July 21, 2022
Creating a product strategy
It may be one of those vague, semi-annoying tasks but creating a product strategy is critical to the success of your company. Below I've outlined how to do this in Q&A format. Hope it's helpful!
What's a product strategy?
It's deciding what the product's focus and position is in the market vs. competitors, and defining how you'll monetize, defend, and improve that position over time.
The most important aspect is how you position your product vs. competitor's. For example, Apple's MacBook is a premium priced, mass-market laptop with an emphasis on beautiful design, powerful hardware, and simplicity. Chromebook tries to be the lowest cost provider and Lenovo's ThinkPad is optimized for productivity-oriented users.
What's a product strategy?
It's deciding what the product's focus and position is in the market vs. competitors, and defining how you'll monetize, defend, and improve that position over time.
The most important aspect is how you position your product vs. competitor's. For example, Apple's MacBook is a premium priced, mass-market laptop with an emphasis on beautiful design, powerful hardware, and simplicity. Chromebook tries to be the lowest cost provider and Lenovo's ThinkPad is optimized for productivity-oriented users.
What's the goal of having a product strategy?
A good product strategy focuses your efforts in a way that wins customers, achieves the growth you want, earns high margins, and improves your product's defensibility over time.
Once you've got the strategy defined, it helps your team make feature prioritization, design, and product messaging decisions.
What about my overall business strategy? How do you define that?
A good product strategy focuses your efforts in a way that wins customers, achieves the growth you want, earns high margins, and improves your product's defensibility over time.
Once you've got the strategy defined, it helps your team make feature prioritization, design, and product messaging decisions.
What about my overall business strategy? How do you define that?
This is how your business succeeds long term, and includes:
- Your vision and goals. Who do you want to be in the market and for your customers?
- How you're positioned vs. competitors
- How you'll defend that position long-term
- Which go-to-market channel(s) you're focused on and how you'll win in each one
- How you'll grow, like via new regions, products, and customer segments
For example, Apple's business strategy includes (these don't map 1-1 to the categories above):
- Be the world's premium mass-market "computing device" provider (i.e. laptop, phone, tablet, watch, etc)
- Have a brand associated with beauty, simplicity, and style (i.e. minimalist design, sleek hardware and stores)
- Increase monetization and network effects with marketplaces (i.e. app store)
- Strengthen their position by getting users to adopt the full suite (i.e. cross-device alerts, data sharing, consistent adapters, consistent look/feel)
- Leverage scale to maintain industry-leading margins (i.e. bring more in-house, squeeze vendors on price, price well above costs)
How do my product and business strategies relate, and which should I do first?
Your product strategy is a subset of your business strategy and should support it, so I recommend getting everyone aligned on your business strategy first.
That said, for a business with one product, you might want to create both strategies in parallel since there are inter-dependencies. For example, if you decide your product strategy is to be the lowest cost provider, this could impact your business monetization, channel, and defensibility strategies.
Apple's product strategy for MacBooks would support their overall business strategy that's outlined above, and may be something like: Be the premium priced mass-market notebook with superior design and tight iPhone integration, that wins long-term by continually improving performance and deepening iSuite tie-ins. You'd want product channel and product marketing items here too, but I'm not close enough to the MacBook business to guess what these might be.
Ok, so how do I create my product strategy?
First, talk to company leaders and get aligned on the overall business strategy. Then assess your product's strengths and weaknesses vs. competitors. Is there anything about your company or product that could give you a long-term advantage? You should also talk to users (1-1s and surveys have worked well for me), sales, and other customer-facing front-line teammates like customer support. Then look at data around why prospects don't convert and which aspects of your product get the most usage and earn the most money.
In parallel with all that, I'd create a point of view on two things: 1) where you think your market is going, 2) whether there are any creative new product extensions, customer segments, or go-to-market channels that could be a part of your strategy.
In parallel with all that, I'd create a point of view on two things: 1) where you think your market is going, 2) whether there are any creative new product extensions, customer segments, or go-to-market channels that could be a part of your strategy.
After that's done, synthesize what you found and brainstorm two or three paths to success for your product. What area can you be the best in that really matters to customers? What marketing or sales channel will most emphasize your product's strengths, and how can you evolve your product to succeed in that channel? How can you increase long-term pricing power, reduce churn, and boost ARPU/CAC? What big new swings could you do - i.e. new products, features, or channels - that can transform your product and business success? Are there any major technical or design leaps you could make that would put you ahead of competitors? Answer these questions, create a rough narrative and 12mo+ plan out of it, and congratulations: you've got a v1 product strategy!
How do I know this product strategy is the right one?
Ask these questions:
- Does it play to our strengths?
- Will it enable the long-term growth we want in both usage and profit?
- Is it aligned with our company strategy and where we think the market is going?
- Are the risks of this strategy reasonable compared to the upside of getting it right?
- Is it defensible long-term?
On the last point, checkout my article on building a defensible business. Ideally you want business and product strategies that create defensible advantages over time like network effects, brand, and product breadth, to name a few.
If you're satisfied with the answers above, it's a good strategy to pursue. If not, keep iterating.
How can I test my product strategy?
Testing a strategy helps you improve it faster, fill in details, and pivot early if it's off the mark.
I recommend listing your riskiest assumptions and then determine how best to validate or invalidate them. For example "customers care a lot about x" or "we can succeed in channel y against competitor z."
Specifically, if you're concerned customers won't resonate with your desired product positioning, then adjust your sales and marketing to match the new positioning, and put out your next few releases and design updates in alignment with it. Stay close to customers during this time, ask direct questions about their preferences, and watch the customer uptake numbers. Hopefully things are trending up and you can make tweaks to the strategic plan based on your learnings.
What's the output of all this, and how often should I review it?
I recommend summarizing your product strategy in a 1-page doc and sharing it with everyone in your org. Then review it quarterly and make any updates based on the latest market, customer, and competitor data.
Good luck!
I recommend listing your riskiest assumptions and then determine how best to validate or invalidate them. For example "customers care a lot about x" or "we can succeed in channel y against competitor z."
Specifically, if you're concerned customers won't resonate with your desired product positioning, then adjust your sales and marketing to match the new positioning, and put out your next few releases and design updates in alignment with it. Stay close to customers during this time, ask direct questions about their preferences, and watch the customer uptake numbers. Hopefully things are trending up and you can make tweaks to the strategic plan based on your learnings.
What's the output of all this, and how often should I review it?
I recommend summarizing your product strategy in a 1-page doc and sharing it with everyone in your org. Then review it quarterly and make any updates based on the latest market, customer, and competitor data.
Good luck!