Every Monday, we dive deep into a topic we think is important for Product Managers and Product Leaders to spend time on. We hope you get value from it and consider sharing it with your colleagues.

There may be no other area within the world of product management that’s just as misunderstood as it is critical than Product Strategy. While some topics may come and go as the “hot topic” within product management, Product Strategy remains ultra popular year in and year out. Yet, despite its frequent mention, a clear understanding of what exactly constitutes a product strategy can be elusive. That’s precisely why I thought it’d be good to focus this essay on what Product Strategy actually is and how Product Managers and Product Leaders can set a Product Strategy that actually works. This essay aims to move beyond theoretical discussions and offer actionable guidance, drawn from the experiences and teachings of so many experts that I’ve personally learned from over the years including Lenny Rachitsky, Gibson Biddle, Melissa Perri, Roman Pichler, Ben Foster, and others. Let’s dive in…

What is Product Strategy?

Before we get too far, we should set the stage for Product Strategy actually is. At its core, product strategy is about setting a direction for a product. It's a high-level plan that outlines the steps a product or product line will take to meet business objectives and user needs. This strategy is not just a roadmap of features; it's a blend of market understanding, user insights, and business goals woven into a coherent narrative that guides product development.

You can think of Product strategy as the guiding north star for teams, helping to navigate the complex and often uncertain journey of building and evolving a product. It answers fundamental questions: Who are we building this product for? What problems are we solving? How does our product stand out in the market? And importantly, how does it contribute to the overall goals of the business? It's about making deliberate choices — deciding not only what to do but also what not to do. This strategic clarity ensures that resources are effectively allocated towards efforts that yield maximum impact, both for users and the business.

As we go deeper into the nuances of product strategy, we'll explore how it's distinct from product vision and roadmaps, and how it acts as a crucial link between the two. We’ll uncover how to approach product strategy in a way that's both grounded in reality and aspirational in its reach, setting you up for success even as your products evolve over time.

Importance of Product Strategy

The importance of a well-defined product strategy cannot be overstated. It's the backbone of successful product management. A solid product strategy ensures that every feature, every update, and every marketing effort contributes towards a unified goal. Without a clear strategy, product development can become a disjointed effort, susceptible to shifting priorities and market pressures.

A product strategy should not be mistaken for a mere to-do list of features or a rigid product roadmap. Instead, it's a dynamic vision that needs to adapt and evolve with the changing market landscape and customer needs. It’s meant to resolve conflicts and guide decision-making processes. It helps product teams prioritize features and initiatives based on their alignment with the strategic goals, rather than on individual preferences or short-term gains. Ultimately, it provides a framework within which teams can make coherent and consistent decisions.

But let’s face it – in the world of software products, things can change fast. Yet, a robust product strategy acts as a stabilizing force. It ensures that the product stays relevant and competitive even when the market or customer dynamics change frequently. By defining a clear target audience, a compelling value proposition, and measurable business goals, a product strategy turns a vision into a concrete plan for success.

In essence, product strategy is about making thoughtful choices – what to do and, equally important, what not to do. It’s about understanding where the product fits in the market, how it stands out from the competition, and how it contributes to the company's broader objectives. This strategic thinking is what differentiates successful products from the rest, making product strategy an indispensable part of product management.

Components of a Solid Product Strategy

A well-crafted product strategy is more than just a roadmap; it's a blend of many components that all work together:

Vision: The foundation of any product strategy is the vision. As Roman Pichler puts it, a product vision describes the product’s purpose, the ultimate reason for creating it, and the positive change it should bring about.​

It's a clear, inspirational statement that paints a picture of what the product aims to achieve in the long term. Pichler points out that the product vision should serve as a guiding star, setting the direction for all product-related efforts. It's not just about the functionalities or the features; it's about the impact the product will have on its users and the market. Amazon describes its product vision as being encompassed by four key principles: customer obsession rather than competitor focus, passion for invention, commitment to operational excellence, and long-term thinking. These aren’t feature-specific, but are set as overarching guiding principles.

Target Audience: Understanding who the product is for and what their needs, behaviors, and pain points are, is vital. The product strategy should not just clearly define who the product is being created for, but also why they would choose this product over others.

