How to create and communicate a product strategy in 6 steps
The art and science of developing and socializing a product strategy, broken down into six steps
The systematic approach to developing and socializing product strategy.
Product strategy can be a scary and opaque term for many product managers. Early in my career, I used to wonder — “What the heck is product strategy and how do I develop one?” Now, when I ask budding product folks for their understanding of product strategy, I typically hear variations of a definition of strategy, but not product strategy. Simply put, products without a clearly articulated strategy will ultimately fail.
The Kernels of Strategy
Before diving into product strategy, we need to first understand strategy, or more importantly, good strategy. The author of Good Strategy, Bad Strategy, Richard Rumelt, coined the concept of a strategy “kernel”. When broken down to its basics, good strategy answers three simple questions:
The ‘Why’ — Diagnosis of the problem and generating insights
The ‘What’ — Guiding policies for actions to be taken
The ‘How’ — Actionable objectives to solve the problem
Product Strategy 101
Product strategy is a plan that delineates how to achieve desired business outcomes. It provides a decision-making framework, guardrails and a clear path to achieving the product goals. It also acts as the conduit between the mission and the roadmap.
A clear and strong product strategy is imperative because it gives your team direction and focus. It ensures your team’s time and resources are spent on initiatives that matter, reducing wasteful execution. Product strategy also acts as a framework to help prioritize incoming requests and provide the product team with the discipline to say NO when needed.
The 6-step framework to create a product strategy
Extending the kernel concept to digital products, there are six key elements to good product strategy.
1. Understand the market and users
Great products are built on the foundation of having a deep understanding of their users and market.
Talk to real users and synthesize your research. Do this until you’re confident that you deeply understand your user segments, their needs, behaviours and pain points.
With your newfound insights, create preliminary user personas for the various users for your product
Study the market your product operates in. Perform market segmentation and understand the size of your addressable market. Understand the regulatory environment and any hard constraints on your product (eg. HIPPA, GDPR). Do a competitive landscape review — Who are your direct vs. indirect competitors? What are their value propositions and how are they positioning themselves in the market?
2. Understand the problem space
A product needs to solve a painful problem to be able to deliver value to users and sustain growth. By solving an acute problem, the product becomes indispensable to users’ repeated use. This, in turn, leads to continued growth and success for the product.
“If I had an hour to solve a problem I’d spend 55 minutes thinking about the problem and 5 minutes thinking about solutions.” — Albert Einstein
Invest plenty of time to understand and define the problem space your product operates in. Ask questions like — What are the macro and micro economic forces at play? How are users articulating their pain when they describe it in user interviews, support tickets, online? What is the context in which these problems exist for users? Does the pain point happen over a short duration or over a long period?
Then create problem statement(s) that succinctly and clearly define the user segment (WHO), the problem (WHAT) and the primary contributor to the problem (WHY).
Examples
E-commerce Retailer:
"Millennials need a way to easily buy everyday essentials from their mobile device because they struggle to prioritize apparel shopping due to their unpredictable schedules"
Buy Now Pay Later Fintech:
"E-commerce merchants struggle to attract and sell to subprime customers
because they lack the ability to offer instant credit and miss out on this customer segment entirely"Note: If there are multiple problems at play, you might have to work with your team to prioritize and focus on the most acute problem first in your strategy.
3. Identify key pillars of your strategy
Look inward to understand your company’s short-term and long-term competitive advantages. Understand what resources and capabilities your company possesses that can be exploited to give your product an unfair advantage in your market and user segments.
I use the VRIO framework to uncover the sources of sustained competitive advantage for my company and product. You can run collaborative workshop(s) with key stakeholders like leadership, sales, customer success, product marketing. It’s important to get multiple views for the VRIO analysis because it gives the product manager insight into how aligned (or unaligned) each stakeholder group is.
Once the sources of sustained competitive advantage have been identified, you can incorporate them into the strategy.
Note: You can also use a SWOT analysis or Porter’s 5 Forces in lieu of VRIO.
Examples
If one of your competitive advantages was your customer success team’s deep product knowledge — a strategic pillar could be to invest less in creating polished product documentation upfront and instead rely on your support team to field support tickets. This trade-off reduces the burden on the customer success team by decoupling the need for documentation to be ready for product go-live.4. Seek Design and Technical Alignment:
Once you’ve identified the core strategic pillars, the next step is to do a high-level assessment of design and technical risks. This helps you anticipate potential design and engineering constraints while also socializing your strategy with the design, research, and engineering stakeholders.
The alignment could be in the form of system designs, architecture diagrams, service blueprints, user-flow diagrams, low-fi mock-ups or any combination of the above.
In this process, you will uncover technical limitations, quantify risks, and create mitigation strategies.
Note: If unfamiliar with any of these artifacts, look them up — there are plenty of very useful write-ups out there!
