Product Strategy: Your 100% Guide With Examples And Best Practices!
"What should our next project be?"
The question floats in the air, loaded with the gravity that has grown inside you since you began your new job as a product manager.
"It'll be a lot of fun," they said. "This is the moment you've been waiting for," they said. And you trusted them. Now, you're not so sure anymore. You feel as though you're being dragged in every direction with nothing to hold on to.
"Wait!" A voice interrupts your thoughts.
You respond, "Our product strategy." "We should concentrate on our product strategy," you say more firmly.
You are correct. A product cannot be managed without a strategy. By the end of this piece, you'll understand what a product strategy is, why it's essential, and how to design one that works for you. You'll also get some tips for carrying out your approach, giving you additional insight into and control over your product distribution.
But, what exactly is a product strategy?
A product strategy is a high-level plan that describes what a company expects to achieve with its product and how it intends to do it. The strategy should address critical concerns such as who the product will serve (personas), how it will benefit those personas and the company's long-term ambitions for the product.
In the face of uncertainty, you must rely on a high-level, broad strategy. One that expresses what you aim to achieve but leaves the how to the imagination. It specifies direction but not speed or mode of travel. It directs everyone's activities and decisions without telling them what to do.
A product strategy, then, is a plan for creating and further developing a product to meet one or more business objectives.
Why is it important?
Creating a product strategy before you begin development is essential because it serves three important commercial reasons.
It's difficult to predict whether your plans will pay off in an uncertain atmosphere. However, you must still make judgments and create outcomes that are in keeping with your business objectives.
It's similar to sailing a ship.
You can't travel from point A to point B unless you have a strategy and keep track of where you are at all times. And you'll need to make adjustments along the way. You'll need to dodge other ships (you'd be astonished how many there are at full sail), as well as to adapt to currents and wind. To avoid a storm, you may have to change your entire travel strategy.
Your product strategy is the map for your product's journey.
1. Provides Clarity
When you write and convey a clear and well-thought-out plan for your business, your team will be in a better position to deliver their best work.
Your developers will understand how the components of the product they are working on relating to the overall strategic goals of the organisation. Developers might become engrossed in the specifics and lose sight of the larger goal of their job. For them, a product strategy simplifies this.
Your marketing and sales teams will be able to define the benefits of the product as well as its unique selling proposition. However, without a well-defined plan behind a product, it is impossible to generate anticipation and sales.
Furthermore, your customer success team will have a better understanding of your product's use cases and will be able to give better assistance to your consumers' issues.
2. Helps Prioritise Product Roadmaps
After you've obtained stakeholder approval for your proposal, you'll need to transform that strategy into a high-level action plan and then create a compelling product roadmap.
Unfortunately, many product teams skip the strategy-drafting step entirely and instead focus on defining themes and epics on their roadmap. Without a product strategy to guide these decisions, the team may prioritise the incorrect items, wasting its limited time and resources. When you begin with a strategy, you have a better image of what you want to achieve with your product, which you can then convert into a more strategically sound product roadmap.
Having a product plan in place will make it much simpler to say "no" and stay on track. Because a product strategy does more than just tell you what you'll do. It also informs you what you're not going to do. Whether explicitly or by omission.
3. Improves Decision Making
No company ever follows the precise plan outlined in the first roadmap when releasing a product to the market. Things happen along the road, and product managers must be prepared to adapt their plans and objectives to accommodate those changes.
When you and your team have a clear product strategy as a reference point, you can make wiser strategic judgments about altering your plans, especially if resources are lost or expected timeframes must be changed.
Product Strategy Types
Now that you understand how a product strategy might help you, let's look at the many sorts of product strategies available.
This approach aims to be the market leader by developing revolutionary items that will leave your competitors in the dust. It's costly and hazardous, but the returns may be enormous.
The goal of this approach is to compete with the market leader by defeating them at their own game.
This approach is designed to capitalise on the innovations of the leaders and their adversaries. You don't make any unique things, but rather leverage them to make cheaper, derivative products.
In an otherwise huge market, this method entails developing a product for relatively particular groups of customers. Because you don't cater to everyone in the wider market, this permits you to operate with fewer resources.
Ingredients of a product strategy
The most often mentioned parts that must be included in a product strategy are your vision for what the product will do, the business goals to which it is intended to contribute, and the actions to attain those goals.
This, however, excludes two critical aspects.
You'll also need to describe who you'll be servicing (your ideal client or customers) and how your solution will address their difficulties.