Unique Value Proposition: What sets the product apart in a crowded market? A great unique value proposition identifies and communicates the unique benefits that the product offers, which will resonate with the target audience. For example, Apple's introduction of the iPhone wasn't just about launching another smartphone; it was about offering an unparalleled user experience that integrated phone, internet, and multimedia.

Business Goals: A product strategy must align with the overarching business objectives. It should articulate how the product will contribute to the company's growth, revenue, market position, and brand equity. As Pichler suggests, setting realistic and measurable business goals ensures that the product strategy contributes to the company's success.

Overall, a solid product strategy intertwines these components to create a cohesive plan. These elements together form the blueprint for building a product that is not just viable but also resonates with users and achieves business success.

Common Misconceptions in Product Strategy

One of the most common misconceptions in product management is conflating product strategy with product planning. While these terms are often used interchangeably, understanding their distinct roles is crucial for effective product development.

​Melissa Perri emphasizes that a product strategy is not a mere collection of features or a roadmap of what to build and when. Instead, it's about setting a direction based on what will be most valuable to both the business and its customers. A strategy is a high-level approach that guides decision-making, whereas planning is about the execution of this strategy.

A clear example of this distinction can be seen in the early days of Spotify. Their strategy wasn't just to build a music streaming app; it was to change how people accessed and enjoyed music. The specific features, like playlist creation or social sharing, were part of the plan that executed this broader strategy.

Another misconception is that a product strategy is set in stone. In reality, a good strategy is flexible and evolves based on market feedback, changes in consumer behavior, or new technological advancements. Perri points out that a product strategy should emerge from experimentation towards a goal, not from a fixed set of ideas.

Many assume that a product strategy should have all the answers from the start. However, as Roman Pichler explains, a product strategy should identify key risks and assumptions and then validate or invalidate them through iterative testing. This approach was exemplified by Dropbox, which initially released a simple video explaining its file-syncing concept to gauge user interest before developing the full product.

Lastly, there's often a belief that product strategy is only the responsibility of senior management. But a collaborative approach is necessary, where teams at all levels contribute to shaping the strategy based on their insights and expertise.

Developing a Product Strategy

Identifying Target Audience and Problem

Understanding user needs is foundational in developing a product strategy. As Gibson Biddle pointed out regarding his time at Chegg, a clear understanding of the target audience – students struggling with high textbook costs – led to a revolutionary rental model. Biddle and his team identified the core problem of expensive textbooks and developed a strategy focused on affordable textbook rentals. This was not just about recognizing a market gap; it involved empathizing with student challenges and financial constraints.

This illustrates the importance of not only identifying who your target audience is but also deeply understanding their challenges and needs. Techniques like user interviews, surveys, data analytics, and empathy maps can be instrumental in this process. For instance, a startup aiming to improve fitness might start by interviewing a diverse range of individuals to understand barriers to regular exercise. Such insights can then inform a product strategy that genuinely addresses user problems, rather than assuming what these might be.

Having a laser-focused understanding of who your audience is and what problems they face is critical in this first step of a true product strategy. This understanding should be grounded in empirical data and direct user interaction, ensuring the product strategy is aligned with real user needs.

Setting Vision and Defining Challenges

The process of setting a vision and defining challenges is critical in steering a product strategy towards a meaningful direction. Melissa Perri's Product Kata offers a structured approach to this process. The idea is to set a long-term vision and break it down into smaller, achievable challenges, thus creating a roadmap for reaching the broader goal.

A product vision should be aspirational yet grounded in reality. It's a statement that paints a picture of what the product aims to achieve in the future and how it will impact its users and the market. Perri emphasizes the importance of this vision being not just a declaration of intent but a guiding star for all strategic decisions.

For instance, let's consider a tech startup focused on improving mental health through an app. Their vision might be: "To revolutionize mental health support, making it universally accessible, personalized, and proactive." This vision clearly sets a lofty yet focused ambition for the product.

Once the vision is established, the next step is to define challenges – specific, strategic objectives that need to be achieved to make the vision a reality. These challenges should be tangible and time-bound. Continuing with the mental health app example, a challenge might be: "Within one year, integrate AI-driven personalization to provide tailored mental health exercises to 50% of our users."

As teams learn more about their users and the market, challenges can and should evolve. This iterative process ensures that the product strategy remains relevant and focused on achieving the vision.

