Building a lasting product strategy!

Product managers and business leaders are often faced with the nebulous challenge of building a lasting strategy for their product. Sometimes these are about new products but most often these are about existing products in response to an evolving market condition or a competitive threat!

Following is an attempt to provide a outline to create a comprehensive and durable product strategy.

Start with the Company’s Mission Vision and Values

Understand your company’s Mission, Vision and Values. This will help you guide creating or refreshing your product strategy.

• Mission is about stating explicitly a company’s purpose of existence. This should explain the “Why” behind any strategic decision a company would make.
• Vision defines where the company wants to be – the desired eventual end state. This should explain at a high level “What” success will look like for a company.
• Values defines the cultural norms a company lives by. This should explain “How” a company operates, between employees and with other stakeholders.

Alignment between a company’s Mission, Vision and Values, and that of its product strategy is of paramount importance not only to get buy-in to get started, but also to gain broader organizational support in the long run. Based on this understanding narrow down on the industry you want to play in, if you are a looking at developing a new product or re-evaluate the industry in case you are refreshing the strategy of your existing product.

Analyze the external environment

• Analyze Industry trends & identify market opportunities
• Identify trends that are happening in the industry, including macro environment trends that may have an influence on the industry.
• Identify Market opportunities that are large enough to participate in [#: Size & Growth]
• Ensure the Market is segmented enough to have a meaningful analysis. In general, the broader the market, the less meaningful the insight.
• Do competitive analysis
• Understand the competitors playing in the market space [#: Competitor market share and their growth]
• Identify their unique differentiation and why they win.

Analyze the company’s internal operating environment

• Understand your core competency
• Review company’s competitive advantage and if it is durable.
• This includes Technical, Product and Organizational capabilities.
• Understand your challenges
• Know your company’s limitation or weakness and how to compensate for it.
• Understand what had worked and not worked in prior product launches and more importantly “why”. Be objective on the learnings as the operating environment might have changed.
• Learn from your wins and losses
• If you have an existing product understand why your customers are buying and how they are using your product.
• If your customers are walking away understand why – competition, substitutes, change in use case or for other reasons.

Build a comprehensive strategy

• Identify specific problems & solution alternatives
• Within the market segment, identify specific problems you will be solving and for whom
• Identify one or more solution alternatives for the problems, and choose from them
• For existing products, look at adjacent segments for opportunities to expand. Alternatively, you can take your existing product to a newer customer segment, assuming you have a compelling strategy to reach them.
• Identify your unique differentiation and why you would win against competition [#: Past Revenue Trend]
• Look for proof points to validate your claim – your ability to solve and differentiate
• Build RTM & GTM strategy
• Analyze and build a strategy to reach target customers and sell (Route to market – RTM)
• Build a strategy to promote your product (Go to market – GTM)
• Analyze and create a pricing strategy aligned with overall company-product strategy
• Develop a business plan
• Build your monetization strategy – direct revenue, ad-based revenue or other models.
• Create a 3-year plan to model how much your company would make directly or indirectly and how much it would cost to develop, sell and maintain the product [#: Yearly revenue projection and cost].
• Compare your projected growth rate against that of the industry growth rate. Also validate your revenue to expense ratio and how it compares against other investments in your portfolio. Note that this ratio would be different based on industry growth and your relative position in the market. [#: Revenue to expense ratio]
• If your product is run as SaaS, ensure your modeling include cost of operations!
• Create a roadmap
• Define the products initial set of capabilities that you will take it to market with.
• In addition, build a long-range roadmap for 12-18months showing capabilities/features @ a high level that will be delivered in increments of 6 months.

Execute & Refine

• Pick a development methodology such as SAFE (Scaled Agile Frameworks)
• Develop the initial set of capabilities to validate the product strategy
• Learn, adapt & Iterate
• Validate what is working and what is not across RTM, GTM and Product domain
• Understand what is contributing to the success or learnings – how much of it is attributed to internal or external factors. Based on it, fine tune the strategy and iterate.
• Be quick to fine tune, but be deliberate and thoughtful to pivot, like switching customer segments, changing industry verticals etc., as it may take time for a strategy to take roots!

Building a comprehensive product strategy takes time and requires deliberate effort. It will also require participation and commitment from various stakeholders so that the developed strategy can be owned and executed by the broader organization. So, stay at it!

Hope the above outline helps you in creating a compelling and durable product strategy. Please do share your thoughts!