How to Design a Successful Product Strategy
Ask several individuals within the organisation to share their key priorities. If you receive conflicting responses, it’s a strong indicator of a lack of a clear product strategy.
Product managers often find themselves pulled in different directions. Requests flow in from customers, sales teams, and various stakeholders. Everyone has an idea or an exceptional pressing question that need to be answered urgently. When prioritisation is a real struggle, it signals an absence of a clear product strategy.
What is a Product Strategy?
Product Strategy is a clear system of goals aligning teams towards desirable outcomes for both the business and its customers. It is a set of goals that moves the company closer to its vision, providing clear guidance on priorities.
The primary aim of product strategy is to unify teams, directing their efforts cohesively. Organizations with a well-defined strategy have clarity on key focus areas and their significance. They effectively communicate a clear strategic message, ensuring priorities are understood and embraced organization-wide. When everyone adopts these goals, integrating them into their individual scope, a shared vision emerges.
With a clear strategy, every team effort contributes to an important company objective. Without a strategy, teams engage in a multitude of actions without a clear understanding of the bigger goal, making prioritisation an impossible task.
Product Strategy vs Business Strategy
The distinction between product strategy and business strategy depends on the product's scope relative to the entire organization.
The business or company strategy encompasses the overarching organizational goals and a high-level plan for achieving them. It spans all aspects of the business, including the product and service portfolio, marketing, operations, and more.
In contrast, product strategy is focused on a specific product or line of products. It must align with the broader business strategy, essentially nesting within it.
In the context of a small startup with a single product central to the entire business, the product strategy may also be identical to the business strategy.
How to Create a Successful Product Strategy
A product strategy doesn't need to be a lengthy, complex 10-page document. It's not an exhaustive list of solutions to be built in the upcoming year. Instead, it's a straightforward, high-level plan outlining your key goals, what you'll work on to achieve those goals, and why.
While the end result should appear simple, creating a successful and simple product strategy involves a more intricate thinking process. Let's delve into the foundational aspects that contribute to a successful product strategy.
Vision and core values
Starting from the basics, a clear vision and core values have a direct impact on your strategy. They serve as the foundation for an effective product strategy, providing guardrails and guiding decisions.
For instance, Amazon's vision is to be earth's most customer-centric company, creating a space where people can discover anything they want to buy online. The core values, including customer obsession, passion for invention, commitment to operational excellence, and long-term thinking, further shape Amazon's core principles.
These guiding principles make it evident that the company's objectives should focus not on short-term business gains, but on long-term and enduring benefits for the customer.
Users and their needs
A robust product strategy builds on a thorough understanding of the target market or niche. Before establishing any goals, having a clear understanding of who the product is designed for is necessary. The aim isn't to create a product for everyone but to tailor it for a specific audience with shared desires and needs.
Understanding the niche goes beyond geographical, age, gender, or professional considerations. What is often more important is understanding their beliefs, passions, aspirations, and the areas they aim to enhance in their lives. This helps grasp how the product facilitates users in transitioning to their desired state and what concrete benefits your product offers to the users.
Product differentiators
You know the needs and desires of your customers. Should you aim to address all of them? Not quite. Rather than attempting to enhance every aspect of the product, a key element of the strategic framework involves honing in on the sweet spot.
Take, for instance, an e-commerce marketplace. Customer benefits might include the highest quality products, diversity of products, lowest prices, fastest delivery, optimal digital user experience, and high-quality customer service.
Striving to be the best in every category as a start isn't a sound strategy. While checking all the boxes is ideal, attempting to excel in all aspects simultaneously is risky. It's more effective to identify the sweet spot – what niche customers truly need, what the competitors can't provide, and where your strengths lie.
Understanding product differentiators means pinpointing the areas you want your product to be known for. This becomes your brand promise to the customer.
List down the benefits, and make an assessment, what are your competitors good at, and which are the key benefits that you will focus on.
Define the product strategic objectives
A solid product strategy rests on the foundation of vision, core values, user needs, and product differentiators. Once these essential elements are established, defining the objectives—integral components of the product strategy—flows naturally. Objectives serve as milestones on your path to achieving the vision, with core values and differentiators guiding and supporting the formulation of these objectives.
Product objectives are essentially derived from the broader company objectives, which are part of the company strategy. Product objectives offer a more concrete representation from a product standpoint.
Let's take an example:
Imagine a company operating an online shopping platform as its primary product. The overarching strategic objective for this year is:
Company objective: Boost annual recurring revenue.
The product team has introduced a subscription model, anticipating it as a catalyst for achieving this goal. However, data analysis uncovers a notable trend – a substantial majority of users are inclined towards one-time purchases, with only a fraction embracing regular subscriptions.
After talking to users, a major issue surfaces: some products have a significantly slow delivery time. The overall delivery time guaranteed by the subscription model exceeds what users find acceptable. The product goal becomes clear.
Product goal: Reduce delivery times.
To make this goal effective, it's crucial to also establish metrics and monitor progress over time.
Principles of a Strong Product Strategy
Every business and product has its own special traits and encounters unique challenges. So, creating a product strategy is unique to each situation, and you need to use your own judgment. However, there are basic principles that should guide the process of defining the product strategy.
High-Impact, mutually reinforcing elements
A successful product strategy centers on a selected few high-impact items that enhance both user satisfaction and contribute to your business success. Rather than attempting to do it all, prioritise wisely and make decisions based on key high-impact items. Ideally, these elements should be mutually reinforcing, working together to amplify the overall impact.
Customer first
Best product companies prioritise their customers, shaping the product vision around customer needs. They focus their goals on delivering customer value rather than solely pursuing financial gains.
For instance, a key product strategic goal could be to reduce delivery time for the customer. This objective doesn't solely focus on the financial benefit for the company but emphasises enhancing the customer experience.
Simple but strong message
A strong product strategy is simple — a straightforward and clear message that can be easily communicated across all teams.
Rather than relying on a lengthy and intricate document to explain every detail of the strategy, the power lies in selecting a high-impact goals and effectively spreading the message. The key is to have every team and every employee in the company embrace these goalas their own story.
Data informed
The goals you prioritise should be grounded in data. For instance, if you aim to enhance delivery time, ensure it's backed by concrete customer insights. Your data should reveal that delayed delivery is a significant obstacle for many users, impacting their trust and product selection.
Of course, solely relying on data isn't the complete solution; you must also apply your own judgment. But ignoring data is akin to navigating blindly based on assumptions.
Regularly revised
Creating a product strategy is not a one-and-done job but an ongoing effort demanding continuous review and enhancement. Set up a systematic process to regularly evaluate and refine the strategy. Revisit it on a quarterly or yearly basis. Continuous improvement is crucial to ensuring the strategy remains relevant and effective as time goes on.
A Strong Product Strategy Requires Great Execution
Crafting a robust product strategy marks just the initial phase of the journey. Achieving success relies equally on effective execution. The crucial element lies in translating the strategy into actionable initiatives, seamlessly integrating it with the unique roadmaps of each team, and ultimately linking it to their daily activities.
In the wise words of Morris Chang: “Without strategy, execution is aimless. Without execution, strategy is useless.”
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Originally published at https://blog.logrocket.com on February 6, 2024.