The product strategy is a crucial product management artefact. But what exactly is it? Who should create the strategy? How often should it be reviewed and updated? How does AI influence strategic decisions? And what product strategy mistakes should you avoid? These are some of the strategy questions that I am frequently asked in my workshops and coaching sessions, and that I answer in this article.
What is a product strategy?
A product strategy describes the approach chosen to make or keep a product successful. You can think of it as a decision-making framework, a consistent set of specific choices that guide product discovery and product delivery.
An effective product strategy should address the following four aspects:
- Market: Who is the product for? Who are the target users and customers?
- Needs: Why would people want to use or buy it? What problem does it solve, and what benefit does it offer?
- Key Features & Differentiators: What kind of product is it, and what makes it stand out? Why should users and customers choose it over competing offerings?
- Business Goals: What are the product’s business goals? What benefits should it create for the company?
Why is the product strategy important?
A product strategy helps you proactively manage the product, align the stakeholders, develop a realistic product roadmap, and select the right key performance indicators (KPIs). Additionally, it is the foundation for effective product discovery and delivery, helping product teams identify and implement the right features and UX design.
Without a product strategy, a product team can easily get lost in the details, whether it is writing new user stories or dealing with an urgent support request, and struggle to make the right decisions. In the worst case, they take their product down the wrong path and end up with a product that underperforms or fails.
How can I capture the product strategy?
A popular tool to capture the product vision and product strategy is my Product Vision Board, shown in Figure 1. You can download the tool together with a handy checklist from my website and by clicking on the image below.
Figure 1: The Product Vision Board
The Product Vision Board in Figure 1 is states the vision at the top and the product strategy in the bottom sections. These are:
- Target Group: The users and customers who are likely to use and pay for the product.
- Needs: The benefits the product will offer for the user and customers or the problems it will help them solve.
- Product: The key features that set the product apart from competing offerings.
- Business Goals: The business benefits the product should create for the company developing and providing it. Examples are to generate revenue, reduce cost, and increase brand equity.
To better understand how you can use the Product Vision Board, watch the following video:
Note that you may want to document how you have made the decisions stated on the Product Vision Board and use additional tools, as I explain in the article Product Strategy as a System.
How does the product strategy relate to the product vision and roadmap?
The product strategy connects the product vision and the product roadmap. The vision describes the positive change the product aims to achieve, the ultimate reason for creating it. The strategy outlines how to realise the vision and achieve product success, and the roadmap states how the strategy will be implemented over time, including the specific product goals and outcomes the product should achieve, as Figure 2 shows.
Figure 2: Roman’s Product Strategy Model
As Figure 2 shows, the vision guides the product strategy, and the strategy directs the product roadmap, as I explain in more detail in the article Roman’s Product Strategy Model.
How can I ensure that the product strategy is right?
To maximise the chances that a product strategy will result in a successful product, it must be based on empirical evidence rather than hunches, gut feeling, or the highest-paid person’s opinion (HIPPO). An effective way to achieve this is to create an initial strategy and then iteratively correct and refine it by addressing the key assumptions and risks it contains. The risks relate to the product’s desirability, economic viability, technical feasibility, and ethicality. The process is shown in Figure 3.
Figure 3: Risk-driven Product Strategy Validation
You might address a risk by interviewing target customers, creating a throwaway prototype, or reviewing the business model, for example. Stop when you’ve addressed the key assumptions and risks and you have collected enough data to show that the information the strategy contains is likely to be correct.
This process is referred to as strategy validation. It is especially important when you create a new strategy and when you significantly change an existing one, for example, to take a product to a new market and extend its life cycle. For more information, read the article Product Strategy Discovery.
Who should create and update the product strategy?
The product strategy is best created and updated collaboratively by involving the person in charge of the product, development team members, and key stakeholders. This leverages their expertise, aligns people, and maximises the chances that they support the strategy. A great way to achieve this is to bring the individuals together and run a collaborative workshop.
I am an advocate of empowering product managers to make strategic decisions for their products, together with the other product team members. This can offer the following benefits:
- Fast decision-making and strategy-execution alignment. The same group of people is responsible for making strategy, discovery, and delivery decisions.
- Increased productivity and motivation: Increased autonomy usually results in motivated, productive individuals.
- Value focus: Taking ownership of strategic decisions encourages the team to focus on user and customer needs, as well as business goals, instead of being primarily concerned with product features.
It requires, however, that product managers have the necessary strategic skills and that a product strategy is guided by a product portfolio strategy, as I explain in more detail in the article Strategy and Product Teams.
How does AI influence the product strategy?