You should also explain how your product is special. The distinguishing characteristics and differentiators that will set you apart from your competition and attract your target consumers. Now, if that sounds familiar, that’s because it is very much the SWOT analysis that we’ve covered in our two-part article on Competitor Analysis which you can read here.
Pro Tip Include a list of what your product cannot accomplish. The features that it will not have. The bright, dazzling goods that you already know will be a distraction and to which you will say "no" right away.
According to Roman Pilcher, a product management expert, a strategy should include the following key elements:
The product's market and the specific demands it will solve.
The primary differentiators or unique selling proposition of the product.
The product's business objectives for the corporation.
Another way to look at it is that a product strategy should have the three following elements:
A. Product Vision
As previously established, product vision explains your product's long-term objective. These are often written as succinct, aspirational statements that describe the company's goals for the product. As a result, a product vision should remain constant.
Google's early vision statement for its search engine, for example, was "Organize the world's information and make it universally accessible and useful."
A product vision should result in high-level strategic objectives. These objectives will have an impact on what the team emphasises in its product plan. Here are some examples of product objectives:
Increase free trial downloads by 50% in the following six months.
Increase our average customer rating on key product review sites by one star.
Within the next 12 months, generate $3 million in revenue.
When it comes to creating goals for your product strategy, using SMART goals is the best way to go. Goals should be explicit, quantifiable, reachable, relevant, and time-bound, just as product roadmaps.
Initiatives are strategic topics derived from product goals and placed on your roadmap. They are large, complicated goals that your team must reduce down into manageable jobs. (After all, the product roadmap is merely a high-level plan.)
Product efforts include the following:
✧ Enhance client satisfaction
✧ Increase customer lifetime value
✧ New services can be upsold
✧ Lower customer churn
✧ Enter new industries or geographic locations.
✧ Maintain product characteristics
✧ Boost mobile adoption
Where should the strategy fit into development plans?
The product strategy should connect your product vision with the tactical steps necessary to achieve that goal.
First, your team will define the product's vision. "We will assist organisations in unlocking important information by making their data more accessible and useful," for example.
(Note: At this point, your team may decide to create a separate product mission. Product vision and mission, on the other hand, are both succinct, high-level statements that explain your product's big-picture goals. If you like, you can just make one.)
After you've decided on a vision, you can move on to developing a product strategy. This step entails responding to queries such as:
✣ For this product, who are our personas?
✣ For these personas, what challenges will our product solve?
✣ How will our product stand out and get market share?
✣ What are the short-term and long-term objectives for this product?
It's then time to turn your product strategy into an action plan by prioritising the primary topics on a product roadmap after your team has finished developing it.
You'll next utilise this roadmap to create a thorough plan, which will include a product backlog, sprint planning for the development team, and a project timeline.
How to create a product strategy?
We’ll start with something that you’ve most likely heard about from the Boston Consulting Group. It’s their Growth-Share Matrix.
Now, that is most certainly an old hat that is still taught in most business schools today. It helps businesses know where to focus their attention and resources, dividing up into four quadrants and assigning each one to a certain product or department which looks something like:
While that is good for segmenting your business portfolios, we decided to go ahead and break that down into simpler steps for you to suit product needs.
✦ Start with the WHY
Why did you go to the trouble of generating your product in the first place? What kind of influence do you want to make? Whose lives do you want to alter?
It's critical to have a vision for your product. Everything falls flat if you don't have a compelling purpose to build your product and for your customers to buy it.
✦ Ideal Customer
The next stage is to write a description of your target consumer. Who they are, what they do, the challenges they encounter, and how your solution will solve those problems are all things you should know about them.
To create a product that would appeal to your ideal consumer or target audience, you must first understand them.
You must comprehend what they desire — and, more crucially, what they require. The distinction between wants and requirements is the same as the distinction between shrugging and paying.
You must also be specific. Large audiences, such as parents, are divided into several groups, each having its own set of requirements.
✦ Stand Out From The Crowd
The third step is to determine which important features you require and how to distinguish common aspects in similar items to stand out.
This refers to the features, usability, quality, affordability, customizability, resilience, and so on of your product.
✦ Always Keep Track Of Data
You'll need four things to know how you're doing on your journey to contribute to your company's business goals.
Where you are currently
What your goals are
What are the metrics that describe your current state VS your goals
Regular tracking of your progress in getting to that final desired stage
✦ Go For Gold!
Finally, you must devise a strategy. At the very least, a high-level strategy. You determine the initiatives you'll utilise to attain the goals you've set, keeping your business and customer goals in mind.
