commitments can lead to rigid timelines and scope creep as sales-driven demands override strategic considerations. This limits the team's ability to adapt to changing market dynamics, emerging technologies, and customer feedback effectively.

2. Undermining Trust: When roadmaps are consistently perceived as sales commitments, stakeholders, including customers, investors, and internal teams, may lose trust in the organization's ability to deliver on its promises. This can erode credibility and damage relationships over time.

3. Risk of Overpromising: Mistaking roadmaps for sales commitments may result in overpromising features or delivery timelines to customers, leading to disappointment, dissatisfaction, and potential churn if expectations are not met.

Instead, we want to view product roadmaps as an agile communication tool that articulates current strategic priorities in achieving established product vision or strategy.

I’ve transformed product organisations across different maturities and sectors towards Product-Led Roadmaps through many ways. In this post, we discuss five common elements and steps for any PM to shift these mindsets to a more collaborative “Product” way of working, focussing on outcomes and flexible, agile collaboration.

Let’s dive in!👇 🏊‍♂️

5 Steps Towards Product-Led Roadmaps

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Product leaders today need to become much more commercially savvy, analysing revenue and cost levers with minutia of detail to ensure every product and technology investment is made with the greatest return with shortest payback.

Often, we must continually create and communicate business cases or impact assessments, to justify strategic priorities. Without it, we may face a swift axe of layoffs decided by a ruthless management board!

So how does one create investment cases that not only capture the attention from senior executives, but also secures the funding you need for your next product initiative?

One way is to tell business cases not only through numbers and analysis, but through an emotional customer-focussed narrative. Daniel Kahneman explores this further through his story of “The Elephant and the Rider”.

The Rider, The Elephant, System 1 and 2

Psychologist and Nobel laureate, Daniel Kahneman, introduced the concept of "The Elephant and the Rider" in his book "Thinking, Fast and Slow."

Kahneman’s metaphor represents the interplay between two systems in our minds:

• The emotional, impulsive "Elephant"; and

• The rational, controlled "Rider”. Imagine a young boy sitting on that impulsive Elephant.

Kahneman argues that while the rider (synonymous for our rational thinking) can guide the elephant to some extent, the elephant's emotions often dominate decision-making.

A brilliant example of success in branding, is Nike:

• Rational Approach: A rational approach might emphasize the technical features of Nike's athletic shoes, such as advanced cushioning or high-tech materials.

• Emotional Approach: Nike's "Just Do It" campaign doesn't focus on the technical aspects but appeals to the emotional side, inspiring people to overcome challenges and achieve greatness. It creates a sense of empowerment and motivation.

Emotional stories can have a massive impact in pitching business cases because they engage the elephant, making the information more memorable and persuasive. Narratives are key.

Here are 5 steps I like using to create compelling narratives that wrap around my business and investment cases. Let’s dive in.

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While there’s no single definition, some startup leaders have offered their definitions below:

Lenny Rachitsky, from Lenny’s Newsletter focuses his definition on desirability, sustainability and profitability:

“[PMF is when] you’ve made a product people want, can find and keep people sustainably, and makes a profit delivering to people at scale”

Marc Andreessen, Silicon Valley entrepreneur, co-founder of the VC firm Andreessen Horowitz, focuses his definition on market satisfaction:

“Being a good market with a product that can satisfy that market” and when building startups “it’s the only thing that matters”

Reid Hoffman, focusses on the sustainability of differentiations, per his book Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies, that:

“… the key product/ market fit question you need to answer is whether you have discovered a nonobvious market opportunity where you have a unique advantage or approach, and one that competing players won’t see until you’ve had a chance to build a healthy lead.”

Perhaps the most visual definition has been offered by Dan Olsen, summarised in his talk at the PRODUCTIZED conference in 2017. A summary of his talk can be found on his guest post on Medium.

Dan breaks down the components of the PMF into two sections: The Product vs. The Market. Our jobs as PMs is to close the gap by understanding the market whilst tailoring a delightful MVP to address underserved needs.

“The bottom layers of the pyramid is the market (Target Customer + Customer’s Underserved Needs). As a PM, you should remember that you don’t control the market. If you change your customer, then your whole pyramid falls down and you have to start all over again.”

The top layers are where the product […] comes in… you have more control and that is where you form hypothesis and execute them. This layer is broken up into three key elements: Value Proposition, Feature Set, UX Design.

For many PMs, these definitions may make sense immediately upon hearing them. However, finding a definitive way to measure it may be challenging for a number of reasons, varying depending on your company industry, life stage and customer type, to name a few.

Let’s take a look at some common challenges below.

Challenges In Measuring Product Market Fit

Your Snapshot Of Time

At any given moment, your product may seem to fit well with your target market, but can change rapidly , especially due to shifts in consumer trends, competition or drastic or large industry or regulatory changes.

Consider a product such as Threads, launched by Meta (Instagram), at a time when users of Twitter, their main competitor, were starting to lose faith due to recent changes in the product and leadership.

In the initial 5 days of launching, they acquired a staggering 100 million users, suggesting a strong market fit from the outset. However, user engagement has since plummeted, according to Similarweb. A 20% drop in daily active users and a 50% decline in time spent on the app one week post-launch.

Ongoing assessment is crucial as market conditions, competitor offerings, and consumer needs evolve. Related to this challenge, is the fact that many products have hundreds of metrics that may send mixed messages, bringing us to our next challenge… 👇

A Sea Of Often Contradicting Metrics

Determining product-market fit involves analyzing various metrics such as customer satisfaction, retention rates, churn rates, revenue growth, and customer feedback. On top of this, there are profitability metrics related to costs-to-serve, operating costs, gross and net margin as well. However, no single metric can provide a comprehensive understanding of PMF.

While many metrics can provide indications to overall fit, different metrics may contradict each other, making it difficult to draw definitive conclusions. Similarly, unseasoned product managers may focus on the wrong (“vanity”) metrics that may appear to be a success, but ultimately does not measure the right metric.

For example, say you’ve launched a mobile app that sells digital gift cards to your customers. Think Apple, Steam, Microsoft, Facebook credits that can be used as digital currency within App Stores. You then see the following patterns across 12 months:

• ✅ 4,000,000 app installs

• ✅ 30,000 weekly active users by end of year (grew from 15,000 to 30,000 across 12 months)

• ✅ 30% of revenue coming from buyers of 10+ cards per month

• ✅ $40.5m transaction value, growing from $300,000 the year before

Seems like a successful venture, right? What if I also told you that related data showed the following:

• 🛑 Fraud losses as a % of all payment value = 15%

• 🤔 Gross margin of 10%

• 🛑 Net margin of -5%

Based on the above, you see strong customer demand in downloads, and weekly active users too, and strong engagement. However those non-fraudulent customers aren’t buying from you enough to counteract the fraud losses seen on your product.

In this case, many would say that you haven’t really reached Product Market Fit. Choosing a right balance of metrics is key. We delve deeper into this later in this post.

Lack of Prior Data to Draw Conclusions

A common problem for all new products or startups, is the limited historical data set to benchmark against. Without a baseline, it's challenging to assess whether the current level of customer adoption and satisfaction signifies a strong product-market fit.

