Step by Step Guide to Product Strategy
The detailed approach to how I have built successful products in over a decade.
So, you have a product and a team, but no customers. You need a product strategy.
A Product strategy is the set of choices a company makes, to achieve its business objectives. This ranges from features to build, market segments to focus on, differentiation model, pricing, positioning, messaging, and other factors.
The success of your product directly depends on executing the right strategy. I have seen it position products profitably even in very fierce markets. And without a proper strategy, I have seen really elegant products fail.
So my goal today is to save you a few months / failure loops, by providing an excellent and tested framework for product strategy.
To start with, I encourage teams to construct a product strategy around a series of product-market fit[s].
Product-Market fit as a part of strategy.
Your product should prove significantly valuable and a perfect match to customers and this is defined as product-market-fit, which is one of the most important goals for any startup.
Without a market-fit, products generally die regardless of their relevance and glossy features. Reaching product-market-fit requires a lot of research and insight, but it is a necessary investment of time and effort for any startup’s success.
Your goal is to validate that the product solves your customers’ problem[s], that you can gather critical feedback, iterate and tweak the product to achieve continuous market fit.
What is a good product strategy?
A good product strategy will do the below ;
Collectively help you figure out what you will do to achieve your outcomes.
Your team instantly has a clear direction and can balance certainty with complexity backed by good decisions.
Ultimately, your intuition will tell you if your team has a real product strategy. Your team is aligned and amped up. Your leaders equip, empower, and get out of your way. Your organization is obsessed with experimentation, unafraid to pivot when assumptions are proven wrong.
Signs of a bad product strategy.
You will notice the below ;
Constant endless prioritization wars of features.
A clear disconnect between the Roadmap and Business.
Directionless activity and unproductive busy man days.
Engineers and designers do not understand why they are working on certain things.
The product managers are looking short term, and this is a recipe for failure.
5 Guiding principles for a good product strategy.
Market (Target market and needs)
You will need to define your ideal users. Your product does not fit everyone. In the same vein, it is important not to be too narrow in segmentation. A product that is built for a limited audience will simply fail.
Business (Connection with overall strategy)
Your product runs on the rails of your overall company, hence you need to be sure your strategy aligns with the overall strategy. You want to take into consideration its strategic priorities, processes and vision.
Product (How the product meets the needs)
Focus on the big wins your product has to offer customers. Be obsessed about improving those “hard-to-copy” features and flog them endlessly. Also, feedback gathering and iteration must be continuous events in your product development cycle.
Delivery (How you will build and deliver the product)
Worrying about “routes to market” is the wrong worry early on in the process. You should obsess more about “customer touchpoints” and “channels”. One of the most important drivers for your business at this point is the adoption rate. You want to build desirability and value into your product, in its early stages.
Success Metrics.
You have to be very clear on what success looks like for your product and defining them early on is very important to progress. One major hack is to always tie your success metrics back to the goals of your product. For example - You build a dating app where your goal is to match professionals for meaningful relationships, a topline metric will be - the number of users talk at least twice daily for 7 days.
All your metrics must be aligned with your outcomes and business impact.
Ultimately, the best product strategies build mental models around the long-term, high-level, and clear alignment with the company’s goals.
How to build a product strategy?
1. Define and establish the product vision to guide your strategy
Every time I start a new product strategy, I build it on one core — the product vision.
This is not the popular random statement that talks about the future. A vision sets the direction for where the product is heading and talks about what the product will accomplish for its target users in the future.
Your product vision should clarify top 3 things:
It describes the motivation behind the product.
Keeps your target user in mind.
Guides key decisions.
A good product vision prioritizes market needs, captures and describes the positive effects your product should have.
Once your product vision is developed, every action your team takes during the product development process will be guided by your vision. At every phase. In every step.
