How to create a product strategy [As a PM]
On a very basic level, your product strategy should explain how you're going to bring value to your customers, product and company.
What's a strategy?
Let's start off with the basics, what is strategy?
Strategy is a plan of action to achieve short, middle and long term desired goals.
We could delve into the definition above and start sub-categorising strategy into segments but let's keep it simple for now. Based on this definition, we could then start to prioritise our goals across each of these time horizons: short, middle and long term.
What's a good strategy vs a bad strategy?
Richard Rumelt, the author of ‘Good Strategy/Bad Strategy’ discusses in-depth the fundamentals of what contributes to a good or bad strategy.
To summarise, a bad strategy:
- Uses fluff (a form of gibberish) or strategic lingo which creates an illusion of high-level thinking (consultants might have something to say here 🙃)
- Fails to define the challenge. Understanding what the challenge is or problems your facing as a business is step numero uno.
- Uses statements vs actions. It just states a desire to do something but doesn't lay out how to actually tackle current problems.
- Contains bad goals. When they fail to address current challenges they are likely bad goals and therefore is likely a bad strategy.
On the other hand, a good strategy contains a logical structure:
- The diagnosis. A definition of the challenge and the most critical elements of it. People will have different views on what is the right diagnosis but it will be the leader's challenge to recognise this and recalibrate when needed.
- The guiding policy. A clearly outlined approach on how to deal with the challenge identified in the diagnosis. This may involve drawing upon advantages the business may have and focusing efforts on goals that address the challenge.
- The actions. A set of clear actions would then need to define in order to carry out the guiding policy.
You don't have to use this approach but I guess the point here is that you need to define the overarching challenge and how you're going to address it with coherent actions.
Now let's translate this into a product strategy. How would you start to create a product strategy? How will users benefit from it? Will this strategy generate revenue?
Step 1 — Diagnosis
As talked about previously, you will need to diagnose what is going on in your product world and the best way to do this is to understand:
- The data. What is the data saying? Are there any obvious trends or patterns? It's always great to segment your data into various categories to get different views or angles: user types, locations, platforms, dates
- The customers. Always the next step would be to speak to customers potentially in the segments you’ve identified in your data and understand their actions or behaviour
- The market. What is going on in the market? Is their demand still? Have competitors entered the market? What emerging technologies are there? It's always great to delve into the market to see what could be affecting your business or what could assist your business.
- The company or team. Something else to consider is your company or team, and understand what your company or team is good or bad at. This will allow you to understand capabilities and any skill gaps which might be needed to achieve certain strategies.
Once you’ve started to diagnose, you can start to piece together what are the problems your facing, what are the goals and what actions you’re going to take to reach those goals.
Step 2— Vision
The product vision is always the reason for creating various products and guides you through a lot of uncertainty. Your product vision should describe how your product will bring value to both your customers and your company. I like to think of my product strategy as a path to the vision which will then ultimately guides the strategy.
Step 3— Success
The classic success metric is an increase in revenue or engagement. We’ve all been there and although these metrics are important, they are not objectives. A better way to position success is by defining the short, medium and long term. This way, it will allow you not to be short-sighted. So when defining success you should take into account various time horizons.
Step 4— Prioritise
Now that you have collated all your data, set out your vision and defined what success could look like, you need to start putting forward your proposal which contains how you're going to tackle the challenges ahead and what actions you're going to take. But with so many good ideas on the drawing board, how do you prioritise them?
A lot of teams get overwhelmed and just plot down all the ideas in a timeline which is NOT a strategy. Other mistakes involve doing exactly what customers or management tells you to do, going big on one ‘crazy innovative’ idea or ‘let's just completely rebuild everything!
A better way would be to mitigate risk, spread your bets and diversify. The classic 70/20/10 framework is great:
- Improve existing features (70%)
- Build out new medium size features with good validation (20%)
- Allocate resources to some long term riskier bets (10%)
This will allow you to categorise risk but also understand your company's risk tolerance. You could always play around with the numbers based on the state or direction of the business.
Step 5— Validate
But sometimes what you decide or think is a strategy may not get validated and hence this needs to be an iterative process.
So before you proceed, it might be a good idea to validate your new strategy and address any key risks and assumptions e.g all the data you gathered in the diagnosis might need to be relooked at or speaking to various teams or management to gather some information you may have missed.
A strategy gets better when we get feedback and when hard questions are asked early. More important a strategy is more likely to be successful when everyone is bought in early.
Step 6— Iterate
If it turns out that you’ve missed something or you gather new data, then you may need to iterate.
Strategies, in general, will evolve and naturally iterate over time. A strategy for a new product should help you launch and find market fit but will not help you scale to a public company.
Once growth starts to stagnate, it's time to review, tweak or iterate.
Now that you’ve created your product strategy, how do you execute it? Find out in ‘How to execute a product strategy [As a PM]’