Lack of historical data makes it harder to interpret current performance accurately without context. In many cases, PMs need to wait to build up data before they perform deeper analysis across more time, products / SKUs and customer segments to understand their PMF.

Let’s rewind back to the early days of Airbnb. They struggled to gain traction and faced skepticism from investors and users alike until sufficient demand and supply could be demonstrated.

The concept of renting out a room or property to strangers was unconventional, and initial growth was slow. However, the founders believed in their vision and persisted in collecting data and iterating on their platform. It wasn't until they gathered more information on user behavior, refined their offerings, and implemented strategic marketing campaigns that they began to see significant traction.

They found from interviews and usage data over time that travelers enjoyed professional photos of listings, so they hired photographers to help take wonderful photos for hosts who lacked the expertise. Airbnb also found ways to generate demand via guerilla marketing campaigns, offering hosts tools (aka. bots) that reposted listings onto Craigslist to increase exposure. These activities were not possible without data, observations, and constant testing and learning.

High Variance In Customer Acquisition Cost (CAC)

Investing in customer acquisition, particularly for enterprise or up-market segments, adds another layer of complexity to measuring product-market fit. It becomes challenging to distinguish between genuine product-market fit and a situation where customers are acquired at highly varying low and high cost due to marketing efforts, sales incentives, or simply when you have long sales cycles due to the industry you operate in.

While you may be able to ‘average out’ the costs over time, frequent significant outliers in sales lead time per deal and customer acquisition costs may signal you haven’t quite nailed your distribution or channel strategy for your product.

Take for example, my time in Littlepay, both a B2B and B2G payments company during the earlier phases of its life stage:

• Prospects with long sales lead times due to incumbent vendor contracts being between 5 to 10 years long

• 50% of prospects required responding to tenders released, ranging from Request For Interest through to Request For Proposals

• 80% of deals closed within 15 weeks of prospecting to signature

• 20% of deals closed within 18 months of prospecting to signature

• However, the longer 18 month deals resulted in 90% of revenue for the company, when signed.

Would you say that the company found product market fit?

Some may say yes. Some may say no.

It gets even more complicated when you start to measure other metrics. Let’s investigate Littlepay in a short case study below ⬇️ 🚆.

Case Study: Our PMF Challenges at Littlepay

My time at Littlepay provided me the biggest lessons in understanding what product market fit could look like for an early stage business. I would say that the first-third of my tenure at the company was spent solving for product market fit, before scaling it globally through APIs and indirect go-to-market channels.

As employee number 7, with barely a product in existence at time of joining, we had many different directions we could take. Luckily, we had a strategic merchant we worked with closely to refine our minimum viable product and our product roadmap for iterations to come later on.

Across my 5 years in the startup growing from zero to nearly 100 million transactions per annum, I recall three distinct events with strong positive signals, but also extremely mixed signals too:

• Transaction Throughput:

  • Positive Signal: we grew our platform to process millions of transactions for one strategic partner’s many sub-merchants. Win!

  • Mixed signal: many millions of transactions processed, but only through one strategic merchant that bought into our solution from day zero. We needed to diversify our client portfolio.

• Market Penetration:

  • Positive Signal: analysing the market, we calculated that we were processing transactions for 50% of the UK Private Bus Operator market, measured by fleet size in number of buses and converted 3 out of the 5 ‘Big 5’ operators. Big win!

  • Mixed signal: we could only convert transit operator deals during the first couple of years. By year three, we had not won a major tender issued by a public transit authority outside the UK, funded by a government. Luckily, we started to win the year after though!

• Portfolio of Integrated Re-sellers:

  • Positive Signal: we successfully managed the integrations and certifications of 12 partners to our API-based platform, either fare validator hardware vendors, or integrators. Another win!

  • Mixed signal: while a large majority of these were integrated, almost 80% of our revenue came from our first strategic fare validator partner in the UK, not from the newly integrated ones. It took a long time to realise the benefits of the partners as we provided sales enablement and realised how to best partner and pitch in global tenders.

By the end of my time at Littlepay, I would classify that we reached product market fit for the UK Bus Industry, but for the public transit authority industry, we failed to gain the true product market fit, as we saw only a third of our revenues generated by non-UK partners.

Fast forward to now: I can see from its website that the company has achieved many international deployments via tenders, with strong evidence that it has high product market fit as a global payments player for all transit organisations, from small to large, from public sector to private.

Six Signals Suggesting Strong Product Market Fit

OK. So we sort of know what product market fit is about. However, how can you tell if you've achieved this nirvana state?

From customer satisfaction metrics to traction indicators, there are several key signals to look out for. For the remainder of this post, we'll delve into Six core signals that indicate your product is hitting the mark with your target audience.

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If you haven’t subscribed yet, here’s what you missed:

• The Key Elements of Product Strategy

• How to Conduct Product Portfolio Profitability Analysis

• Linking Product Strategy to Roadmap through Themes & Initiatives

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Welcome to our Deep Dive on Price Strategy, Setting and Execution!

In our 3 part Deep Dive, we cover:

• The Key Elements of Pricing: Strategy, Setting, Execution → link

• How to Set The Optimal Pricing For Your Product → link

• How to Implement and Execute Product Pricing → this post!

I today’s post, we look at the final step: how to execute pricing decisions and setting across your organisation at scale. While previous posts answered “Why”, “What”, “When”, we now discuss the detail of “How”.

If you haven’t already read Part 1 of this series, please read my previous post before continuing on.

Let’s dig in!

What is Pricing Execution?

Pricing execution is the implementation of the pricing strategy and setting decisions. It involves putting the pricing plans into action, monitoring and adjusting prices as needed, and ensuring consistency in pricing across different channels and markets.

While strategy and setting focus on planning and decision-making, execution is about implementing and managing those decisions in the real market environment.

For me, I see Pricing Execution as three components:

• Enablers: the support structures needed to sustain pricing decisions across your company, such as data orchestration and analytics, skills & competencies, and clear collaborative ways of working

• Governance: the guardrails and rules for what acceptable pricing ranges are, depending on certain parameters agreed in the ‘Setting’ phase of your strategy

• Rollout Plan: a delivery plan outlining your deliverables and work packages to improve your executional capabilities defined above. Recall that we want pricing decisions to be consistent and applied company wide at-scale.

The Difficulties of Executing Pricing

Over the past few years, I’ve witnessed all kinds of revenue models, each with different cost and value components. No business was the same, yet they all suffered from the same problem:

How to ensure consistent decisions being made on product pricing, without requiring manual analysis each and every time?

If you have a handful of people within your company, then it may be simple as meeting with your colleague or referring to a pricing sheet that was once created in Excel. However, As your company grows, and as your product portfolio and feature set as well, you can’t simply rely on going back to the ‘finance person’ or the ‘pricing guru’ for every pricing approval and decision.

This is where you need to invest into Pricing Execution ‘Enablers’, where you implement a set of processes, capabilities and tools, that are available to the company in a transparent simple to use manner.

Pricing Enablers

I see at least 6 distinct enablers that can help your organization embed a culture for mature pricing strategy and setting decisions.