2. Next, set clear goals for your product
Now that the vision is clear, you can now set bit sized goals that your team can execute. I recommend setting this on a quarterly basis. A tested hack is to hinge your goals on insights from data and also hypotheses you need to validate.
One proven way to do this is to estimate how your current users will use your product [My assumption is that you have an MVP]. Google analytics, hotjar or mixpanel should give you an indication of this. You are looking for the frequency of usage for each feature in your product. That means, looking at functionalities that ties to your product’s core unique selling points and eliminating basic features.
Now that you have this information, you can do two things:
If you're getting great user adoption and usage, you can now set a new goal. [Think deeper engagement & retention]
If adoption and usage are below expectations, you need to figure out why and improve them.
For example: For an app like Clubhouse, if you see more people scrolling through their timelines and jumping into rooms, but are not staying for X session time, you know there’s engagement within the product. But on the flip side, not staying for X session time isn’t the expected behaviour. It will lead to an eventual drop in engagement within Clubhouse.
In the example above, it is easy to settle down on a goal of increasing the session time of Clubhouse visitors. This only describes what you are going to do.
But when you connect it to an outcome of improving network effects, it will open up a wide array of possibilities that your team can then prioritize and execute on.
3. Prioritize features to reflect your product goal
By now, you know that everything in product management is hinged on prioritization. Because you need to be sure you are not spending time building something that barely has an impact, you need an articulate prioritization technique that lets you tie your decisions about what you build, back to your product goals.
When prioritizing features, I recommend you have a view of the complexity, effort, and the impact it will have. Another hack is to identify where the majority of your users are in their lifecycle and if your goal aligns to these users.
Once a user has downloaded your app, their journey looks like this ; signed up > activated > retained > delighted. Every feature you build should help your users cross over to the next stage effortlessly, so they can quickly achieve their goals with your product.
The truth is that not all your users will need the feature you are currently building and the hack I have shown you above will help you identify which part of your users’ lifecycle you are building you are trying to improve and optimize for.
4. More than team alignment on product strategy, Drive autonomy.
You will usually read in many places that you need to align your team members to a common goal, usually the product strategy. I have devised a means to even go beyond and seen immeasurable success. How? Make the goals team-specific. Why?
As soon as features are prioritized till delivery, team members from multiple disciplines get involved — design, engineering, QA. These features will then be crunched to tasks that will then be collaborated within and across multi roles.
To handle the non-linear product development process, the system must align members from every role on two levels:
On a common goal.
On a goal specific to their job function.
Because aligning everyone around a product strategy only aligns people around what you plan to do.
However, when you crunch this down to their job roles, you give them equity and autonomy to execute their part of the product strategy.
Finally, every great product manager should often re-visit the strategy quarterly, to be sure they are still aligned and I have shared with you, my personal framework with you.
1. The 60/30/10 ratio
It is important to be intentional about what percent of time/effort that go into:
Existing product Improvement (60%)
building medium size features with excellent validation. (25%)
long term/riskier bets (15%)
This structure can help categorize ideas and understand what type of risk tolerance the team/company has at the moment.
2. ROI based
Basically for the amount of effort a project can take, what is the expected outcome. It can be something besides revenue or engagement such as customer happiness, development velocity, etc. Don’t get too granular and make this a complex math problem.
3. Market based
Another way to look at the problem is what does the market want/need and where is the growth? Starting purely from an external perspective can help us eliminate biases and find new opportunities. Of course we then have to marry that with our insider knowledge and data.
Importantly ;
Every strategy gets better when we get feedback and when hard questions are asked early. More importantly, a strategy is more likely to be successful when everyone is bought in early. As the author, have a listening and growth mindset and thank your stakeholders for their feedback.
Do you know someone who would benefit from this newsletter? Consider sharing this gift of a newsletter that keeps on giving. 💖
Loved today’s guide, it gave me a framework to understand product strategy. I think I need more experience in understanding what should be considered a key or valuable metric for users
Really Insightful! Thanks Salem.