The strategy defines how we are planning to go about accomplishing our goals and objectives. It enables us to determine what problems we should be solving to make the product vision a reality while meeting the needs of the company as we go.
Product strategy is notoriously hard because:
We need to make tough choices on what’s really important and what we should focus on (and therefore on the things we won’t do)
We need to generate, identify, and leverage insights
We need to convert these insights into actions
Please note that strategy doesn’t tell us how we will solve the problems. That’s what product discovery will do, discovery is all about figuring out the tactics that can actually solve the problems we want to solve.
The truly great collateral you get when thinking about strategy is focus. Focus comes from realizing that not everything we do is equally important or impactful, and we must choose which objectives are truly critical for the business.
By not picking your battles and focusing on the few truly critical problems, most of the work going on does not make an impact. And for the truly critical priorirties, there is not enough attention to actually move the needle.
- Marty Cagan
Every company building software knows this: the list of objectives, problems, and initiatives you can pursue is almost endless. In fact, there are more things you cannot do compared to the things you can do. Also, many of these initiatives are truly hard problems and just getting a little time slice and no clear ownership has virtually no chance of making a real impact. Making tough decisions is what allows us to truly focus on these initiatives we believe are worth pursuing.
However, it is impossible to build breadth & depth in each of these stages & categories at the same time. And this is what strategy should help us with, defining what stages & categories we want to invest time & resources in.
Good strategy works by focusing energy and resources on one, or a very few, pivotal objectives whose accomplishment will lead to a cascade of favorable outcomes.
For each of the stages & product categories above, we weigh two considerations:
Is it something we can play out as a unique aspect of our platform or does competition exist?
How strong is the demand and value for our customers for that specific aspect of our platform?
Based on that classification, we can decide:
To either build depth in that category, make the category truly loveable
To either seed and nurture the category (= build an MVP and see how customers use it, those are blue)
To either integrate an open source alternative if it exists (= insource the category)
To either partner with others (= outsource the category)
To either open up the category for free use and contributions by the community (= enable the community to help us build the category)
We can revisit this classification at any stage based on evolutions in the market, competitive dynamics, customer demand, or other factors.
The foundation of strategy: Insights
While product strategy starts with focus, it then depends on insights. And insights come from study and thought.
If the strategy is about defining what problems you think are worth solving, how do you identify those problems then? The answer is insights!
The most important, yet most difficult part of defining the product strategy is to generate, identify, and leverage insights that will provide the basis for the product strategy. Defining strategy, therefore, doesn’t happen without any preparation that requires us to study data, our customers, our technology, and the industry or ecosystem we operate in.
There are four valuable sources for insights:
Quantitative insights: The foundation of insights comes from analyzing data (product, sales, CS, business, …).
Qualitative insights: Insights coming from user research, interactions, demos, sales conversations, etc. Although these insights aren’t backed by data - they are often profound and can literally change the course of the company.
Technology insights: Technologies are constantly changing and occasionally a technology comes along that can help us solve long-standing problems or revolutionize the ecosystem we are operating in.
Industry insights: Learning captured from the industry (eg: competitor analysis, trends, insights from other industries, …)
Note that company objectives are set every year and OKRs (or team objectives) every quarter. This means that strategy can be set or adjusted every quarter as new data can come in, or new insights/opportunities/problems are uncovered.