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If you haven’t subscribed yet, here’s what you missed:

• The Key Elements of Product Strategy

• How to Conduct Product Portfolio Profitability Analysis

• Linking Product Strategy to Roadmap through Themes & Initiatives

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Welcome to our Deep Dive on Price Strategy, Setting and Execution!

In our 3 part Deep Dive, we cover:

• The Key Elements of Pricing: Strategy, Setting, Execution → previous post

• How to Set The Optimal Pricing For Your Product → this post

• How to Implement and Execute Product Pricing → next post!

Let’s dig in to the world of Price Setting.

What is Price Setting?

Price setting is a specific phase within the broader pricing strategy process where a company establishes the actual monetary value that will be assigned to a product or service. Simply put, it’s the actual calculations you perform to establish your range of optimal prices you’d like to promote to your customer.

Of course, price setting is a crucial step within the overall pricing strategy, and it involves analysing various factors to arrive at a figure that aligns with the company's objectives, market conditions, and customer expectations.

Many may the mistake of jumping straight into calculating prices without thinking through their customer segmentation, market and competitive landscape and review of their product portfolio’s revenue and cost structures. This unfortunately leads to bad pricing decisions that may have adverse consequences: lost revenue via churn, degradation of market positioning, among others.

If you haven’t already read Part 1 of this series, please read my previous post before continuing on.

Price Setting Components: Models, Metrics, Messaging

In our approach, we break down Price Setting into three key pillars:

• Pricing Models: the set of decisions of the type of pricing you wish to charge, how often, under what conditions, and using which metric;

• Metrics: the calculation and tracking of key product metrics used as an input or the basis for your pricing model;

• Messaging: the creation of key messages to communicate pricing to the customer that maximises their adoption, and decisions on which channels to utilise and when.

These steps have been distinctly separated from the strategic step, so that you can clearly focus on the method of deciding and setting your prices, which often requires different stakeholders or support teams to give you quantitative data to begin calculate and set your price ranges.

Teams may include:

• Finance: to provide cost inputs and revenue estimates where possible

• Data: to enable data orchestration that enables the tracking and monitoring of specific data events that are inputs to your chosen pricing metric and models

• Marketing or Product Marketing: to provide input and feedback on the types of channels and messaging approaches available to communicate pricing

• Commercial / Sales or Customer Success: to provide input and feedback per customer segment and market on the perceived product value and perception of your current pricing

Start to engage with stakeholders early on in the Price Setting process, if not walking through the pricing strategy analysis you performed in Step 1. The earlier you consult them, the more aligned and bought into the pricing analysis they will be, and the more willing they will be to adopt and implement pricing across their responsible areas.

Choosing Your Pricing Model

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If you haven’t subscribed yet, here’s what you missed:

• The Key Elements of Product Strategy

• How to Conduct Product Portfolio Profitability Analysis

• Linking Product Strategy to Roadmap through Themes & Initiatives

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Can you believe it? 2024 has arrived!

If you’re like me in Product, you’ll be busy recovering from a wild 2023 full of ups and downs, whether the growth of AI, the onslaught of layoffs, or just simply a roller coaster ride of the stock market. Personally, I’m looking for a far smoother 2024 with a clear head space to take on new challenged for the year!

In my previous posts, I walked through The Key Elements of Product Strategy, and how to link Product Strategy to Roadmap through Themes & Initiatives. It’s now time to dig in deeper into execution: how we convert product strategy into actual outcomes and action across various dimensions.

In this post, I will be walking through a guide on Pricing, potentially one of the most important topics for 2024 for SaaS business.

Why Pricing? Why Now?

Recall that revenue is always a function of two main inputs:

• Price: how much you pay per unit consumed; and

• Quantity: how many units you consume. Note that this can be simply one (e.g., a service fee to access a product or service), or multiple (e.g., access fee, API call, transaction based model)

If SaaS companies cannot be grow quantity (sales) organically through new business (customer acquisition), then we default to monetising through existing customers, either to:

• convince them to up-sell / cross-sell to another offering, or

• simply to pay for what they already pay for, via re-pricing.

In fact, in 2023, we saw this happen all across the board from early to late stage companies vying to reach profitability, as soon as possible.

According to ChartMogul, for companies with $1-30m Annual Recurring Revenue (ARR), median ARR growth rates have slowed from 42.5% in 2020 to just 27% in 2023. Looking at the bottom quartile, and we see even flat growth rates of just over 6% for 2023. Ouch.

Kyle Poyar, from Growth Unhinged also wrote about slowing growth and the shift from new business towards expansion via existing customers. He surveyed more than 700 private SaaS companies and found that as companies grew from small (<$1M ARR) to enterprise (>$20M and beyond), their median ARR from new business decreases rapidly relative to Expansion revenue from existing customers.

While new business was important for newer companies, later stage companies needed to take a different approach.

He found that those companies with the most powerful expansion motions centred around a few success factors, related mostly to pricing:

• Multiple pricing levers for expanding customers: providing optionality when pressure against seats (declining headcount) or usage (cost optimizations) exists; and

• Prioritised product roadmaps based primarily on willingness-to-pay.

So, yes: pricing strategy and execution is perhaps the most important topic to pay attention to as you start your new year.

However there are some very common misconceptions of pricing that we should debunk very early before we move on. Let’s dig in!

Note: Expanding revenue from your existing accounts can be very challenging, deserving an entirely separate post on all the different types of Expansion Strategies available. For the purposes of this deep dive, we are solely focusing on Pricing changes: that is, how we set, change or introduce new pricing to your customers.

Pricing Misconceptions

Many people think that Pricing is solely the activity of just setting a new price for the product. Reduce the price, get more demand - it can’t be that difficult to implement, surely?

Unfortunately, you need much more thinking and much more well planned execution once you’ve decided the pricing you want to implement. Let’s address some common Myths.

Myth #1: Lowering prices always results in increased sales

Lower your price, and a flood of customers will come. Simple equation right?

Well, there are many scenarios where lowering prices may actually result in fewer sales, typically for those markets where competitors have similar offerings, switching costs are low, and brand loyalty is not as high. Competitors can simply lower their prices in reaction, leading to a pricing-war.

We’ve seen this time and time again, and often resulting in unfavourable outcomes for all players in the same market. For example:

• Russia and Saudia Arabia Oil Price Reduction: In March 2020, when Russia and Saudi Arabia couldn't agree on production cuts to support oil prices amid a drop in global demand due to the COVID-19 pandemic, a price war broke out. Both countries flooded the market with oil, driving prices down, leading to an oversupply and a massive drop in oil prices of approximately 65% plunge.

• Commission price war among ETF brokerages: In 2018-2019, Charles Schwab, TD Ameritrade, and E*TRADE engaged in a fee-cutting competition, ultimately leading to the elimination of commissions for online stock and ETF trades as they raced to the bottom. Investors emerged as the winners in this pricing battle, at the expense of lost revenue to brokerages.

Before lowering prices, careful analysis needs to be done. We dig deeper into this topic in Part 2 of our post, Price Setting.

Myth #2: Increasing prices means I will lose my business

On the flipside, many think that price increases will result in major losses to clients who would churn to alternative products.

But this is not always the case, especially for premium products or those that are embedded in ecosystems where the total value of the products purchased are greater than the sum of each individual part!

