Strategy and Product Teams

Strategy and product teams are both key to achieving product success. But what exactly do we mean by strategy? Which one is most relevant for product teams? To what extent should the teams shape strategic decisions? And what role does the head of product play? These are the questions I discuss in this article.

Listen to the audio version of this article:

What is Strategy?

Strategy derives from the ancient Greek word strategos, which means army leader or general. For centuries, the term was primarily used in a military context to describe how battles were fought.[1] Today, there is an abundance of strategies—think of business, marketing, sales, technology, operations, and, of course, product strategy, for example. Fortunately, only a few strategies are important for product teams. These are captured in Figure 1.

The Strategy Stack in Figure 1 consists of five layers and seven elements. These are the business strategy, which is also referred to as corporate strategy, the product portfolio strategy, the technology strategy, and the product strategy, as well as the product roadmap, the technology roadmap, and the product backlog. The backlog is not a strategic plan, but I’ve added it to the stack to show how strategic decisions can be translated into tactical ones.

Note that I’ve ordered the elements according to their importance, with the most important at the top. As a consequence, higher-level strategies guide lower-level ones. For example, the business strategy guides the portfolio strategy, which directs the product strategy. The latter, in turn, drives the product roadmap, which directs the product backlog. This creates alignment and ensures that the decisions across the different layers are consistent.[2]

Product Strategy and Ownership

Out of the four strategies shown in Figure 1, the product strategy is most significant for a product team. It describes the approach chosen to achieve product success. To do this, I find it helpful to describe the following four elements:

• The target group—the users and customers who should benefit from the product.
• The needs—the problem the product should help solve for the users and customers, or the benefit it should offer.
• The business goals—the benefits the product should generate for the company that’s developing and providing it.
• The standout features—those aspects that make it special and set it apart from competing offerings.

If you are looking for a tool to capture the product strategy, try my Product Vision Board, which you can download for free together with a handy checklist from my website.

Traditionally, the product strategy is owned by the head of product, the person in charge of the product management group. Sometimes, the role is also called Chief Product Officer and VP or Director of Product Management, depending on the size and structure of the organisation.

Having a single individual in charge of the strategy can offer consistent decision-making and close alignment: Different product teams are guided by the head of product’s decisions. However, this approach has several drawbacks, too, including the following four:

• Slow decisions: The head of product can become a bottleneck, especially when the portfolio grows and more products are added. Consequently, decisions might be delayed, and product teams might not be able to quickly progress their products.
• Being overworked: The head of product can become overworked. As a people manager, they have to look after the individual product people and the entire product management group. Consequently, they can experience stress, reduced productivity, and, in the longer term, health issues.[3]
• Strategy-execution chasm: If the product team members don’t fully understand or sufficiently buy into the product strategy, a strategy-execution chasm can open up, and the strategy is not effectively translated into detailed product decisions. The UX and product features may therefore not align with the strategy.
• Lack of in-depth knowledge: The head of product might be too far removed from the day-to-day product management work to fully understand the impact of strategic product decisions. At the same time, this can make it difficult to leverage insights from the product discovery and delivery work to adapt and evolve the product strategy—think of user feedback you collect on early product increments, for example. In the worst case, the wrong strategic decisions are taken.

Empowering Product Teams to Make Strategic Decisions

If having the head of product in charge of product strategy is not always effective, then what’s the alternative? My recommendation is to empower product teams to own the strategies of their products. Consequently, a product team is given the authority to create and evolve the product strategy over time. This offers three key benefits:

• Fast decision-making and strategy-execution alignment: The product strategy, discovery, and delivery work are now carried out by the same people. This speeds up the decision-making process and maximises the chances that strategic decisions are effectively executed.
• Increased productivity: As the team now owns a product in its entirety, the members’ motivation and productivity are usually increased.
• 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.

As good as this might sound, there are two key challenges with this solution. First, the product team may lack the necessary expertise to get the product strategy right. Second, the increased autonomy may result in misalignment. In the worst case, different product teams create diverging strategies and take their products in opposite directions. Let’s explore how these two challenges can be addressed.