AI influences strategic product decisions in two ways:
- It can help you make better decisions faster, at least for certain products.
- It can help you offer products that do a better job for the users and customers and are differentiated more effectively.
In the first case, AI-based tools help you discover user and customer trends using predictive analytics. This can help you create a new strategy and evolve an existing one. The tools can also analyse market data, customer feedback, and emerging trends to suggest new products and features, assuming that enough relevant data is available. Finally, AI tools can continuously monitor how much value a product is creating and recommend improvements.
In the second case, AI tools can help you provide new or enhanced product features and make your product stand out from the crowd. For example, offering AI-enabled product features, including a personalised user experience and user-specific recommendations, can give your product a unique advantage.
To leverage the benefits above, you need to be aware of AI’s current limitations, select the tools that work best in your context, and have solid product strategy practices in place. To future-proof yourself, experiment with AI tools and increase your product strategy skills.
While the capabilities of AI tools will undoubtedly increase further, they are unlikely to create effective strategies without human involvement any time soon. After all, a key prerequisite for developing a winning product strategy is the ability to empathise with users and customers. Strategy development will therefore continue to be a deeply human activity. AI tools aid this process, but they don’t fundamentally change it.
For more advice, read the article AI and Product Strategy.
How often should a product strategy be reviewed and updated?
A product strategy is not static. Instead, think of it as being adaptive. It should therefore be reviewed and adjusted regularly, at least once a quarter, or whenever there are significant changes in the product’s performance using the appropriate key performance indicators (KPIs), market trends, competition, or the business and product portfolio strategy. This ensures the strategy remains relevant and effectively guides the product discovery and delivery work.
For more advice on reviewing and adapting the product strategy, please refer to the articles The Product Strategy Cycle and Continuous Strategizing.
How does the product strategy evolve over the product lifecycle?
The product strategy has to change to guide a product through its lifecycle. The life cycle is commonly divided into five stages: Development, Introduction, Growth, Maturity, and Decline, as Figure 4 shows.
Figure 4: The Product Lifecycle Model
In the Development stage, your focus is to discover the initial strategy to address the early market (innovators and early adopters) and launch a minimum viable product (MVP). In the Introduction stage, rework the product strategy to achieve product-market fit (PMF) and enter the growth stage.
In the Growth stage, adapt the strategy to keep the product growing and effectively differentiated. Despite your best efforts, the growth will eventually slow down and the product will enter Maturity. At this stage you have two options: You can rework the product strategy to facilitate a life cycle extension. Alternatively, you might adapt it to turn the product into a “cash cow” and maximise its business benefits.
In the Decline stage, adjust the strategy if you plan to sell (parts of) the product. Rework it to re-launch the product as a niche offering. As these recommendations show, the strategy should adapt to the lifecycle stages to guide the product toward continued success or a managed decline.
You can find more advice in the article The Product Strategy and the Product Life Cycle.
What is the relationship between the business strategy and the product strategy?
A business strategy describes how a company wants to achieve its overall aspiration and create value for its users, employees, and shareholders. Contrast this with the product strategy, which states how a product will be successful.
Figure 5: Business and Product Strategy
What common mistakes should be avoided when working with a product strategy?
Avoid the following five common mistakes when you work with a product strategy.
- No documented product strategy. The strategy might exist in the head of the Chief Product Officer or a senior stakeholder, but it has not been clearly articulated. This makes it hard to assess the strategy and understand if it is still helpful or if it has to be updated.
- The product strategy has not been validated. It is not based on relevant empirical evidence, but on the highest-paid person’s opinion or AI-generated suggestions. Consequently, it may contain hidden assumptions and risks, or it might even be wrong all together.
- The product strategy is disconnected from tactical product decisions. The strategy does not direct the product roadmap and the product backlog, and the data gathered from developing product increments and releasing new product versions is not used to evolve the strategy.
- The product strategy is not supported by the key stakeholders and development teams. A lack of stakeholder support renders the best strategy useless. A great way to secure strong buy-in is to involve the key stakeholders and development team members in creating and updating the plan, as I explain in the article Maximising Stakeholder Buy-in to Product Strategy and Product Roadmap.
- The product strategy is not regularly reviewed. The strategy is seen as a fixed plan that simply needs to be executed instead of a decision-making framework that has to be adapted depending on the product performance, changes in the competitive landscape, and new technologies and trends that create opportunities and threats. To ensure that the strategy stays useful, review it at least once every three months, as I discuss in more detail in the article Continuous Strategizing.
For more guidance, read the article 10 Product Strategy Mistakes to Avoid.
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