Take for example Apple’s product pricing for iPhones, Macs and iPads. Each successive year is a new launch of a brand new device in each category, often increasing in price each time, with no adverse impact to sales quantity / volume.

Here, premium products are being promoted to the consumer, and increases in prices have not resulted in reduced demand due to price inelasticity, a topic we will cover in part two of this deep dive.

Another example of effective price increases is when a company succeeds at adopting a value-based pricing approach, rather than cost-plus pricing (see below).

For example, a consumer may value and pay for a fine art painting, or even perhaps digital art NFTs, for hundreds of thousands of Euros, the cost of creating the art is miniscule relative to the sale price. Both value and price is derived from artist prestige.

We investigate value-based pricing in Part two of this post, Price Setting.

Myth #3: Cost-Plus pricing is the best to stay profitable

Cost-plus pricing is the concept of taking a unit price, then applying a premium on top of it, to arrive at the final price for buyers. It aims to ensure a favourable gross profit per sale, but this strategy has many drawbacks.

One of the biggest problems with Cost-plus pricing is that it does not consider market variability, which was rife between 2022 and 2023, most notably inflation and the general increase in consumer prices. Such inconsistency in production costs can result in variable profit margins, creating challenges for sustained profitability.

Adopting a Cost-plus pricing mindset also fails to consider customer perceptions of value, willingness to pay, and ignores competitors' prices, potentially leading to missed revenue opportunities.

It also limits innovation and creativity in product design due to the emphasis on maintaining low costs. Products can then become more and more commoditised, lacking in differentiation, making it easy for customers to shift to alternative solutions that solve their needs.

Myth #4: Our pricing strategy is too complex or too old to change

Maintaining a status quo on your pricing is like writing your own obituary. While adjusting pricing can be complex to execute, the potential for higher profits can be far more beneficial and worth the spend in effort or time. Fail to adapt, and you’ll be dead in the water.

Let’s say, hypothetically, your business charges high upfront costs for your product. A major competitor of yours changes their pricing model, offering a ‘pay later’ or subscription model that simplifies the billing for the customer and outright investment needed. By staying still, you will lose market share within a matter of days, not months.

To navigate these challenges, organizations must adapt their pricing strategies to ensure ongoing profitability and growth. While it may seem daunting, there are many modern pricing solutions available now, including dynamic pricing models (and even SaaS!), make it easier to navigate complexities and implement changes.

In Part 2 and 3, we’ll explore some ways you can mitigate the downsides of costs and negative business performance while you optimise your pricing strategy for your individual circumstance.

The 3 Steps to Pricing: Strategy, Setting, and Execution

In all of my product and market strategy projects, whether as consultant or as a product leader, I follow a simple model for Pricing across three phases:

• Pricing Strategy: Setting the context on our customer, customer segments, market and product landscape, and our choices on the type of pricing we want to implement (versus those we will not);

• Price Setting: The actual calculations of the most optimal pricing to set on our product, the metrics to watch to ensure we have set the right price for ROI, and messaging the price to our customers through the correct channel and frequency; and

• Pricing Execution: How to implement the pricing both internally and externally, based on a pragmatic plan and the longer-term capabilities, governance and enablers (e.g. tools, support teams, processes) to ensure pricing is implemented and sustained.

In this post, we deep dive into the first pillar of Pricing Strategy, and the components within. You’ll also be given access to our Lean Pricing Canvas, a Miro board that allows you to craft, set and implement pricing in your company, with ease!

Strategy Pillar 1: The Customer

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So you’ve got your product strategy articulated and aligned, great work! I knew I could count on you.

However your stakeholders are asking you what this means in execution and what to expect in deliverables. What do you do?

In our post on the Key Elements of Product Strategy, we identified that Product Strategy is the combination of Context, Choices, and Competencies:

• CONTEXT — the compelling story of the significant challenges the company faces, its overarching vision and mission, and its alignment with the broader goals and metrics of the company.

• CHOICES — the deliberate decisions regarding the specific market, customer segments, unique differentiators and business activities it chooses to invest in, and the non-negotiable foundational principles that guide the product development process.

• COMPETENCIES — the inherent capacity, strengths, skills that a company possesses, encompassing both tangible and intangible assets, required to achieve its goals.

The next step now is to clearly lay out the steps you will take to achieve the outcomes and objectives articulated in the strategy. To do this, we need to set some Strategic Themes. Let’s take a look at some case studies of these themes to get some inspiration, before diving into how we can make our own.

Roadmaps Defined

Unfortunately many stakeholders expect a list of deliverables with due dates attached, aiming to gain commitment and certainty of results. In Product, we usually shy away from this as priorities change all the time, and new developments contain uncertainty that is hard to estimate and foresee during planning.

From my previous post on Roadmaps, I see there are three main reasons why we have a roadmap. These are:

1. To set a Strategic artefact or statement of intent.

2. To depict our short vs long term goals.

3. To describe the desired set of steps to achieve both short and long-term goals.

To articulate the desired set of steps, I advocate using Strategic Themes, which span multiple opportunities that drive your business objectives in your strategy.

Strategic Themes Defined

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Welcome to Part 2 of our strategic product management post on How to Conduct Portfolio Profitability Analysis. In this deep dive, we present to you two parts:

• Customer / Account Segmentation (posted here)

• Product-Line Profitability Analysis ← this post

Let’s dive in!

What does a Product Portfolio look like across organisations?

A product portfolio refers to the collection of products or services offered by a company. It's like a curated line-up of what your organisations brings to the market to solve your target customer’s evolving needs and problems.

The product portfolio should be linked to product strategy and often shaped through carefully planned steps in your Roadmap. The portfolio should achieve specific business goals, cater to different market segments, and adapt to changes in the business environment.

Executing a product portfolio involves making decisions about which products to develop, enhance, or retire based on many factors, such as:

• Market demand

• Changing market dynamics

• Competitive pressures

• Internal resistance to change

• Complex organizational structure

In this post, we break down the complex task of Product Portfolio Profitability Analysis into 5 steps, with a Google Sheet template to help you along the way.

Let’s begin.

5 Steps to Reviewing your Portfolio:

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Our 🔒Strategic Product Execution series helps product leaders efficiently plan and convert strategy into action and outcomes. One post at a time.

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For the last couple years, it seems like the same old question has been asked:

“How do we stop making layoffs and stop experiencing negative start-up sentiment on ‘survivability’ in both public and private markets?”

There are many factors that contribute to failure and generally the financial viability of many start-ups, varying in reason and life stage. According to Failory, the general consensus is that it is caused by general lack of product-market fit, marketing, and team and financial problems.

We’ve seen this story before:

• Start-up finds traction in its MVP within a selected market

• Start-up raises capital, whether or early or late stage, based on the promise of meeting high growth targets

• It aggressively hires with a ‘growth at no cost’ mindset, due to previously cheap cash (the ZIRP phenomena: Zero Interest Rate Policy) often provided in bulk by investors looking for a high return multiple

• It scales up its teams, invests into their go-to-market strategy and product only to find that customers are harder to acquire and retain per the forecasts that justified previous valuation and investment

• Unit economics become loss-making, eating into the cash raised, but cash is running out and new rounds are not possible at the same low-level interest rates

• Companies must make the difficult decision to cut costs drastically across the board, reducing overheads to ensure ‘break-even’ comes faster, and that it generally makes more money than it burns.

