Products often don’t exist in isolation. Instead, they are part of a product portfolio. Think of Word, Excel, and PowerPoint, which belong to Microsoft Office. Such a portfolio benefits from having a dedicated strategy—a product portfolio strategy. But what information should it contain? Which template can you use to describe it? How does it relate to the overall product portfolio management work? And who should create and update the strategy? Read on to find out my answers.
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What Is a Product Portfolio Strategy and Why Does It Matter?
A product portfolio strategy is a high-level plan that helps you maximise the value a group of products creates. It achieves this by setting overarching goals for the entire portfolio. These guide and align the strategies of the portfolio members, as Figure 1 illustrates.
In Figure 1, the strategies of the individual products—Word, PowerPoint, and Excel—implement the Office strategy. Their visions, target groups, needs, standout features, and business goals must comply with the overall portfolio strategy.
Product Portfolio, Product Family, and Product Line—What’s the Difference?
A product portfolio is a group of products. These might be end-user-facing or internal ones like a software platform, for instance; they might directly generate revenue or support commercial offerings. Larger companies often have several portfolios; early-stage startups, in contrast, usually have a singleton one—it consists of just one offering.
A product family is commonly defined as a group of related products. You can therefore view it as a cohesive product portfolio—a portfolio whose members have related value propositions and/or business goals, for example, Adobe Creative Cloud and Microsoft Office.
A product line is a set of product variants. You can think of Microsoft Visio as a product line, as it is offered in three versions at the time of writing—basic, standard, and advanced. Another example is YouTube, which is available in three variants—standard, premium, and kids.
Which Specific Information Should the Portfolio Strategy Contain?
An effective product portfolio strategy should contain five elements—an overarching vision that describes its purpose, the positive change it should bring about; the markets and market segments the portfolio serves; the overall value it creates for the users and customers; the business benefits it helps achieve; and the type of products it contains with the capabilities that set them apart from competitors.
To make this more concrete, let’s explore how the Microsoft Office strategy might be captured.
If you are familiar with my work on product strategy, you’ll recognise the structure I’ve used in Figure 2: It is based on the Product Vision Board—the tool I’ve developed to capture a product vision and a product strategy. This means that you can apply my strategy approach not only to individual products but also to your product portfolio.
To get started, create your own Portfolio Vision Board by downloading and adapting the Product Vision Board or by recreating it in your favourite tool. Please make sure, though, that you state the author and source of the Product Vision Board as well as the CreativeCommons BY-SA license on your derived portfolio board—like I did in Figure 2. If you haven’t worked with the Vision Board, then read the article The Product Vision Board and watch the video Product Vision Board Introduction.
But despite the structural similarity between a portfolio and a product strategy, there is an important difference: Due to its nature, a portfolio strategy has to be bigger and less specific than a product strategy—it covers several products and not just a single one. This means that its target group, needs, standout features, and business goals are significantly less specific than those in a product strategy.
How Does the Product Portfolio Strategy Direct the Product Strategies?
Now that we understand which information a portfolio strategy should contain, we can take a closer look at how it guides the strategies of the products it contains using Office as an example. The Word, PowerPoint, and Excel visions have to either support the Office vision or, which is my preference, they inherit it. This way, they share the same purpose—“to enable individuals and organisations to get things done.”
Additionally, the target groups of Word, PowerPoint, and Excel have to be subsets of the portfolio target group. Similarly, the needs captured in the individual strategies have to help meet the needs in the portfolio; the standout features of Word, PowerPoint, and Excel have to address the needs stated in the Office strategy; and their business goals have to help achieve the portfolio ones. Figure 3 illustrates this relationship.
Following this approach ensures that the portfolio and product strategies are closely aligned. To put it differently, the portfolio strategy sets the stage for the product strategies; it guides and constrains the strategic decisions of the portfolio members.
How do Product Portfolio Strategy and Product Portfolio Management Relate?
As its name suggests, product portfolio management is the process of managing a group of products. This includes analysing a product portfolio using a tool like the Product Portfolio Matrix, creating and updating a product portfolio strategy, and adjusting the portfolio. The latter includes harmonising the strategies and roadmaps of the portfolio members, resolving dependencies, coordinating major releases (if required), as well as adding and removing products.
As this description shows, simply creating a product portfolio strategy is not enough. You also have to establish an effective portfolio management approach. Part of this process should be regular portfolio strategy reviews. I recommend holding them every three months and considering the portfolio performance, changes in the competitive landscape and business strategy, new trends, and modifications of the strategies of the portfolio members.
The product portfolio strategy is therefore far from being a fixed plan. Just like a product strategy, it is best understood as being malleable and changeable. As Dwight D. Eisenhower famously said, “Plans are nothing; planning is everything.”
Who Creates and Manages the Product Portfolio Strategy?
Carrying out portfolio management and creating and evolving a portfolio strategy requires expertise and time. To ensure that the work gets done, you have two options:
First, use a dedicated product manager. The individual should have a track record of successfully managing products similar to the ones contained in the portfolio. Additionally, they‘ll benefit from having the right leadership skills, be able to guide a group of product people, collaborate with senior stakeholders, and engage with senior management.
Second, ask the head of product to carry out the portfolio management work in addition to their other duties—as long as the individual has the necessary expertise and does not become overworked.
No matter, which option you choose, it would be a bad idea if a single person made all portfolio decisions on their own. This would waste the knowledge and creativity of the people working on the individual products. What’s more, it might cause poor alignment and weak buy-in. I therefore recommend a collaborative approach that involves the following individuals:
- The product portfolio manager (who might be the head of product);
- The individuals managing the products contained in the portfolio;
- Development team reps which might include a UX designer (for end-user-facing products), an architect/programmer, and a tester/QA engineer.
- Key stakeholders, for example, a sales rep, marketer, and customer support team member.
These individuals form a product portfolio team like the one shown in Figure 4.
The team in Figure 4 is similar to a product team but it operates at a higher level. What’s more, the portfolio team should not only create a portfolio strategy but also collaboratively review and adjust it on a regular basis.
To staff the team, I recommend asking the dev teams and various key stakeholders involved in progressing the individual products to nominate representatives. This ensures that the team members are motivated to help with the portfolio management work. Additionally, keep the team stable to facilitate trust-building and collaboration and avoid handoffs and loss of knowledge.
How Can You Get Started with a Product Portfolio Strategy?
My experience suggests that it’s usually best to first able to create and evolve a strategy for a single offering before you move up a level and employ a product portfolio strategy. Once you have established an effective product strategizing approach—which often is challenging enough—you’ll be in a great position to transfer your learnings onto the portfolio level.
To remind yourself of the advice shared, download the infographic below by clicking on the image.
 The article is based on my work with different clients in different industries using different product portfolios. I use Microsoft Office, officially called Microsoft 365 at the time of writing, as a well-known example of a product portfolio, which you hopefully can relate to—even if you use an alternative like Google Workspace or Apple iWork. Note that it’s unknown to me how Microsoft manages the Office suite, and I don’t claim that the company uses an approach like the one described in this article.
 Note that the sample strategy shown in Figure 2 is based on my research; it is not an official description of the Office strategy employed at Microsoft.
 You therefore cannot apply the checklist I have developed for the Product Vision Board to the Portfolio Vision Board.
 Figure 3 uses a single product strategy for simplicity’s sake.