4 Elements Of An Effective Product Strategy
Becoming an effective product leader starts with an understanding of what a great product strategy looks like and how it compares to undifferentiated good product strategies.
Though product strategy is one of those words that take on a lot of different meanings. It often becomes a platitude in many organizations.
It’s part of why we built an entire program on Product Strategy — and will provide a sneak peak of it here.
But you can't build a successful product strategy without first having a common understanding of what product strategy looks like and what it doesn't look like.
What Is A Product Strategy?
The best and easiest place to start is defining what strategy is not.
Product Strategy is not:
- Goals or Metrics: Metrics and goals tell us what we're trying to achieve, and if we are making progress against them, but they don't tell us how or why.
- Roadmaps: It’s also not a product roadmap. Experiment, feature or campaign roadmaps are just a list of activities. They are not a coherent strategy.
- New Features or Products: Adding a new product feature or product is one of many methods to help us achieve a strategy, but it is not the strategy itself.
- Budgets: Resourcing is our team or money allocation to our roadmaps, not a strategy.
- Mission Statements: Mission statements are statements of long-term beliefs and values. Your product strategy is how you're going to fulfill that mission.
Product leaders who become overly focused on any of these things lose sight of how to build a successful product strategy.
In direct comparison, a great product strategy has four key components:
- Is Targeted
- Has Fluency
- Has Visibility
- Is Compounding
Let’s take a look at each of those four elements in detail.
1. A Great Product Strategy Is Targeted
We can think about product strategies across a spectrum, from bad to good to great. The first element that defines the difference between great, good, and bad strategy is whether or not the strategy is targeted.
A bad strategy tries to be a little bit of everything, which often looks like placing even bets across all different areas of product work.
But a great product strategy doesn't try to be everything to everyone and identifies points of leverage to focus resources around.
Harvard Business School professor and "Father of Competitive Strategy" Michael Porter underlines the importance of this, saying: "Strategy is about making choices, trade-offs; it's about deliberately choosing to be different."
2. A Great Product Strategy Has Visibility
The next element of a successful product strategy is visibility. By visibility what we're talking about is how effectively our product strategy looks into the future.
A bad strategy will have no visibility, and no understanding of where our current product strategy might hit saturation.
That's going to push product managers and leaders toward surprise ceilings that require much more work to navigate away from.
A decent strategy has at least an understanding of the product strategy horizon, seeing where there are future limitations and constraints.
But a great product strategy is not only going to know where that horizon is and why it's a horizon, but it has a clear plan of action of how to address it and how we're going to push the frontier of that horizon into the future.
3. A Great Product Strategy Has Fluency
The third element of a great product strategy is fluency within our company. We can think about this in terms of what percentage of the company is able to not only repeat the strategy but also communicate how the thing that they are working on fits in within the broader picture.
A bad strategy is one where only a couple people are really fluent and able to communicate that strategy. Because that means it's stuck in one or two people's heads.
When there isn't fluency, product leaders often rely on "big hairy audacious goals" to align a company around a strategy.
Big hairy audacious goals are tools product leaders often use to build motivation or rally the troops around a long-term initiative but make for poor operational directives for product strategy.
A great strategy will be one where the vast majority, close to 100% of the company, from product to marketing, is able to accurately tell the strategy and where they fit into that picture.
This means they understand the high-level vision as well as how their work ladders up to it.
4.A Great Product Strategy Is Compounding
The last element of a great product strategy is that it's compounding.
Bad product strategy prioritizes isolated wins and is constantly trying to find that next thing to keep their product strategy afloat.
Great product strategy doubles down on areas that can result in compounding returns.
Great product leaders identify which components of their product strategy can not only be improved but also help reinforce other components of the strategy, creating compounding results.
8 Signs Of A Bad Product Strategy
Spotting signs of a bad product strategy can help your product team avoid costly errors in the future.
When product strategies are focused on the wrong elements, several symptoms start to emerge.
- Unmeaningful work. People work on things that just end up not mattering or are incremental.
- Randomness. People work on things that are random without a common purpose or theme.
- Thrashing. Goals and objectives just change with the weather, creating a feeling of thrashing among the team and organization.
- Lack of purpose. People don't understand how they fit into the broader picture and how to impact it.
- A lack of understanding and trust. People don't understand why others are working on what they are working on.
- Inaccurate goals. Goals are consistently way off, over and over.
- Can’t get buy-in. In other words, you struggle to get buy-in around initiatives and you just don't know why.
- Surprise ceilings. You hit these surprise ceilings or local maximums in your attempts to improve your product strategy.
Putting It Into Action
Now that we know what a great product strategy contains, let's take a brief look at how to put it into action.
Putting your product strategy into action involves four stages:
1. Identifying strategic priorities: determining the strategic priorities of your business that are within your scope as a product leader
2. Translating strategic priorities into product work: ideating and refining product work ideas that support your strategic priorities
3. Developing a product workplan: categorizing the sequence of product work based on the degree of impact and urgency
4. Communicating and iterating your product strategy: aligning your strategy with your leadership and team as well as refining your product strategy due to internal and external changes
Want to learn more about putting the perfect product strategy from our experts? They cover each of those stages, and a whole lot more, in our Product Strategy program. Sign up now to unlock it all.