Well, at least I’ve been part of one growth story that followed the above (you can probably guess which one!).

How can we prevent such a loop from happening? In my view, as leaders, you need to take control of your own profitability levers, review your product portfolio’s profitability, often through customer segmentation or product line performance analysis, to then make difficult (yet data-driven) decisions on where to cut back or invest further.

In my post below, I provide you a framework for Product Portfolio Profitability Analysis that you can apply to your own portfolio, to steady your own ship, before its too late.

Note: these examples are based on my experience working largely in B2B organisations with at least a handful of distinct features or products, as well as paying customer accounts, where segmentation can be performed across multiple variables.

Preamble: Why review your portfolio, even if your company has already conducted layoffs?

You’re probably already in a company or position where you have seen layoffs conducted in the last two years.

As I reported in a previous article, and according to layoffs.fyi, we’ve already seen 1155 tech companies that have laid off at least 250,000 employees in 2023 alone (as of 12th December 2023). Another source (TrueUp) believes that this number can be as high as 450,000.

Just because your company has already done one or more round of layoffs, it can always still make layoffs, even for a growing company that has had profitability or has been close to it.

For example, according to Wall Street Journal, on December 11th 2023, Spotify laid off 17% of its workforce, despite making 11% more revenue in Q3 (close to $3.6 billion). Over the last 12 months, stock has been up 130%, rewarding cost cutting measures. Simply put, this is what investors want: return on cash invested.

So, take the helm of your own product stack as much as you can: analyse your own portfolio of products and make the hard decisions now, so you can divert your resources towards higher growing or more profitable products and services.

In this strategy deep dive, we present to you two parts:

• Customer / Account Segmentation ← this post

• Product-Line Profitability Analysis (next post)

Let’s begin!

What is Customer and Account Segmentation?

Segmentation is the process of identifying distinct and actionable groups of customers based on various measures, such as revenue generated, cost to serve, perceived value, characteristics, behaviours, needs, or attitudes towards the product.

The purpose of customer segmentation is to effectively quantify and communicate the value of products, not only influencing how your commercial stakeholders manage their go-to-market and sales strategies, but also to ensure a reasonable amount is invested into the more favourable customer segments.

Bottom line: properly created segments allow the business to focus its efforts and offerings on the most attractive groups of customers.

Segmentation forms the basis for creating and tailoring value propositions that align with the customers’ needs.

4 Steps to B2B Customer / Account Portfolio Segmentation

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When I was 16, I got my first job in customer service as a restaurant waiter. I loved it — cash-in-hand, free food at the end of my shift, and the ability to meet all kinds of new people.

It was certainly hard work, dealing with both happy and unhappy customers. Two key lesson I experienced that has stuck with me forever was to: ‘listen, listen, listen’ and ‘the customer is always right’:

• If an order was too cold — make it again, ASAP and ensure it is more than warm.

• If a food item was missing — give them twice as much what was missing

• Essentially: if a complaint came through — do a good deed, double in quantity.

Yet, years later, as a management consultant and as a Product Manager, the same service and listening skills don’t quite fit the bill.

Stakeholder requests and demands are much more complicated:

• No longer are you simply executing against a pre-set menu of goods. Your menu (i.e., backlog, roadmap) keeps changing. Problems can be solved by all kinds of solutions, each with differing levels of impact.

• Your kitchen (aka Product / Engineering team) isn’t that forgiving when you have a demanding stakeholder in front of you, instructing your every step. In a restaurant, customers may never return. In a company, the same stakeholders are in front of you each and every day.

• Contrary to popular believe, your stakeholders (internal customer) aren’t always right: their issues may just be individual to them, their performance goals, and their agendas.

That said, the majority of the time, our stakeholders are a great source of inspiration: they often are on the front line that experiences the pain often on behalf of the customer, and they all have objectives that should (in theory) be aligned with yours, assuming you all work towards some shared company goal (aka North Star Metric).

The Outcome / Opportunity Map

Assume we have already got a strong understanding of what our stakeholder’s power and influence is, and what level of involvement we need to have with them. I wrote about this extensively in previous posts.

The Product Post

How to build executive consensus and buy-in

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2 years ago · Andrew Quan

Our challenge now, is how to distinguish between their ideas: the great, the good, the bad, and the ugly.

To do this effectively, I always vouch for opportunity mapping: working with stakeholders top-down, starting from Company Goals, moving down the stack, asking many questions along the way to arrive at a shared set of opportunities to pursue together.

Let’s walk through each in detail:

• Goals: What goals are your stakeholders aiming towards <this period>? How does the company goal break down into a stakeholder’s departmental and team goals?

• Hypothesis: What hypothesis needs to hold true for us to deliver (solution) to reach (goal)?

• Outcome: What outcome are you aiming to achieve with your (solution idea)

• Opportunity: What actor (user segment, persona) are we targetting, and which metric are we aiming to impact? Why?

• Solution: What is a summary of the solution idea from teams and stakeholders?

• Evidence: What evidence or data points do we already have to suggest this hypothesis holds true, and that this opportunity makes sense?

• Experiments: What experiments can we run to reinforce the evidence or provide as proof points that a bigger solution should be delivered?

• Success Metrics: What is the definition of success, and the leading (input) metrics that drive it?

• Health Metrics: What counter (health) metrics should we track, to ensure we don’t have negative consequences of our experiments or future solutions?

A simple mapping exercise with post-its, either physical (ideally face to face) or remotely (e.g., via Miro Board) will allow you to lay all the ideas out on the table, and see whether there are gaps in understanding by your teams or stakeholders.

A few scenarios could happen:

• Scenario 1: Many Ideas, Low Evidence: This is a common scenario when solution ideas are aplenty, but they are inconsistently mapped to problems, hypotheses, or evidence needed to justify these ideas. In these cases, your job as a PM is to guide the stakeholders through each topic above, identify which data points are needed to validate hypotheses, and the measurements you need to measure to decide on future solutions to be delivered.

• Scenario 2: Few Ideas, Low Evidence: In this scenario, stakeholders struggle to come up with ideas that may drive shared outcomes. Here, a PM can facilitate collaborative ideation exercises (e.g., design thinking, collaborative feature kick-offs for existing opportunities) to gain more perspectives and ideas that may spur future experiments and opportunities. Feel free to look at my previous posts about some ways to do this.

• Scenario 3: Few Ideas, High Evidence: Prioritise the opportunities and hypotheses first (e.g., through ICE), before deep-diving into solution mode so as to not waste time on relatively less important opportunities. For the prioritised opportunities, map them to the hypotheses that need validation, and the experiments and data points needed to establish whether that idea is successful.

• Scenario 4: Many Ideas, High Evidence: A nice scenario where your stakeholders have matched ideas to the required evidence and hypotheses that may already be validated through existing data. In this scenario, a PM can simply negotiate through prevailing prioritisation processes, prioritising at the hypothesis, outcome or opportunity level.

