How Important Is It to Create A Product Strategy?
In Product Management, it is understood that once you’ve gotten the vision and identified the customer’s needs, then it’s time to formulate a specific product strategy. But is it really that serious? How much of the success of your Product actually depends on creating a Product Strategy?
This article is unofficially part of a three-part series on the make-up of a good product. Read the other article here.
Experienced Product Managers have described having a Product Strategy as non-negotiable. The same reasoning that guides the creation of a Product Vision is what carries the Product Strategy. Simply, if you don’t decide on a specific path to walk, you’ll wander around before you eventually get to your destination, if ever.
What is Product Strategy?
Product strategy describes a clear and realistic way to guide the entire team to achieve set milestones and accomplish the product vision.
This does not mean that when you create a Product Strategy, you can only do what it charts out. That should be your goal but you’re not in control of the world, so when the need arises you can make changes. The central purpose of a product strategy is to map out a path that allows the company to achieve its objectives for a certain product. In the long run, this shortens the time it takes to arrive at results, allows you to work smart not hard and accelerates growth. With a Product strategy in tow, the roadmap is a breeze to construct and building the product is much faster.
John Utz encapsulates it perfectly when he says “Product strategy has one primary goal — creating clarity. Clarity around the product vision, market opportunity, end-to-end story, value to the user, metrics, objectives, prioritized capabilities, and how the product directly delivers to the corporate strategy…”
An effective product strategy defines the main features of a product, users and their needs, and key performance indicators (KPIs) that the product must meet.
It is advised to create your product strategy at the beginning of your project development. Those who skip the process for whatever reason usually end up eventually creating one when things start to go south, after already expending time and resources on the product.
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Components of a Good Product Strategy
Product strategy at the initial stage ought to consist of the following elements i) target market and customer needs ii) the distinctiveness of the product iii) business strategy and iv) product-market fit.
Target market and customer needs: This effort involves coming up with a hypothesis of who the target customers are and investigating customer needs.
The distinctiveness of the Product: Chances are that you’re not the only one who has created the product you have. The question is, why have you created it in the specific way that you did and why should that appeal to customers?
Business strategy: Products are built to add value to the company and to contribute to the overall vision of the company. Some products are built to generate revenue while some products are built to help in selling the company’s other products. An example of this would be iPhone and iTunes.
What is the reasoning behind the pricing of the product? What’s the marketing strategy? What business model does the product follow? What are the constraints? These should all be available on demand. The business goals should be measurable and the KPIs that will be defined to track the business goals should be more than just vanity metrics. For example, the total number of users is misleading as that KPI may be growing but doesn’t give the complete picture.
Product-Market fit: This step involves developing an MVP based on the hypothesis about target customers, needs, and product differentiators. It is about ensuring that the product continues to fit the needs of the market over time whilst remaining profitable. As always, you are encouraged to build agile and iterate as you learn more.
Just like your product vision, your strategy is not something that you create and then put aside while you do the work. it should be referred to constantly both internally and externally. It is the game plan and to score the goal, everyone on the team must be in on it.
What Specifically Does the Product Strategy Contribute to the Process?
1. Sets the foundation
A product strategy becomes the basis for the implementation of the product roadmap. With a product strategy, there is a clear focus on the target market and the product life cycle. A company can measure the success of a product and minimize risks with the help of a product strategy.
2. Value Creation
A product strategy helps a company to focus on specific target markets, which adds value to the product. The product strategy brings about clarity in the mode of operation that adds value to the customer both in cost and in durability. Due to this value creation, the performance and reputation of a company grow.
As product strategy focuses on the road map of a product, there is a high emphasis on keeping up with the changes in the market at all stages of the product life cycle. Product strategy will help design products and tailor them according to the customers' changing needs.
4. Non-price competition
When most companies are fighting it out based on price, product strategy gives an advantage for a product in other areas such as design, looks, automation, taste, and so on, thereby competing in other areas other than price.
5. Enhancing Strategic Decision Making
The product strategy lays the foundation for the product roadmap. You can convert it into a detailed action plan. What happens without a product strategy is the failure to guide decisions. The team may prioritize the wrong items more than the right ones because strategy is absent.
In contrast, when your product strategy comes before your product roadmap, you and your team have a clear picture of how to go about, what you need to accomplish, and what tasks you should prioritize. That helps make your product roadmap more informed.
Having a product vision and strategy is essential to creating valuable, usable, and marketable products. If you don't have a clear vision of where you're going and what the most important things are for you to execute on at the moment and in the future, you wind up creating work for yourself that may or may not be focused on long-term returns.
So work smart: vision ➡️ strategy ➡️ roadmap = best quality product.