In defining these challenges, it's essential to keep them aligned with the vision, ensuring each step forward is a step towards that ultimate goal. This approach not only provides a clear direction for product teams but also facilitates alignment across different departments, ensuring everyone is working towards the same end goal.

In essence, setting a clear vision and defining specific challenges to meet that vision are foundational steps in creating a robust product strategy. They provide a clear direction and milestones for the product journey, aligning all efforts towards a common objective.

Creating a Unique Product: Strategies for Innovation

Innovation is at the heart of creating a unique product. A significant component of product strategy involves understanding how your product can stand out in the market. This requires a deep dive into the unique value proposition of the product and how it differs from existing competitors.

A crucial step in this process is comprehensive market research. Understanding what's already out there, what competitors are offering, and where the gaps lie, provides a rich foundation for innovation. Let's consider an example in the context of a digital health application. The market might be saturated with generic fitness tracking apps, but there might be a gap in apps that integrate mental wellness with physical fitness.

​Following Pichler's guidance, the next step is to define the unique aspects of your product. In our example, the unique proposition could be a holistic approach to health, combining physical exercises with mindfulness practices, all within one platform. This differentiation needs to be significant enough to sway users from existing options and compelling enough to attract new users.

Innovation also involves being forward-thinking. It's not just about filling current market gaps but anticipating future trends and user needs. This could mean integrating emerging technologies, like AI or augmented reality, in ways that competitors haven't yet thought of or considered viable.

Furthermore, innovation isn't just about the product's features. It can also be in the business model, the user experience, the service level, or the technology used. For instance, the health app could innovate by offering a unique subscription model that scales according to user engagement and results, differing from the standard monthly subscription model.

Connecting Product Strategy with Business Objectives

Aligning a product strategy with overarching business goals is critical for ensuring that the product contributes meaningfully to the company's success. After all, you can’t have a product strategy without truly understanding the overall business’s strategy first. This alignment is a key point emphasized by Ben Foster in his talk at INDUSTRY: The Product Conference. It's about ensuring that every aspect of the product not only serves the users but also supports the broader objectives of the business.

For example, let's consider a company aiming to break into a new market segment with its software product. The product strategy should not only focus on features and user experience tailored to this new segment but also align with the company's goal of market expansion and increased revenue. This could involve strategies like localized features for the new market, pricing models tailored to different economic conditions, or marketing strategies that resonate with the new user base.

In another scenario, a business might aim to position itself as an innovation leader in its industry. Here, the product strategy should include cutting-edge features, use of advanced technology, or pioneering new uses for existing technology. For instance, a company in the automotive industry might focus its product strategy on integrating AI and machine learning for predictive maintenance and autonomous driving features, aligning with its goal of being seen as a leader in automotive innovation.

It's crucial that product managers understand these business objectives and integrate them into the product strategy. This means not just being in tune with the current product requirements but also having a vision for how the product can evolve to support long-term business goals.

The Role of Experimentation

Experimentation plays a pivotal role in the development and refinement of product strategy, embodying principles from lean and design thinking methodologies. This approach is not about making random guesses but about informed hypothesis testing to learn what truly resonates with users and drives business value.

​Lean startup methodology, popularized by Eric Ries, advocates for the "build-measure-learn" feedback loop, where ideas are quickly turned into minimal viable products (MVPs) and tested in the market. This iterative process allows teams to validate assumptions and adapt the product strategy based on real-world feedback, reducing waste and focusing resources on features that deliver the most value.

Design thinking, another influential framework, emphasizes empathy with users, creative problem-solving, and prototyping to explore and test a wide range of solutions. This approach encourages teams to deeply understand user needs and continuously refine the product strategy through iterative design and testing. For instance, Airbnb's redesign in 2009, which focused on improving the quality of property photos, was a result of understanding user behavior and preferences. This seemingly small change, informed by user feedback, significantly increased bookings and became a strategic turning point for the company.

Incorporating experimentation into product strategy development necessitates a culture that values learning and is comfortable with uncertainty and failure. It's about creating a safe environment where hypotheses can be tested, and learnings can be openly shared and used to make strategic decisions.