Whatever the scenario may be, you can see that a PMs role is rather crucial: you either coach or guide your stakeholders through the opportunity map, or you are helping generate and validate ideas based the diverse knowledge of your team and stakeholders, and you are helping structure the prioritisation of the opportunities first before your teams get too deep on experiments and solution ideation.

Let’s take a look at some illustrative examples of the full Outcome / Problem / Opportunity Stack mapped out 👇.

Opportunity Mapping: E-commerce Start-up Case Study

See below an illustrative example of a e-commerce start-up looking to become break even by Q4. Clearly, there are many ways to do this, but the chosen quarterly goal by the stakeholder in alignment with your team and leaders is to drive Sales Revenue in the second half (H2) of the year.

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Unfortunately, there is no single place that ever teaches young product managers (PMs) how to create meaningful product strategy. PMs spend hours (and usually a ton of money) copy-pasting and filling in templates found online, all the while failing to realize that they’ve created a monster of a document that is verbose and irrelevant to their cause.

Filling in templates (aka death-by-sticky-note) isn’t the way. In order to be successful, you have to know how to build and maintain ‘sufficient product strategy’ — just enough detail for stakeholders to understand compelling context, strategic choices you’ve made, and the capabilities needed to be successful.

I know, because I wasted years building up hundreds of strategy pages and slide packs for clients, and £100k+ studying an MBA in an attempt to bridge my strategy skill gaps.

But, my loss is your gain.

Below is a guide that will save you dozens of painful hours trying to learn how to craft a sufficient product strategy from scratch! Let’s dig in.

Our 🔒Strategic Product Execution series helps product leaders efficiently plan and convert strategy into action and outcomes. One post at a time.

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Product Strategy Defined (And It’s Many Interpretations)

Product strategy has so many definitions and interpretations, it’s hard to keep track of what works and what doesn’t. Below, I’ve collected definitions from several product leaders (Roman Pichler, Gibson Biddle, Roger Martin, Tim Herbig, Melissa Perri, Richard Rummelt), all of whom differ slightly in their definition and reasoning:

Roman Pichler, of Pichler Consulting, focuses on a narrative that imagines the product’s future and a plan to realise your overarching goals:

Product strategy is about imagining the future of your product:

• What offering will it become?

• Who will it benefit?

• How will it create value?

It’s a high-level plan that helps you realise your vision or overarching goal. More specifically, the product strategy should describe:

• who the product is for and why people would want to use and buy it;

• what the product is and what makes it stand out; and

• what the business goals are and why it is worthwhile for your company to invest in it.

Gibson Biddle Former VP/CPO at Netflix/Chegg, writes on his blog about what he calls the DHM Model (Delighters, Hard to Copy, Margin):

When I join a company as a product leader, advisor, or board member, I brainstorm ideas to answer three questions:

1. How will the product delight customers? [D]

2. What will make the product hard to copy? [H]

3. What are the business model experiments required to build a profitable (margin) business? [M]

The answers to these questions provide high-level hypotheses for your product strategy.

[…] The next step is to tease out high-level hypotheses that combine delight, hard-to-copy advantage, and margin. Achieving two or three of these objectives with a single strategy is at the heart of an effective product strategy.

[Examples of ‘strategies’ from Gibson and his time at Netflix (as listed in his blog)]

• Personalization. Today, Netflix’s personalization delights customers in hard-to-copy, margin-enhancing ways. Over two decades, the percentage of recommendations that customers choose increased from 2% to 80%, making it easier for customers to find movies they’ll love.

• Device ecosystem. Netflix launched streaming in January of 2007 on PC-based computers. The Mac followed shortly, but members wanted to stream movies to their TVs, which required partnerships with hardware manufacturers. In late 2008 Netflix launched on Xbox. Later, Playstation, Wii, Roku, Samsung, and nearly all DVD and Blu-ray manufacturers followed. By 2012, Netflix had critical mass with hardware partners; they created a hard-to-copy network effect that also delights customers who enjoy watching “anytime, anywhere.”

Roger Martin, in his book called Playing to Win: How Strategy Really Works co-authored with Proctor & Gamble CEO A.G. Lafley, defines strategy on a series of purposeful choices (elaborated further here):

In 2013, I wrote a book […] to clarify and simplify strategy to make it a powerful tool for managers. That requires having a clear definition of strategy: strategy is choice. 

Strategy is not a long planning document; it is a set of interrelated and powerful choices that positions the organization to win.  There are five key choices in the Strategy Choice Cascade:

1. What is our winning aspiration?

2. Where will we play?

3. How will we win where we have chosen to play?

4. What capabilities must be in place to win?

5. What management systems are required to ensure the capabilities are in place?   

Tim Herbig, Product Management Coach, Author and Speaker, describes it as

A Product Vision describes the future state for your users, which emerges from the value provided by your product. It’s a big, aspirational goal: it should inspire others and, at the same time, be the foundation for your Product Strategy Choices. In short, a Product Vision defines where you are going.

A Product Strategy outlines the most promising direction for reaching that future state. For example, which problems will you solve? Who will use your product? Which business objectives will you aim for?

In short, a Product Strategy defines how you will get there… [describing] the set of choices needed to achieve your Product Vision. […] you want to look at the four key pillars of Product Strategy:

1. The Idea driving the Strategy (part of your Product Strategy Narrative Pattern) […e.g., Vision, Defensibility, Drivers]

2. The Market you want to play and win in (also often described as your "Playing Field") […e.g., Alternatives, Customer, Channels]

3. The Value you need to provide to succeed […e.g., Segment, Value Proposition, Problems]

4. The Capabilities needed to manifest the idea, create the value, and differentiate yourself from other players (Part of the "Winning Choices" win on your "Playing Field")

And Product Vision is the most important input for the Idea pillar of your Strategy, as it articulates the long-term changes you seek to create.

Melissa Perri, Product Speaker, Coach and Author of Escaping the Build Trap, defines Strategy as:

Product Strategy is a system of achievable goals and visions that work together to align the team around desirable outcomes for both the business and your customers.

Product Strategy emerges from experimentation towards a goal. Initiatives around features, products, and platforms are proven this way. Those KPIs, OKRs, and other metrics you are setting for your teams are part of the Product Strategy. But, they cannot create a successful strategy on their own.

We need a few core things for our Product Strategy to be successful:

• Vision: The vision is your high level, ultimate view of where the company or business line is going […]

• Challenge: The challenge is the first Business goal you have to achieve on the way to your longer term vision. Which area of your customer journey or funnel needs to be optimized first? It’s communicated as a strategic objective that helps align and focus your team around a certain aspect of product development. [...]

• Target Condition: The target condition helps break down the Challenge. Challenges are made up of smaller problems you need to tackle along the way. These are set in terms of achievable, measurable metrics. When you set a target condition, your team shouldn’t know exactly how to reach it tomorrow. They should have a good idea of where to start looking through.

• Current State: This is what the current reality is compared to the Target Condition. It should be measured and quantified before the work starts to achieve the first target condition.