Upskilling People and Forming Extended Product Teams

A product team that consists of a product person, a developer, and a UX designer is well-equipped to carry out product discovery and delivery work. But such a team often lacks the expertise to make the right strategic product decisions. There are two factors at play: First, the product person does not always have the necessary skills to methodically develop a winning product strategy and an actionable product roadmap. This can be addressed by upskilling the individual, for example, by attending training courses, making time for self-study, and being coached by the head of product.

Second, a small product team usually struggles to make the right decisions to successfully monetise their product. It typically lacks the necessary marketing, sales, support, legal, finance, and operations know-how, depending on the type of product and the company structure. To address this issue, I recommend forming an extended product team like the one shown in Figure 3.

The team in Figure 3 has key stakeholders as additional members, as well as a coach. The former are stakeholders whose expertise and support you need to get the product strategy right. They share their expertise and contribute to product decisions in collaborative workshops, and they work with the other members to progress the product and achieve product success.

For example, you might discuss the viability of existing marketing and sales channels in a product team meeting. Similarly, you might co-create the product roadmap with all product team members, as I explain in more detail in the article Maximising Stakeholder Buy-in to Product Strategy and Product Roadmap.

As the team composition in Figure 3 is heterogeneous and the members may include senior stakeholders, I recommend involving a team coach. The role is responsible for facilitating meetings and helping the team members collaborate effectively. It might be filled by an experienced agile coach or Scrum Master.[4]

Using a Portfolio Strategy to Align the Product Strategies and Teams

The second challenge when empowering product teams to own the strategies of their products is misalignment. Take Microsoft 365, formerly known as Office, as an example. If PowerPoint, Word, and Excel followed divergent strategies, this might not only result in a fragmented user experience and inconsistent feature sets but also endanger the suite’s ability to act as a cash cow for Microsoft.

To address this challenge, I recommend two measures. First, use a product portfolio strategy, which must be followed by the individual product strategies. If we apply this approach to Microsoft 365, the strategies of PowerPoint, Word, and Excel must comply with an overall 365 strategy, as Figure 4 shows.

Second, ensure that the head of product takes care of the product portfolio strategy and practices effective product portfolio management. This allows the head to align the product strategies while empowering the product teams to fully own their products and make all necessary strategy, discovery, and delivery decisions: alignment and autonomy are balanced.

Following my advice leads to the distribution of strategy ownership shown in Figure 5.

In Figure 5, the business strategy is owned by the CEO and the C-suite, the company’s executives.[5] The product portfolio strategy is created and managed by the head of product together with the portfolio team. The product strategy, together with the product roadmap and product backlog, is owned by a product manager (or Scrum product owner) and the product team. This ensures that strategic product decisions effectively guide discovery and delivery and that insights from the development work help evolve the product strategy and roadmap. The technology strategy and roadmap, finally, are owned by the CTO together with senior architects.

If we apply the ownership model in Figure 5 to the Microsoft 365 example, the head of product would take care of the 365 strategy together with a portfolio team. Separate product teams would own PowerPoint, Word, and Excel and be empowered to determine their strategies, as long as they comply with the overall 365 strategy.

Notes

[1] Stephen Bungay, 2011, The Art of Action: How Leaders Close the Gaps between Plans, Actions and Results, p. 23 and Lawrence Freedman, 2017, “The Meaning Of Strategy, Part I: The Origin Story,” Texas National Security Review: Volume 1, Issue 1.

[2] While I have described the connections between the layers top-down, changes in a lower layer can trigger adaptations in a higher one. Say that the portfolio strategy turns out to be wrong, then this may require changing the business strategy. To put it differently, the relations between the layers are bidirectional.

[3] The larger the product management group and product portfolio are, the more likely it is that this will happen.

[4] For more guidance on forming effective product teams, refer to my article Setting up Product Teams for Success.

[5] This does not imply, however, that only the leadership team determines this strategy. The opposite is true: I find that a collaborative approach like Strategy Deployment can not only help create a better business strategy but also increase its acceptance amongst the employees.