Effective experimentation involves defining clear metrics to gauge success, ensuring tests are designed to deliver actionable insights, and being prepared to pivot the strategy based on what is learned. It's a balance between being data-informed and not being paralyzed by the need for perfect data. The goal is to make the best decisions possible with the information at hand and to remain agile enough to adapt as new learnings emerge.

Refining Strategy Based on Feedback and Market Changes

Adapting the product strategy in response to feedback and market changes is crucial for maintaining relevance and competitive advantage. This involves continuously monitoring user feedback, market trends, and competitive actions, and then making strategic adjustments as necessary.

A prime example of strategy adaptation is seen in the evolution of Instagram. Originally launched as Burbn, a check-in app with gaming elements and photo-sharing capabilities, the founders Kevin Systrom and Mike Krieger quickly realized through user feedback that the photo-sharing aspect was what truly resonated with their audience. This insight led them to pivot their strategy, stripping away the app's other features to focus solely on photo sharing. This strategic shift not only simplified the product but also positioned Instagram to become the massive social media platform it is today.

Similarly, Netflix's transition from a DVD rental service to a streaming giant showcases the importance of adapting strategy in response to market changes. As internet speeds increased and streaming technology became more viable, Netflix pivoted its strategy to focus on streaming content, moving away from its original DVD-by-mail model. This adaptation was not a one-time event but part of an ongoing process of responding to technological advancements and changing consumer preferences, illustrating the need for continual strategy evolution.

Adapting a product strategy also involves balancing immediate user feedback with long-term market trends. The process of strategy adaptation requires a structured approach to collecting and analyzing feedback and market data. This can involve regular user surveys, A/B testing, monitoring user behavior through analytics, and staying informed about industry trends and competitor movements. It also necessitates a willingness to experiment with new approaches and, when necessary, to pivot the strategy in a new direction.

Effective communication and alignment within the organization are essential when adapting the strategy. Stakeholders and team members must be informed and onboard with strategic shifts to ensure cohesive execution and to maintain momentum toward achieving the overarching product vision.

Staying flexible while maintaining strategic focus

Maintaining a delicate balance between flexibility and focus is crucial. This dynamic interplay ensures that while a product can pivot and adapt to changing market conditions and user feedback, it doesn't lose sight of its overarching goals and vision.

Flexibility in product strategy allows teams to embrace the iterative nature of product development, integrating lean and agile methodologies. However, this flexibility must be tempered with a strategic focus. A well-defined product vision and clear objectives provide a north star for the product team, ensuring that each pivot or iteration brings the product closer to its ultimate goal. This focus prevents the team from being swayed by every piece of feedback or new trend, keeping the product on a path that aligns with the business's long-term strategy.

In practice, balancing flexibility and focus requires clear communication and alignment within the product team and with stakeholders. It involves setting clear objectives and key results (OKRs) that align with the product vision, while also fostering a culture that encourages experimentation and learning. Product teams should regularly review their progress against these objectives, using data and user feedback to make informed decisions about when to stay the course and when to adapt.

Communicating the Strategy

Effectively articulating a product strategy to stakeholders is crucial for aligning everyone's efforts towards a common goal. Roman Pichler emphasizes the importance of a shared understanding, suggesting that a compelling narrative around the product vision and strategy can captivate and motivate stakeholders. This narrative should not only convey the 'what' and the 'how' but also the 'why' behind the strategy, making the product's purpose and direction clear to everyone involved.

One technique for effective communication is storytelling. By weaving the product strategy into a story that illustrates the user's journey, the problems they face, and how the product will solve these issues, stakeholders can better empathize with the users and understand the strategy's rationale. This approach was effectively utilized by Ben Foster, where he found that storytelling helped bridge the gap between technical details and the overarching strategic goals.

Another crucial aspect is the use of visuals. Visual aids like Melissa Perri’s Product Strategy Canvas or Roman Pichler's Product Vision Board can make complex strategies more accessible and digestible. These tools provide a clear, at-a-glance understanding of the strategy's key components, making it easier for stakeholders to grasp and remember the main points.

Regular strategy review meetings are also essential. These sessions offer a platform for discussing the strategy's progress, addressing any concerns, and making necessary adjustments. This iterative approach ensures that the strategy remains relevant and aligned with both market needs and business objectives.

