What is Good Product Strategy?
When considering Product Strategy, it’s important to differentiate it from a mere plan. Picture this: the CTO repeatedly emphasizes to the product team, “YOU NEED A STRATEGY.” He wasn’t simply urging us for a strategy; he was actually seeking a concrete plan. For two months, our team had been experimenting to figure out the best way forward to encourage user sign-ups on our site. We made significant progress, learning a lot in the process, but we still needed to test our ideas. This scenario made the CTO uneasy as he craved certainty and clear milestones to gauge our progress. This common misconception, equating a strategy with a detailed plan, often leads to failure.
Many companies treat Product Strategy as a feature-building plan. They articulate their strategies with intentions like:
– “To create a platform that allows music producers to upload and share their music.”
– “To develop a backend system for the sales team to manage their leads.”
– “To build a website that markets to target users and converts them.”
These statements are plans, not strategies. Plans provide a false sense of security and don’t account for uncertainties or changes. This misstep often leads to judging teams based on output rather than outcomes.
Switching the perspective of what constitutes a Product Strategy is crucial. Rather than thinking of it as top-down directives, it should surface as a result of iterative learning, aligning the team towards achieving business objectives and customer satisfaction.
Key Components for a Successful Product Strategy:
1. Vision: This is a high-level statement of where the company or a specific business line is heading. For large corporations, it’s focused on particular business areas or customer journeys, while for smaller companies, it’s the overall vision for the company and product. Keep this long-term and qualitative, discussing competitors, customer perceptions, and growth aspirations.
2. Challenge: This is the initial business goal that needs to be achieved to progress towards the long-term vision. It’s a strategic objective that aligns the team’s focus on a specific aspect of product development. This can be qualitative or quantitative and should remain broad and high-level.
3. Target Condition: This narrows down the challenge into smaller, manageable problems, expressed through measurable metrics. The team should know where to begin their efforts, even if the exact path to the target condition isn’t immediately clear.
4. Current State: This is the current reality compared to the target condition, which should be quantified before planning begins to address the first target condition.
Example: Uber’s Product Strategy (Hypothetical)
Vision: The CEO aims to make Uber an affordable and efficient alternative to both private car ownership and public transport.
Challenge: Understanding why users opt for other transport modes, with a focus on reducing long wait times in less popular cities. If wait times exceed 10 minutes, aim to reduce this to 5 minutes by January 30, 2018, as shorter wait times significantly increase user likelihood.
Target Condition: Addressing long wait times by focusing on the acquisition of new drivers, setting an objective to onboard at least one driver for every 50 people in each city by January 30, 2017.
Current State: Measure the current driver-to-population ratio in each city, identify obstacles preventing new driver sign-ups, and experiment to overcome these obstacles until the target condition is met.
Product Strategy involves setting goals and systematically removing obstacles through experimentation. By focusing on strategic alignment and continuous learning, companies can effectively achieve both business and customer objectives, departing from the traditional notion of rigid, feature-based planning. This approach ultimately positions product managers to solve real customer problems, driving business success.
About the Author
Melissa Perri is a strategic advisor, author, and board member working with Fortune 500 companies and SAAS scale-ups to drive growth through impactful product strategies and organizational development. She authored Escaping the Build Trap and Product Operations and is the CEO and founder of Produx Labs, offering e-learning through Product Institute and CPO Accelerator. A former Harvard Business School instructor in Product Management, she has consulted with numerous companies, including Insight Partners, Capital One, Vanguard, and Walmart/Sam’s Club. Melissa is also an international keynote speaker and hosts the Product Thinking Podcast.