The product strategy is a detailed plan that helps you reach the long-term goals that build towards the product vision.
How do product vision and product strategy complement each other?
- the product vision is the future state of the product that you want to achieve
- the strategy represents the tactical decisions and the course of action that will get you there
Even if you have a strong product vision, without a good strategy in place to lead your steps towards it, it will be difficult to keep on track. But also, without a clear and achievable product vision, it will be difficult to create a strategy that can take you there, because you don’t know what “there” really means.
Why is product strategy important
1. Provides the direction and clarity for the teams within the company
Think about the following scenario. You want to travel to New York. You know that New York is your goal, but you have no information whatsoever about possible routes and transportation that can take you there. What do you think the possible outcomes could be?
- You arrive at the destination, but after many attempts that would stretch over a very long period.
- You have no chance to get to New York, maybe even get lost on the way.
- If you are very lucky, you’ll find the fastest route from the first attempt. But, let’s face it, what are the odds of this happening?
Same goes with the strategy you create for your product. A clear strategy gives direction and helps your teams make informed decisions to meet the product’s long-term goals.
2. Guides your decision-making process
During implementation, the plans you make towards fulfilling the long-term goals can be affected by many factors: people leaving, unforeseen risks, blockers that arise along the way, and many others.
However, having a strategy in place allows the team to make the best decisions to still reach that goal. Simply put, a good strategy gives you an alternative route to reach the same destination when things don’t go as you plan.
3. It’s the foundation of your product roadmap
Product strategy is the basis of a roadmap. It tells us what are the initiatives that should make up our roadmap.
I don’t recommend creating product initiatives before finding a strategy because this will lead to prioritizing the wrong work and waste of time. You need to know what’s your product strategy, in order to make the most suitable choices for your roadmap.
Take a look at these product strategy core elements:
Vision
The product vision is a core element of product strategy that keeps you focused on the main purpose. It should comprehensively state what the product will do and who it is addressing to. In my earlier post about product vision, I talked about the information you need to gather about the market and competitors to create a powerful vision statement. But these findings must be in the back of your mind also when building the product strategy.
- Know your audience
You will probably talk to many people to find out who your target customers are. However, only a part of them will be potential users who could benefit from the product. Don’t lose sight of this when you work on your strategy.
- Know your audience’s pain points
Before building a product, you should be able to define the actual problem it will address. What are your target customers’ pain points? What are their needs? These are questions you must answer before you start to plan your strategy.
- Know your competitors
Ideally, you should know what your competitors have to offer. You can build a better product than them from a quality, security, features, or pricing perspective. Or you can address a pain point of the market that no one did before.
By having these figured out, you know what you can offer compared to your competitors, what type of audience you should focus on and what to build.
For a better understanding of product vision, I recommend you read my earlier post.
Goals
Product goals convert the product vision into measurable and clear objectives and are linked to company goals. They should be achievable, actionable and have a fixed time frame.
Goals should come before strategy and initiatives:
- The correct strategy can be developed when you are heading towards a goal that you set out to achieve
- It helps you make the best choices when adding initiatives to your roadmap
Remember that a goal must be measurable.
- Goal: Increase our product’s customer base
- Timeline: 3 months
- Success metric: Increase the number of clients by 20%
Therefore, our product goal could sound like this: Increase our product’s customer base by 20% in the next 3 months.
Initiatives
You can look at product initiatives as smaller steps that must be completed to reach a specific product goal and that span over a shorter period than goals.
Goals and strategies are broad and difficult to follow without decomposing them into initiatives, which are smaller and achievable steps.
Initiatives connect the broad goals and strategies to the team who is building the product features.
It is one thing to tell the development team that our goal is to increase our product’s customer base by 20% in the next 3 months. And another is to present them with an initiative that says what features we need to get there.
4. Example
Imagine you are building a CRM web application.
Product vision: Enabling large companies to seamlessly organize and check their leads, while cutting down repetitive administrative tasks, with the help of artificial intelligence.
Product goal: Increase product engagement by 20% in the next 6 months
Product Strategy: Focus on online stores with a volume of users of over 1000000 whose client engagement grows exponentially during the holiday season, whose marketing teams need to automate the process of advertising the products they are selling online.
You can see that this product strategy incorporates our target audience (online stores with a volume of users of over 1000000), our audience’s pain point (the online store needs to advertise their merchandise), and the advantage we can offer over our competitors (automate the entire process).
To reach out to these stores, you can develop a comprehensive marketing strategy that includes paid advertising, social media marketing, influencer partnership, or email campaigns.
Let’s simplify things a bit and look at another example.
Product Vision: Visit every exotic destination on earth.
- This is your desired future state
Product Goal: Visit at least 8 places in the next year by spending no more than $500 per location
- This is a measurable, and achievable goal
Product Strategy: Group the locations by proximity to be able to go from one location to another with means of transportation cheaper than the plane.
- This is the plan you will follow to reach the proposed goal
Product Initiatives:
- Of course, to support the strategy and the goal, the initiatives will come into place, such as visit diferent places and everything that visiting different places implies. Each initiative is being broken down into smaller pieces, such as Epics and Stories. You can read more about initiatives in my next post.
Common types of strategies
1. Product segmentation strategy
Product segmentation refers to versioning your product for different types of people. There is a core version of the product, but you focus on providing some different features depending on the different needs of each type of user.
For example, you build a product that serves individuals but also large teams. Depending on the type of user you can create a set of features that benefit mostly individuals using your product, and another set that benefits teams. While for individuals you don’t need a means to communicate with other users, teams may need a way to communicate with each other.
2. Product led growth strategy
Companies that adopt the product led strategy focus on building a product that is the main driver for customer acquisition.
It means that the product is free for a group of features and services, and to use the more advanced ones, users have to upgrade their accounts.
3. Product differentiator strategy
The product differentiator strategy refers to having a unique selling point on the market which will make your product stand out in front of others similar to yours. This strategy is rooted in your customer’s needs.
A very important element for this strategy is that you know very well what your customer segment is and that you understand very well their needs and pains.
Final thoughts
Product strategy is not a standalone element in product management. It relies on the product vision for directions, on product goals to know when the objectives are achieved and needs initiatives to connect to the teams doing the work.