Goals are more technical than initiatives. You might think of them as the overarching themes that will guide the steps you'll take to realise your goal.
Effective product strategy business models?
We've been concentrating on the mechanics of building a product strategy up to this point. What about the strategy's substance? When developing a product strategy, what types of business or revenue models should a corporation consider?
Here are a few examples of successful product strategy models.
Many organisations, including Zoom, have found that building different versions of a product to satisfy the unique demands of distinct personas is an effective product approach.
If you make cybersecurity software, for example, you might want to make a consumer version. The fact that this programme works fully in the background, securing the user's data and gadgets, may be its most compelling feature.
Your team could then create an enterprise version aimed at IT professionals, with different key selling points. In this situation, you'll make certain that the software makes it simple for firms to adhere to data privacy rules. You'll also work on creating an administrator dashboard that provides the IT team with a real-time picture of the security of its digital environment.
Lean Product Differentiation
Yahoo! was the most popular online search engine in the early days of the internet. The company's homepage, on the other hand, was packed with links, buttons, and advertisements.
Then came Google, with a home page that had absolutely no links, no ads, and was nearly white space. On the Google homepage, the sole explicit activity was to type in a search request. We know who took first place in that competition.
One potential method is to release a product that only allows people to do one thing. The idea is to make sure that
➀ The task solves a real problem for your persona, and
➁ Your product makes it simple to complete.
Whether your product has competitors on the market (as Google did with Yahoo!) or you're inventing a new product category, this method can succeed.
Assume your product is simple to use and addresses a real issue in your market. Making the product as minimal and focused as possible is a fantastic strategy and a useful product differentiation in this scenario.
A company that adopts the PLG method focuses on making the product its marketing and sales representative.
In many situations, like with Dropbox and Spotify, this entails making the product free for a certain level of service and only charging users who want to upgrade to more advanced capabilities. Users tell their coworkers and acquaintances about the product since they value the basic service, and others sign up as well.
In other circumstances, organisations flourish with product-led growth by using the network effect. This model has benefited companies like Slack and Zoom. Early in the epidemic, for example, Zoom redirected its efforts to make its app more user-friendly for the many new business users who wanted to connect while quarantined at home. The corporation also developed features for new customers, particularly schools, who would have specific requirements.
Product Strategy Best Practices
Problems To No End
Concentrate on the issues rather than the solutions. Talking about solutions before developing a plan is a sort of premature optimization. It prevents you from seeing other options that might be better, easier, more cost-effective, or more relevant.
While you're deciding on a strategy, concentrate on understanding the problem you're trying to solve and the obstacles you'll face in achieving your business objectives.
Only when you've established that can you begin to brainstorm potential solutions and actions to make them a reality.
Don't stop looking for solutions to the problems you're facing once you've found the first one. That's just the beginning. Inquire about how this solution aids you in achieving your product's commercial objectives. And then there's how it doesn't.
Consider how otherwise your product could be able to meet the issues you're up against.
It makes no difference how far away the challenges are. At this time, feasibility isn't important. It is creative thinking. Furthermore, far-fetched ideas can inspire (more) practical ones.
Plus, you'll have plenty of time to weed out any ideas that aren't realistic before putting them into action.
That takes significantly less time and effort than picking a solution too early and discovering halfway through the implementation that it falls short of expectations. U-turns and other sudden departures from a predetermined path are quite costly.
MORE! GIMME MORE!
Don't sit in your ivory tower devising a product strategy for others to implement. Collaborate. Make use of the advantages of back-and-forth talks between people with diverse opinions and cognitive processes. Recruit from all departments inside your company. And plan talks to gain a better understanding of the difficulties you're facing as well as a variety of options from which to choose.
Facilitation Is Not Up Everybody's Alley
Look for a decent facilitator and stay out of their way.
It's not easy to provide excellent facilitation. It takes talent and expertise to lead a diverse group of people through a problem-solving process. It's also critical to guarantee that everyone has the opportunity to share their best ideas.
You don't want groupthink, loudmouths, shyness, HiPPOs (highest paid person's opinion), and other group dynamics that deter people from engaging to imperil something as vital as your product strategy.
Hire a facilitator from the outside. Someone whose sole concern is the quality of the process and who is unconcerned about the conclusion of the conversation.
You now have all you require to develop an ideal product strategy for your product. And you know where and how to receive the aid you need to carry it out while remaining certain that you're on track.
So take the plunge and start working on a product vision that inspires you. It'll be your North Star, guiding your decisions, assisting you in saying "no," and preventing you from feeling pulled in every way.