What is an effective product strategy?
You are enthusiastic about your product. You have a highly disciplined and motivated team. You have advanced technology and highly-effective processes in place. Still, your product does not bring the growth benefits as you've expected. What you are missing is a sound product strategy.
What is a product strategy
Product strategy gives direction to the product development teams. It helps everyone keep focus on what matters and more importantly, gives confidence to say “No” to work that does not matter. It prevents you from making decisions that can be harmful for your business.
A product strategy consists of a long-term vision, achievable goals that lead towards this vision, and a high level plan for how to achieve these goals informed by a competitive analysis.
Without having a long-term vision, your choices might bring you only short-term win. Without setting achievable goals as milestones, you might never move towards your vision. High-level plan makes the strategy actionable and gives clarity to your team on which actions to take. And having a plan that is informed by a competitive analysis is necessary to avoid the risk of becoming irrelevant due to the dynamic market conditions or your competitors.
How to develop a product strategy
To understand the above definition better, let's go through an example.
Say, you have a company that builds an online platform for grocery shopping. Your vision might be "Make grocery shopping efficient and affordable for everyone". The platform is your tool to support your long-term vision.
The goals you define are concrete milestones with timelines. Goals should be driven by the insights you have about your customers and your competitors. What is the typical profile of your customer? What is the main trigger for your customers to start using your product? Are they enjoying your services on a regular basis? Is there any declining trend in the product use? Which competitor do your customers go to as an alternative?
List the benefits that your product offers to your customers. Ignore talking about product features, instead focus on the value your customer gets. For example: "Access to all types of grocery products", "Low prices", "Efficient shopping", "Automated products selection". Is lack of some of these benefits the reason that your customers are choosing your competitor when doing their weekly grocery shopping?
There are different frameworks to use when prioritising the benefits. A useful one is the Kano model. Benefits are categorised in three categories: "Basics" - basic expectations from the product, "Satisfiers" - the better your product performs at these, the more satisfied the customer, and "Delighters" - benefits that are not expected by your customer, but would bring delightful customer experience. Your product must satisfy the "Basic" expectations, should perform better than the competitors for some of the "Satisfiers", and should surprise your customer from time to time with some "Delighters".
In our example, access to all types of grocery products is a Basic expectation, low prices or efficient shopping is a Satisfier, while a Delighter would be automated product selection. As a customer I am not expecting this benefit, but if your product is smart enough to correctly recognise the products I am missing at home, it would be a pleasant surprise for me, and might very well be the reason to never replace this shopping platform with anything else.
By doing this kind of analysis, you might for example identify that your customers are not happy with the agility of your application as it takes a lot of time to do the shopping. Once you have this insight, you have a goal to achieve: "Decrease the average shopping time by 30% in the next quarter".
How you achieve this goal, could be decided later. Perhaps the performance efficiency of your online platform should be improved, or you might need to redesign the page for selecting the products. This will be the role of the product managers and their teams to come up with an idea to achieve this goal. They could figure out the detail in the later stage when defining the product roadmap.
What are the most common pitfalls of a product strategy
Unclarity. This is a common pitfall in many organisations - vision that is not clear to everyone, goals that are not well-defined and clearly articulated to the rest of the organisation. As a result, product growth stagnates, a lot of great ideas end nowhere, or perhaps a product is built with all kinds of features that add too little value to the customer. It’s important to take some time to define and internalise the product strategy and align with the relevant stakeholders. It should be crystal clear what are you going to do and why.
Vision that is not customer-focused. The product vision should always start with the customer. What are the needs of the end-user? Are they currently addressed by other competitors? It is critical to talk to customers when developing the product vision. A well-defined vision describes the client’s benefits of having the product, and not the solution that we want to implement. Only customer-centric mindset can lead to a product valuable for the customer.
Tunnel vision. It happens often for a product leader to be overenthusiastic about an idea and to easily miss the blindspots. She would even do a data analysis to support her enthusiasm with facts, but she would stay blind to some of the results. Take some time to discuss your idea with others, especially with critical thinkers who have a different view than yours, and who can make a judgment more objectively. And be prepared that your idea might fail.
Not aligned with the rest of the organisation. The product strategy should be nested in the broader corporate vision and should be in line with the values of the organisation. In a smaller organisation where the whole business relies on a single product, the product vision can even be the same as the corporate vision. Building a product that does not fit with the rest of the organisation is harmful for the organisation and will ruin customer experience.
Theoretical exercise. Sometimes organisations would go through the annual exercise of developing/revising the product strategy, with the goal to just get this activity crossed on their to-do list. The output of this activity is then just a document that no-one looks at. If you spend time and effort in developing the product strategy, you should do that with a reason. The outcome should be concrete actionable initiatives and a plan to measure their progress.
Technically unfeasible. A common pitfall for many organisations is the business being too detached from the technology. The business strives for a product, decides the timelines and budget for building the product, without having a good understanding of the technical feasibility. This results in software project delays, complex software architecture and product unsustainable on long-term. To avoid this, make sure product leaders are always well aligned with the engineering leaders.
The development of the product strategy is not a one-off activity. A strategy consists of hypothesis and this hypothesis needs to be validated and adjusted. You develop the strategy, you give yourself time to experiment and validate your hypothesis, you evaluate the progress and revise your strategy.
Having an effective product strategy is crucial, but it is also just one part of the game. Successful organisations have it all: great strategic thinkers, excellent execution, and deep insights in the market dynamics.
This blog is part of a series “Is your digital product ready to grow?”. The next post from this series will be about “How to set up your product development teams to optimise performance”.