The Key Elements of Product Strategy
Shape a Compelling Product Strategy Without 'Boiling The Ocean'
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.
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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:
How will the product delight customers? [D]
What will make the product hard to copy? [H]
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:
What is our winning aspiration?
Where will we play?
How will we win where we have chosen to play?
What capabilities must be in place to win?
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:
The Idea driving the Strategy (part of your Product Strategy Narrative Pattern) […e.g., Vision, Defensibility, Drivers]
The Market you want to play and win in (also often described as your "Playing Field") […e.g., Alternatives, Customer, Channels]
The Value you need to provide to succeed […e.g., Segment, Value Proposition, Problems]
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), 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.
“When crafting your product strategy artefact, be sufficient, not overly exhaustive”
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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