Can You Say What Your Product Strategy Is?

Can you summarize your product’s strategy in 35 words or less? If yes, can your colleagues put it the same way? Organizations fail to appreciate the necessity of having a simple, clear, succinct strategy statement that everyone can internalize and use as a guiding light for making difficult product choices.

Not having a clear product strategy statement can cause product, design, engineering, marketing, and sales to work in different directions and it can cause misalignment of priorities as time and effort is wasted building product features that customers do not want.

A well understood strategy statement aligns behavior within the business. First, Product Managers know what they are trying to build and second, implementation becomes much simpler because the strategy’s essence can be readily communicated and easily internalized by everyone in the organization.

Elements of a Strategy Statement

A good strategy statement consists of 3 elements: objective, scope, and advantage. The objective states a clear goal, the scope defines what markets the product will compete, and the advantage states how the product will reach its objective.

The Objective

A strategy statement begins with an objective and it will drive your product over the next two to four years. The strategic objective should be specific, measurable, and time bound. The statement should pick a specific goal and focus on one metric, for example, what matters more growth or profitability?

For example, a new messaging app may define an objective of signing up one million users in the next 3 years. Having a clearly defined objective allows the Product Managers to build features that will help drive the growth of the user base and not worry about features that will generate revenue.

The Scope

The scope or domain of the business defines the part of the competitive landscape which the product will operate. The scope encompasses the customer, business channel, and location. By clearly defining the boundaries the product will compete makes it obvious to Product Managers which activities to focus and, more importantly what activities they should not.

For example, if you are planning to enter the restaurant business will you provide sit-down or quick-service? Italian or Mexican food?

The Competitive Advantage

Defining your competitive advantage is the most critical aspect of a strategy statement. Your competitive advantage is the essence of your product strategy and it defines:

• Your customer value proposition or why customers should buy or use your product.
• What your product will do differently from or better than others to deliver the customer value proposition.

The competitive advantage defines how your product will meet its objective. For example, our patented technology creates a barrier of entry for our competitors and they will not be able to copy our product for the next 5 years.

Creating a Product Strategy Statement

How do you go about creating a product strategy statement? The first step is to create a great product strategy, which requires a detailed understanding of customer needs, segmenting customers, and identifying unique ways to create value for the target customers. It also requires an analysis of competitors current strategies and a prediction of how they might change in the future. Finally, it involves an objective assessment of the organization’s capabilities and resources.

The creative part of developing a product strategy is finding the sweet spot that aligns the organization’s capabilities with customer needs that competitors cannot match given changing external factors such as technology, industry, demographics, and regulation.

Example Product Strategy Statement

Now that we have defined the elements of a product strategy statement, we’ll create an example statement based on a fictional cloud software company called Acme-AI. Acme-AI has a patented AI/ML algorithm for ecommerce businesses that increases customer conversion rates and sales. Our company targets consumer brands that have $5M - $100M in revenues, that do not spend heavily on technology, and that want to grow their online sales. Acme-AI generates revenue by charging customers for each client request.

The Acme-AI strategy is to grow its business by increasing the number of daily client requests to 1 million per day as the number of client requests is directly correlated with the sales and revenues of its AI/ML product. Focusing on mid-sized consumer brands and leveraging its patented technology will allow Acme-AI to reach its objective.

Conclusion

Having a clear, simple, well-structured product strategy statement allows everyone in the organization to work towards a common goal as it acts as a beacon/North Star and provides framework for prioritization of product features that drive the success of the business.

References
David J. Collis and Michael G. Rukstad, “Can You Say What Your Strategy Is?”, Harvard Business Review, April 2008.