The Critical Role of Product Strategy When Money Is Scarce (Part 1 — Seed)
Every company needs a solid product strategy, especially when investor funding and customer demand aren’t guaranteed. Here’s how a good product strategy can drive business success, even in tough market conditions.
Last week, I had an interesting conversation with an entrepreneur who was aiding me with market research for the work I do with startup founders. While explaining my work, I realized many founders misunderstand the term “product” in my pitch. My coaching goes beyond just the deliverable; it connects the product to the business and the go-to-market strategy. So, I adjusted my pitch to “I help founders connect the product to the business and the go-to-market.”
This new pitch was better than my initial “product consulting” term, but it still wasn’t perfect. It sparked curiosity rather than immediate understanding. Surprisingly, during our chat, the entrepreneur identified my work as “product strategy” without me having to spell it out. Although the term is accurate, it’s often ambiguous to many, including seasoned product leaders and CEOs, which can make it seem less important.
One CEO I worked with didn’t realize the enormous impact a structured product strategy could have until we implemented one. His company struggled with sales and multiple pivots without significant progress until we developed a strong product strategy.
When a product strategy is properly executed, it becomes a pivotal tool for achieving business goals and navigating daily operations. This series of articles dives into how product strategy benefits companies at different stages since its role evolves over time.
What Is Product Strategy?
The term “strategy” is often misused, contributing to the confusion around “product strategy.” Many mistake strategy for a general direction or vision. However, strategy is a high-level plan to achieve specific goals under uncertain conditions. It requires making decisions about why a chosen plan is preferable over others, despite inherent uncertainties.
A good strategy outlines your objectives, how you plan to achieve them, and the rationale behind your choices. During planning, you might discover that initial goals need adjustment or that you lack information crucial to the plan’s success. This iterative process refines each component until it makes coherent sense.
Product strategy specifically is a high-level plan that details how a company will achieve its business objectives through strategic decisions about the product, market, and brand. It’s not limited to the product department but encompasses a broader scope, including marketing and sales. The aim is to guide the company toward business success with its products, not just to create a good product.
Product Strategy at Seed Stage
At the seed stage, responsibility lies with the founders, and the primary goal is to find an initial product-market fit. This phase involves a lot of trial and error, but it doesn’t have to be blind experimentation.
In the seed stage, startups often have a promising idea and technical capability that interest people. However, the critical question is determining the actual product to sell. For example, at Twiggle, we had powerful e-commerce search technology but no defined product. Initially, we considered a smart e-commerce search engine, but this idea had significant drawbacks: our technology lacked essential features, and potential customers preferred in-house solutions.
Instead, we created an API to enhance existing in-house search engines. This approach resonated with potential clients and proved successful. This strategic choice came from understanding our customers and the market, which guided us to avoid paths with no potential and achieve results.
A well-defined product strategy at this stage ensures all decisions align with market needs. It involves making strategic choices that connect the dots between the market and the product you’re building. This strategy clarifies why you’re building the product, what assumptions you’re making, and why it all makes sense.
While these principles apply to later stages too, additional roles and complexities come into play. I’ll cover those in the next part. Stay tuned!
Feel free to reach out if you’re interested in learning more about strategic product management.