Setting a product strategy
Product managers take part in a number of strategic planning activities. Every company has different planning practices, but there are a few commonalities amongst the highest performing digital companies. These companies have an audacious vision, a roadmap that defines what products and features to build to achieve that vision, and a product strategy that describes how product development fits into the business strategy and company vision.
The company vision is typically set by the Chief Executive Officer, potentially with help from a Chief Product Officer or other c-level executives. The vision describes the ultimate impact the company will have in the world.
Blade Kotelly, Leader of the Advanced Concept Lab at Sonos, said that the vision should be at the bounds of what’s imaginable while still speaking to customer needs. “The best vision always speaks to enduring human needs”, he said. He elaborated, saying that if the vision is too fantastical, it’s not actionable. But if it’s too specific, there isn’t room to iterate based on customer feedback.
IKEA’s vision, for example, is to “to create a better everyday life for the many people.” This vision is not specific to the product they offer today (furniture) and is not something that can be definitively defined as achieved in the near future. It’s a north-star that inspires employees and customers.
The product strategy is typically set by the Head of Product. The product strategy describes how product management will help the company achieve the company vision and business goals.
Steven Haines, Author of the Product Manager’s Survival Guide and former Senior Director of Product Management at Oracle, described how developing a product strategy fits into a product manager’s role:
“It is vital that people who are in product roles be able to look at what’s going on with the business, identify what that future state ought to be and create a pathway to get there.”
The product strategy describes your target market and your method for achieving business goals. An effective strategy covers four key components: your customers, your competitors, your business, and the macro environment.
- Customers. The foundation of a successful business is a product that customers want. Therefore, the product strategy should first define who your customers are. Many companies serve multiple customer segments. For example, many banks provide services to both consumers and businesses.
Make sure you have a strong understanding of your customers’ needs before setting a long-term product strategy or roadmap. And be willing to adjust as you get feedback from your customers throughout the product lifecycle.
- Competitors. Most companies have direct competitors in their market, or, at least, companies that provide a similar value proposition. The product strategy describes how you position your product to your customers given the other products and services on the market.
In the cloud storage market, Box is more tailored to the needs of large companies than Dropbox. Airbnb provides guests with the opportunity to live like a local, while the major hotels provide a consistent experience across the world.
- Business. For-profit companies have shareholders that expect the company to make money and provide a return on investment. The product strategy describes how the product will make money and achieve business goals.
Twitter is a consumer product that monetizes its user base through selling advertising space to brands. Box sells subscriptions to its enterprise customers. Companies employ a variety of different business models. It’s important to define your business so that your team understands how the product facilitates it.
Macro Environment. The macro environment accounts for economic, technological, political, and cultural forces that may affect your market and your product over the short and long-term. The product strategy should account for the below factors as appropriate:
- Emerging markets where your product may have demand
- Emerging technologies that may impact your customers
- Economic forces that may impact your customers’ budgets or needs
- Evolving customer needs and behaviors