Finally, ensuring that all communication is clear, concise, and jargon-free is vital. Stakeholders come from various backgrounds and may not be familiar with technical or industry-specific terms. Using plain language ensures that the strategy is understood by all, fostering a cohesive and collaborative environment.

Execution and Roadmap Alignment

Translating a product strategy into actionable roadmaps and backlogs is a critical step in bringing the strategic vision to life. This alignment ensures that the development team's efforts are focused on delivering features and enhancements that drive the product towards its intended vision. There’s a lot more to write about Product Roadmaps in general (more to come on that in the future!) – but it’s important to bring up roadmaps as an important outcome of a great product strategy.

​Ben Foster advocates for roadmaps that are goal-oriented, with each item linked to a specific strategic objective. This approach ensures that the product development efforts are not just about building features but about achieving measurable outcomes that advance the product's position in the market.

To effectively execute a strategy-aligned roadmap, it's crucial to maintain a flexible yet focused approach. The roadmap should be viewed as a living document that can adapt to changing market conditions, user feedback, and business priorities. However, every change or addition to the roadmap should be carefully evaluated to ensure it aligns with the overarching product strategy.

Collaboration between multiple groups internally – including the product management, design, and development teams – is essential in this process. Regular planning sessions and reviews can help ensure that everyone understands the strategic context of the roadmap items and how their work contributes to the product's goals.

By maintaining a clear link between the product strategy and the roadmap, product teams can ensure that their day-to-day efforts are not just about shipping features but about making strategic progress towards the product's long-term success.

Managing Stakeholder Expectations

One of the most challenging aspects of product management is balancing the diverse interests of stakeholders while ensuring alignment with the product strategy. Stakeholders—from executives to sales teams, marketing, customer support, and even end-users—often have differing priorities and expectations from the product. The key to managing these expectations lies in effective communication and transparent alignment with the product strategy.

​Roman Pichler emphasizes the importance of stakeholder engagement in the strategic process. By involving key stakeholders in the formulation of the product strategy and the creation of the roadmap, you foster a sense of ownership and buy-in. This collaborative approach not only helps in aligning expectations but also leverages the collective expertise to refine the strategy. This can happen through regular strategy reviews, roadmap updates. These sessions serve as opportunities to reaffirm the strategic direction, discuss progress, and address any concerns. They also allow for the recalibration of expectations in light of new insights or market changes. Internal newsletters and digital dashboards can also keep everyone informed about the product's progress and how it aligns with the strategic goals.

Transparency in decision-making processes reassures stakeholders that their input is valued, even when certain suggestions cannot be accommodated. Explaining the rationale behind strategic decisions, particularly how they relate to the product vision and business objectives, can mitigate disappointment and maintain trust.

Summing it all up

In wrapping up our exploration of product strategy, product strategy is not a document of any sort, but a dynamic blueprint for success. But understanding product strategy is just the beginning. The real magic happens in the application—when you take these insights and translate them into actionable steps in your work. Whether you're at the helm of a burgeoning startup or steering a product line in a sprawling enterprise, the principles of effective product strategy remain the same: be clear, be adaptable, and always keep the customer at the center of your universe.

For those hungry to dive deeper, I definitely encourage you to explore the works of the experts mentioned throughout this essay.

• ​Gibson Biddle’s extensive 12-part product strategy series is a masterclass on the topic, and dives deeper into specific frameworks that may be applicable to you. You can see a video recap of the series here in this webinar I hosted Biddle in.
• ​Melissa Perri’s essay highlights a useful framework on understanding Product Strategy here.
• Roman Pichler, who is speaking this year at the European edition of INDUSTRY: The Product Conference, has written extensively on Product Strategy, including here where he outlines his framework on the topic.
• ​Ben Foster’s keynote at INDUSTRY: The Product Conference helps weave in many of the topics covered in this essay and applies them in the “real world.”

– including Gibson Biddle, whose comprehensive along with resources like Roman Pichler's blog and Melissa Perri's "Escaping the Build Trap," offer a wealth of knowledge to further refine your strategic approach. As you embark on this journey, remember that a well-crafted product strategy is your north star, guiding you through the tumultuous seas of product development towards the shores of success.

•

Again, we hope you enjoyed this article and got value from it. Please consider sharing this Product Collective email with your colleagues, or head directly to our blog to view this post on the web.