Lastly, Richard Rummelt, within his book Good Strategy Bad Strategy: The Difference and Why It Matters, describes Strategy as a set of 3 elements:

Let me [try to give you] a leg up in crafting good strategies, which have a basic underlying structure:

• A diagnosis: an explanation of the nature of the challenge. A good diagnosis simplifies the often overwhelming complexity of reality by identifying certain aspects of the situation as being the critical ones.

• A guiding policy: an overall approach chosen to cope with or overcome the obstacles identified in the diagnosis.

• Coherent actions: steps that are coordinated with one another to support the accomplishment of the guiding policy.

My Interpretation of Product Strategy —
Context, Choices, Capabilities

Taking a step back from all of these definitions, mapping them all to find common themes (see my Miro board here; password = ‘coastwithproductpost’), I saw three emerging themes from each of these leaders and from my own thinking.

I believe Product Strategy is the combination of Context, Choices, and Competencies:

• CONTEXT — compelling story of the significant challenges the company faces, its overarching vision and mission, and its alignment with the broader goals and metrics of the company.

• CHOICES — the deliberate decisions regarding the specific market, customer segments, unique differentiators and business activities it chooses to invest in, and the non-negotiable foundational principles that guide the product development process.

• COMPETENCIES — the inherent capacity, strengths, skills that a company possesses, encompassing both tangible and intangible assets, required to achieve its goals. These may include systems, resources, and cultural elements essential for success and the proactive management of constraints and risks.

Strategy, should also be backed by data and rationale where possible, as it simply forms the hypothesis of what will happen in future, based on the 3Cs above. Where data is not available, I recommend flagging these for validation in future product discovery (another topic to dive into later). Strategy is also an ongoing exercise that needs to be reviewed frequently.

I’ve summarised some key questions per category, in a nifty infographic below:

But how does one articulate strategy into a succinct, ‘good-enough’ artefact that not only aligns stakeholders but also builds a strong narrative for people to trust you?

The key to this, is building a ‘sufficient product strategy’, that matches the culture of the company and context you work in. Before diving into how we do this, let’s address some common misconceptions about Product Strategy, to ensure we are aligned.

Common Misconceptions

Misconception #1:
A Strategy = Vision = Roadmap = Plan

No, these are not the same things, but they are very much linked.

A Product Vision is the overarching long-term goal, like a guiding light, describing the ideal end-state of your product for your users. That is: the depiction of your product at its most mature state, should you have unlimited resources and no constraints to deliver it. Think of this as the unwavering just cause — the non-negotiable ‘what’ we want to build.

A Product Strategy is an articulation of the business context, strategic choices, and capabilities your company and product needs to achieve your Product Vision. In short, it is ‘how’ you achieve the Product Vision over time, with goals, metrics or ‘themes’ that frame which upcoming initiatives to prioritise in your roadmap (below).

A Product Roadmap is an artefact that reflects the current strategic priorities of the product, breaking down the strategy into actionable steps over time. Seasoned PMs will make sure Product Roadmaps don’t have timelines attached, as that would then convert it towards a Project or Release Plan for features, programmes, or multiple initiatives. I wrote about Roadmaps extensively in another article below!

Misconception #2:
When KPIs are achieved, you have met your strategy

Achieving your goals and KPIs can be done in many ways. You may not have followed the same strategy to get there.

For the example of Netflix: imagine that their Goal was to acquire as many users possible that would return to Netflix every month to buy more goods and services.

They could have pursued an ‘overnight DVD rental service that is available in all vending machines around the world’, or pursued a ‘subscription services across all digital devices available at any time’. Both of these could have reached their KPIs of Monthly Active (Paying) Users, irrespective of how widely different the strategies were.

By the way, if you read Gibson Biddle’s blog, you will find that both product strategies were indeed experimented by Netflix over the course of their lifetime; where cross-device subscriptions became the pre-eminent strategy, whereas Overnight DVDs ultimately failed due primarily to technology advancements and was eventually shutdown.

Misconception #3:
Strategies shouldn’t change as any change distracts our teams’ from their current focus

Focus indeed is important for fixed periods of time to deliver specific features (and hence deliver outcomes). However, strategy must be revisited by you and your leaders, to ensure that the company is travelling in the correct direction based on the current landscape and context the business finds itself in. Technological and political landscapes, for example, can have very drastic changes in what strategy to pursue.

Strategic reviews can happen quarterly or half-yearly, and a baseline of strategy is usually tied to annual planning (once a year).

Failing experiments and product strategies should not be discouraged: launching, learning, then building something else to achieve the vision actually flexes the muscle of continuous product discovery habits within a company.

Misconception #4:
Product strategy can solely be solved with by product and technology

While a product strategy is delivered through mostly product and technology, you also require a lot of work outside of these teams to validate problems, discover solution ideas, then eventually go-to-market, pilot and deploy the product.

Successful product strategy requires a balanced integration of product, technology, a deep understanding of your stakeholders (internal) and the market ecosystem (external). There are many different factors that influence the success of a product strategy: market dynamics, user feedback, user adoption, market rules and regulation for product launch, among others.

Effective product strategy requires a holistic approach, considering not only the technical aspects but also non-technical ones, such as political, economic, legal, business (customer needs, competitive landscape, and broader business goals), etc. Ignoring these elements may result in a disconnected strategy that fails to resonate with users or align with the overall business direction.

The Secret To Sound Product Strategy: Just be ‘Sufficient’

Perhaps the simplest way to create your Product Strategy is starting with your audience and the reason why you’re creating the strategy artefact to begin with, across:

• Business Maturity — are you in a smaller company building a business case for more resources or protection of the minimum resources you have? Or perhaps are you in a larger role and company that needs to rebalance existing portfolio investments across a wide remit of products and services?

• Stakeholder — do you have a wide set of stakeholders demand frequent deliverables to fine detail, or smaller yet senior set of stakeholders that simply want a concise answer and assurance you are on top of your KPIs? Does your company has status reporting mandates due to local or public market obligations?

• Growth model — do you have a naturally sales-led organisation due to large enterprise business contracts? If so, you may need more context and detail in your strategy artefacts with sales stakeholders to justify decision making. Or do you have product-led growth motions dealing with self-service products to individuals or smaller teams, with minimal sales staff?

In the end, you need to map out your stakeholders to see what kind of information needs they are likely to have, based on their segment via the power vs interest model by Roman Pichler. See my previous article on stakeholder mapping for more tips on this:

Long Strategy Decks or Short Strategy Map?

One one hand, if you need to communicate with an executive audience interested in executive summaries with limited time to pre-read, you may opt to have shorter content, fewer pages, and a lot of reference material in the Appendix. For example, in Amazon’s famous 6 pager memo template, anything outside of the 6 pages should be referenced in Appendix.

On the other hand, if you have joined a company recently or have an audience that has never seen a product strategy artefact of your domain previously, you have the opportunity to walk through through more detailed and compelling narrative than you would normally with a stricter 6-pager memo.

In between these two groups there may be a set of stakeholders who just want to see your thinking and be involved in strategy workshops to co-create an answer. In these cases, you could facilitate strategic workshop, working through each category (Context / Choices / Competencies), deep diving on specific areas that you believe your stakeholders would be the most active and vocal.

Whatever your informational needs are, I have provided below a list of reference frameworks that you can use to craft your product strategy, based on the 3C model I explained earlier.