5. Define your Vision, Mission, and Goals
The product vision and mission serve as a compass for your product. If you find the product straying off course, use them to steer back in the right direction.
The Product Vision
A vision statement defines what the world will look like because of the impact of your product. It should be aspirational, compelling, and easy to understand while capturing the essence of your product. It serves as a reminder of the general direction the product should be taking. With a clearly defined product vision, you can translate it into a roadmap.
Examples
Amazon - To be Earth's most customer-centric company, where customers can find
and discover anything they might want to buy online.
Apple - To bringing the best user experience to its customers through its
innovative hardware, software, and services.
Disney - To be one of the world's leading producers and providers of
entertainment and information.The Product Mission
A mission statement describes core factors of the business, its focus and goals. It serves to create a clear sense of your company’s objectives, target customers and reason(s) to exist. It should be easy to understand and inspire your team.
Examples
Amazon: "Our mission is to be Earth's most customer-centric company. This is what unites Amazonians across teams and geographies as we are all striving todelight our customers and make their lives easier, one innovative product, service, and idea at a time."
Meta: "Giving people the power to build community and bring the world closer together."Product Goals and Metrics (KPIs)
A good product strategy accounts for measuring the product’s success. It enables teams to monitor progress in achieving desired business objectives. The vision and mission set the aspirational tone for the strategy, but product goals are the tactical markers that translate your product strategy into an actionable plan. From the vision statement, derive product goals that will influence initiatives on your roadmap. For each initiative, set 2–3 product metrics that can track the initiative's success. Setting a north-star metric (NSM)for your product is imperative as well.
A north star metric is the key measure of success for the product team in a company. It defines the relationship between the customer problems that the product team is trying to solve and the revenue that the business aims to generate by doing so. — Amplitude Analytics
Amplitude has a great article on what a NSM is and why your product needs one.
Examples
1. Initiative: Decrease time to checkout by 7% in Q2
Metrics: Avg. time to checkout, % of sessions with abandoned checkout
2. Initiative: Improve engagement on Instagram Stories
Metrics: Monthly Active People (MAPs), Avg. session duration, Time on screen6. Put It All Together & Communicate It
Once the strategy is documented, it’s time to sell it. This is arguably the most important step because effective communication ensures that the strategy gets ratified across the company and teams start executing towards it. I’m a big proponent of the Amazon style product memo. However, use a format and structure that works best for your product org and company culture.
Practice extreme clarity
Your stakeholders are going to be strapped for time and attention. Highlight only the key pillars of the strategy when you socialize it. If needed, distill your document down to bullet points during your meeting and share the full version asynchronously.
Focus on the strategic pillars and not execution
When meeting with key stakeholders (senior leaders, CEO, team leads, investors etc.), focus on the strategic pillars and how you will win. Paint the picture of your product’s path to success. Don’t get bogged down by talking about specific features, instead showcase the direction in which you intend to take your product and gain alignment at that 10,000 ft level.
Socialize as you go
Step 6 is actually misleading. Communication of your strategy should not happen in a big-bang after it’s done. Instead, get feedback from a small group of trusted stakeholders throughout the process. Meet with these key folks on a regular cadence to review progress and get feedback as the strategy starts to take shape. This way, you build allies and get buy-in and create shared understanding along the way.
Anticipate potential questions and pushbacks
When you communicate your strategy, there will be questions and concerns from stakeholders. Anticipating them while you are working through Steps 1–5 will ensure that you’re well prepared during your meetings. In your document, have an “FAQ” section outlining the questions you’re anticipating and your responses to them. Be sure to clearly highlight risks and mitigations.
Examples
This SVPG article shares a sample FAQ section with potential questions and their responses. 1. Many companies that serve small and medium-sized businesses have failed in their attempts to move to the Enterprise. What makes you believe we can be successful?
1. Many companies that serve small and medium-sized businesses have failed in their attempts to move to the Enterprise. What makes you believe we can be successful?}
We consider this the primary risk. We know enough to know the needs of
enterprises are substantial and varied. We don't know enough to know if we can be successful. To address this risk, we intend to utilize the
Customer Discovery Program (CDP). We are working now to select between 6 and 8 prospective Enterprise customers. We plan to engage directly and intensely with them in order to determine precisely what we will need to do to provide them a solution that they will buy, use successfully, and find enough value to serve as a reference.
2. How long will it take to onboard a new Enterprise customer?
This will be a function of the answer to the above question. Our strong desire is that a new Enterprise customer should be able to get operational very quickly (less than 48 hours) but that optional additional customization might come after that.Who am I?
I’m a product leader with almost a decade of experience across startups, scale-ups and consulting for large enterprises. I’ve led the go-to-market for successful digital products in multiple verticals (manufacturing, B2B SaaS, fintech, ecommerce) and have consulted for some of the largest brands.
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