Creating a successful product requires attention to the details, from getting the user interaction and the visual design right to providing the right functionality and using the right technologies. With so much focus on the nitty-gritty, it’s easy to no longer see the wood for the trees. This is where the product strategy comes in. It helps you manage your product proactively and it prevents you from getting lost in the details. This post discusses what an effective product strategy is and how it benefits you.
The Three Elements of an Effective Strategy
Product strategy is about imagining the future of your product: It’s a high-level plan that helps you realise your vision or overarching goal. More specifically, the product strategy should describe three elements: market and need, key features or differentiators, and business goals, as the following picture shows.
The market describes the target customers and users of your product, the people who are likely to buy and use it. The needs state why people would want to buy or use it. What is the main problem your product should solve or the primary benefit it will provide? Think of a product like Google Search or Microsoft Bing that solves the problem of finding information on the Internet. Compare it to a product like Facebook or Twitter that allows you to stay in touch with family and friends.
The key features and differentiators are those aspects of your product that make it stand out from the crowd and entice people to choose it over competing products. Take, for example, the first iPhone with mobile Internet, iPod-like digital music player, and touch screen as its key features; or the Google Chrome browser with its focus on speed, safety, and simplicity.
The business goals capture the benefits the product should offer for your company. Is it going to generate revenue, help sell another product or service, reduce cost, or increase the brand equity, for example? Being clear on the business goals allows you to select the right key performance indicators (KPIs) and measure your product’s performance. Take the iPhone and the Google Chrome browser mentioned earlier. While the iPhone generates a significant portion of Apple’s revenue, the Chrome browser does not earn any money for Google, as far as I know. But it allows the company to control the way people access the Internet and it has reduced Google’s dependency on third-party browsers such as Mozilla’s Firefox and Microsoft’s Edge. Both are important business benefits.
You can capture your product strategy with the Product Vision Board, a simple yet effective tool shown in the following picture. You can download it from romanpichler.com/tools/vision-board or by clicking on the image below.
The Product Vision Board above captures the vision at the top. The four sections underneath it describe the strategy. The questions help you provide the right information. You can learn more about the tool by reading the article “The Product Vision Board” and watching the video “The Product Vision Board: Introduction“.
Strategy Focus and Inflection Points
The product strategy is not a static, fixed plan that you create for a new product. You have to adapt it to help your become and the stay successful. I like to use the product life cycle model to contextualise strategic product decision and get the strategy right. The following picture shows the product life cycle with four key events: launch, product-market fit, life cycle extension, and end-of-life.
The strategy of a brand-new product should help you get to launch and address the needs of the early market, the innovators and early adopters.
After your product has successfully launched, analyse the market response. Then rework the strategy to achieve product-market fit (PMF) and move into the mainstream market. This may involve pivoting–radically changing the product strategy. Think of YouTube, for instance, which started as a dating website and pivoted to a video-sharing product.
Once you have managed to achieve product-market fit, you’ll have to adjust the product strategy again to sustain the growth of your product. Think, for instance, of the changes Apple has made to the iPhone since its launch in 2007 to keep it attractive and preserve its growth for as long as possible, from adding apps to changing the its size.
Once the growth starts to stagnate you have reached another strategic inflection point: You can either extend the life cycle of your product, for instance, by taking it to a new market, or you let it mature thereby accepting that it will eventually decline and die. Whatever you choose to do, adapt the product strategy to help your product move forward in the right way.
Don’t forget to review and adjust the product strategy on a regular basis together with the business stakeholders and development team members—I recommend once per quarter as a rule of thumb. This helps you proactively manage your product and it minimises the risk of experiencing nasty surprises. After all, strategizing is about playing a proactive game and maximising the chances of making and keeping your product successful.
The Product Strategy in Context
If the product strategy describes the key elements required to achieve product success as I suggested above, then where are the vision and the product roadmap? The following picture shows how I relate the three concepts.
I view the vision as the ultimate reason for creating the product that describes the positive change your product should bring about as I describe in more detail in my post “8 Tips for Creating A Compelling Product Vision”. It should inform and guide your strategy. To put it differently, the product strategy should describe the path towards the vision.
The product roadmap states how the product strategy will be implemented. It adds the necessary information like product goals and dates/timeframes and it shows how the product is likely to grow. The two work in tandem, as I describe in my article “10 Tips for Creating an Agile Product Roadmap”.