Introducing: the Product Strategy Canvas and Product Strategy Catalogue 👇

Introducing: The Product Strategy Canvas and Catalogue (+ How To Use It)

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Value chain mapping can often be thought as a boring old task for strategy consultants to summarise how your industry operates in an effort to sound like an expert. Heck, I know I’ve done this in my previous life as a strategy consultant advising both smaller start-ups through to large enterprise.

However, I argue that the Value Chain is extremely important analysis for Product Mangers looking to demonstrate wider impact, regardless of whether you are an individual contributor (ICs) or a product leader who already manages multiple domains or products. Analysing market forces shows stakeholders how well you can navigate opportunities, threats and changes in your industry.

Regardless of your seniority, value chain analysis helps you in the following situations:

1. Market Changes: such as technological advancements, regulatory shifts, or emerging trends that might impact your product;

2. Pre-Product Launch: to refine product positioning and go-to-market approach;

3. Quarterly / Bi-Annual Reviews: to align with stakeholders on evolving industry landscape, assess the performance of your product in comparison to competitors, and any shifts in consumer behaviour, to identify opportunities for improvement;

4. Portfolio optimisation: to review the profitability and value derived across your whole portfolio of products, to see whether you should invest or discontinue investing into chosen competencies; and

5. Geo-expansion or New Market Entry: to identify and mitigate market entry risks, such as: cost of operations in the new market, cultural or competitive landscape impacting pricing strategy, among many others.

In this post, I will be giving you the tools and techniques to craft your value chain from scratch, aligning your stakeholders along the way.

The Industry Value Chain Defined

An industry value chain is a concept developed by Michael Porter that describes the full range of activities that firms go through to bring a product or service from its conception to delivery to the end consumer.

It outlines the various stages and processes involved in the production and distribution of a product within a particular industry. The value chain concept is crucial for understanding how value is created at each step and how businesses can gain a competitive advantage.

There have been many examples when a business fails to adapt to adjacent market inertia or internal organisational entropy, as outlined by Richard Rummelt, writer of ‘Good Strategy / Bad Strategy’:

• ‘Inertia’: an organization's unwillingness or inability to adapt to changing circumstances, and

• ‘Entropy’: a tendency of poorly managed organizations to move toward disorganization and a lack of focus.

Both effects can be seen in these business examples:

• Kodak: A company that was in the business of selling camera film, only to be disrupted completely by a burgeoning alternative: flash cards for digital cameras, and hard drives for digital images.

• Blockbuster: A company that was in the business for renting out DVDs and videos to consumers, only to be completely disrupted by a combination of cable television, the internet, and eventually digital streaming service, Netflix.

• Blackberry: A smartphone manufacturer that had a physical mini-QWERTY keyboard as its primary differentiator, only to be completely disrupted by Apple, Samsung and other smartphones that replicated keyboards onto screen-based devices.

To ensure continued business viability, I always vouch for recurring strategy reviews. In this post, I break down the steps for any product manager to conduct a Value Chain Mapping for their industry and their product. These steps are:

• Step 1: Define the core customer problem you are solving and identify alternatives in adjacent markets.

• Step 2: Map out core business activities to each value chain component.

• Step 3: Draft and socialise your Value Chain with Stakeholders, seeking input on strengths and weaknesses

• Step 4: Choose your core competencies. Outsource or partner for the rest.

As a wise man once side:

… So chickity-check yo' self before you wreck yo' self…! — Ice Cube (1994)

Let’s begin!

Step 1: Define the core customer problem you are solving and identify alternatives in adjacent markets

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Suppose that you’ve just joined a company or launched your minimum lovable product to market. You’re beginning to receive fantastic feedback and validation from your clients. Congratulations!

You are now being bombarded with feature requests your customers, partners and suppliers. They are all asking you when you can deliver their requested features, yet some of these features seem less priority than others— so, what do you do?

Perhaps its time to communicate through a product roadmap. Sounds simple enough, but the process is much more nuanced than you first think!

Provided below is a guide to creating your first product roadmap, which you’ll see is art mixed with science.

Why creating roadmaps is so challenging

Even the most experienced product managers can often find it difficult to consistently articulate a roadmap to their internal and external audiences. Reasons include:

1. Competitive and market landscape constantly changing — this results in changes in what you build in the short to medium term. Take, for example, COVID-19 and the immediate shift to remote-first tasks.

2. Clients or partners depend heavily on what you are building—e.g., they’ve requested a feature, and you’ve set some expectation that it will be due ‘soon’ but haven’t delivered it yet.

3. Feature ideas come from all over the place— for example, your sales team may push your product and engineering teams to change your priorities due to an impending sales opportunity that cannot be won without a specific feature released.

4. Your management team or board demand concrete timeframes — but you are unable to commit to any because your development team cannot provide appropriate estimates on deliverables due to complexity or scope.

5. Its purpose differs between internal and external audiences —internally, a roadmap is used to build consensus and gain alignment on priorities and goals. Externally, it is often perceived as a release plan containing dates for when certain features will be released.

Whatever the case may be, it can often be overwhelming for a new product manager to come up with a roadmap that appeases multiple stakeholders and priorities.

What isn’t a roadmap…

There are many opinions on what a roadmap should and shouldn’t be, but many would agree that a roadmap is not:

• A wish list of functionality requested by your partners or clients

• A list of features to close ‘urgent’ deals in the sales pipeline.

• A way to force commitment on timelines in a delivery plan

• An exercise conducted in sole isolation of the product team

• Something you throw together last minute, the day before a workshop

Perhaps Teresa Torres says this best:

We need to let go of the idea that we can enumerate a list of features that represents what we’ll do in the future. This idea is absurd. Rather than sharing feature lists with the rest of the company, we should be communicating how we will make decisions. — Teresa Torres

Instead, roadmaps should be considered very carefully in strategic alignment with your organisational objectives, business strategy, and overall product vision defined per product within your overall portfolio of one or many products.

What is a roadmap…

Here’s a handful of definitions from fellow product leaders and companies that specialise in enabling Product functions to create roadmaps from scratch:

• “A high-level, visual summary that maps out the vision and direction of the product offering over time, communicating what you are building and why — ProductPlan.”

• “A statement of intent — it communicates both the short and long term initiatives that the team will work on and tells you the how and the why behind the product organisation strategy — Roadmunk.”

• “A high-level strategic overview of a significant business initiative... used to manage the development of a new product or the execution of a company-wide project — Airtable.”

• “…it describes the path from where you are now, to realizing the vision you have spelt out in your product strategy.” — Roman Pilcher.

• “…they are guides that describe the steps you need to take to move from your current location to your desired destination” — Clement Kao.

You should see some recurring themes in the quotes above. These are the following:

1. A Strategic artefact or statement of intent.

2. A depiction of short vs long term goals.

3. A description of the desired set of steps to achieve both short and long-term goals.

But how does one actually go about creating a roadmap from scratch? Well, let’s consider asking some more basic questions first before we dive into actually writing up your first roadmap. After all, a roadmap without alignment in strategy or shared goals is simply a wish list that is not worth the paper it's written on.

Let’s begin!

Step 1 — Confirm business strategy and objectives.

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