Elements of an Effective Product Strategy

Published on 19th May 2015

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.

Elements of an Effective Product Strategy

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

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.

Product Life Cycle

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.

Product Strategy in Context

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”.

Post a Comment or Ask a Question

14 Comments

  • Paritosh Agarwal says:

    Hi Roman,

    Thanks for your article. This is quite enlightening.

    I often struggle asking the right set of questions and making right assumptions while consulting the customer on a new product, Can you please throw some light on what should be the right approach while defining a new product for the customers.

    • Roman Pichler Roman Pichler says:

      Thanks for your feedback Paritosh. Reading my article “Product Discovery Tips” should help you answer your questions. Good luck!

  • Ani says:

    Hi Roman,
    I liked your post. Very helpful ! You mentioned about Product Strategy being derived from the Vision of the company and then ultimately a roadmap to achieve that strategy. But how do you relate product strategy to business strategy ? Many times, even if we have a vision, there are intermediate focuses of businesses on a quarterly / half yearly basis and product needs to deliver to achieve those business strategy. So what do you think about: Vision -> Business Strategy -> Product Strategy -> Product Roadmap way of thinking ?

    • Hi Ani,

      Thank you for your feedback and sharing your question. I like to work with the following model, which I describe in my book Strategize:

      Vision -> business strategy -> product strategy -> product roadmap -> product backlog

      If you can break down quarterly business goals into product goals and capture them on a product roadmap, depends on the product’s life cycle stage: Once your product grows steadily, you should be able to carry out this exercise (if it is helpful). Otherwise I recommend that you use a validated product strategy and actionable product roadmap to show how your product helps implement the business strategy and move the business in the right direction. Hope this helps!

  • Sandy says:

    Hello Roman,
    Very interesting read. I am trying to learn more about the Product Quality strategy especially in the manufacturing context. It will be really helpful if you can guide me further on this topic. It will be interesting to see a developed model and how it behaves taking into consideration various dimensions of Quality. Using this framework how to develop a product quality strategy in accordance with the overall product strategy.
    Your inputs will be highly appreciated

    • Hi Sandy,

      Thanks for your comment. Unfortunately, I am neither a production nor a quality expert. But I would suggest that if quality is a differentiator for your product, you include it in your product strategy (and list it in the “Product” section if you use the Product Vision Board).

      Hope this helps!

  • fred kalu says:

    Thanks, i also love your book and your work. please can you guide me on product strategies for effectve performance of agro- based SMEs.thanks

  • Ivan says:

    I like your framework and I loved your book.

    Who should define the product strategy?
    I work in a startup as the only product leader and I’m transitioning to a role of product marketing. The more I spend time on this the more it seems natural to me that the strategy may be a product marketing task, since I have much more inputs and clearer mind now than as a busy product owner.
    What do you think?

  • Gerson Rodriguez says:

    So you would not include business model as part of strategy discussion ?

    • Great question, thanks for asking. If the product requires a new or changed business model, then I would include it in the strategy discussion. That’s typically the case when a brand-new product is developed and when the life cycle of an existing one is extended (for instance, by taking it to a new market). But I would recommend clearly distinguishing between product strategy and business model. The former should focus on the product’s value proposition and business goals, whereas the latter explains how the product is monetised. I discuss the relationship between the product strategy and business model in more detail in my book Strategize. Hope this helps!

  • Mike Beatty says:

    I would think the more appropriate order is Vision >> BUSINESS MODEL >> Product Strategy >> Roadmap

    Without the fully fleshed out business model, your product strategy may become too myopic on the product aspects for the sake of product…Missing opportunities to innovate the product to achieve the business model goals.

    • Hi Mike, Thanks for your comment. If you have a business model that you want to use or make work, then the product strategy should be derived from the business model. An example is the original iPod: The sales took off and the business model succeeded after the launch of iTunes in 2003. But I find it no unusual that a company has a great idea for a new product and is looking for the right business model to monetise it. Take Google Search and Facebook as examples. Both products were launched without a working business model in place. As the topic deserves a separate blog post, I have adjusted the text and removed the business model discussion.

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