Product Strategy as a System
When it comes to product strategy, people often focus on templates, tools, and frameworks. While these matter, they are only a small part of what’s needed to develop a successful strategy. In this article, I take a holistic approach and discuss product strategy from a system perspective. I consider people, processes, and principles in addition to tools, I share the strategy system I have developed and explain how you can take advantage of it.
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A Product Strategy System
The product strategy system in Figure 1 consists of four main parts: people, processes, principles, and tools. Like any system, it is a collection of interconnecting parts that function as a whole. To put it differently, an effective product strategy approach must involve the right people, use the right processes, apply the right tools, and follow helpful principles. Additionally, the different parts have to fit together and support each other. Having said this, the system in Figure 1 captures the specific product strategy approach I’ve created.[1]
You can use the model in Figure 1 to review and improve your current product strategy approach. To do so, ask yourself the following questions:
- Are the right people involved in determining the product strategy? Are they properly empowered and adequately qualified?
- Are the right processes used?
- Are the right tools applied? Do they support each other?
- Do you follow helpful principles that guide the strategy work? If so, what are they?
Additionally, you can use the model to build your own strategy system. Be aware, though, that a change in one area, like adopting a continuous strategizing process, may impact other elements, including the people involved in the strategy work. Therefore, ensure that your system is consistent — that its components are carefully chosen and fit together well.
Let’s now take a closer look at the four main elements of the strategy system in Figure 1, starting with People, the most important one.[2]
People
To make the right strategic product decisions, it’s crucial to involve the right people and understand who has the final say on strategic product decisions. I am a big advocate of empowering product teams to not only own product discovery but also the product strategy. Additionally, I like to engage the key business stakeholders and form an extended product team, as shown in Figure 2.[3] This leverages their expertise, creates strong alignment, and maximises buy-in.
The team in Figure 2 consists of the person in charge of the product, a UX designer (for end-user-facing products), an architect/programmer, and a tester, as well as the key business stakeholders. The latter are the individuals whose expertise and support you require to make the right product decisions and successfully implement them.[4] Additionally, the group contains a coach who facilitates teamwork and helps the members practise collaborative decision-making.[5]
Note that the product person in Figure 2 has to be empowered to lead the strategizing effort and have the final say if no agreement can be reached. This ensures consistent decision-making and prevents the team from getting stuck in endless arguments.
If extended product teams own the product strategies, what’s the role of the head of product, also called Chief Product Officer and Director/VP of Product Management, in making strategic decisions? There are two effective ways how the individual can be involved. First, as a coach who offers strategy and leadership guidance to the person in charge of the product. Second, as a product portfolio manager who ensures that an effective portfolio strategy is available, which directs the product strategies.
Processes
With the right people on board, we can take the next step and discuss how the strategy work can be carried out. I find it helpful to distinguish two processes: product strategy discovery and continuous strategizing.
Product Strategy Discovery
As its name suggests, product strategy discovery is about finding an effective product strategy — be it for a brand-new product or an existing one whose current strategy is no longer valid. It’s consequently not only relevant to developing an initial offering (MVP) but also to achieving product-market fit and extending the product lifecycle.
A great way to discover an effective product strategy is to capture your initial ideas, using a tool like my Product Vision Board, and then systematically correct and refine them. Figure 3 illustrates how this can be done.
Start the process by identifying the biggest strategy risk. Then, determine how to address it, for instance, by interviewing target customers or creating a throwaway prototype. Next, collect the relevant data. Finally, evaluate the data, generate new insights, and decide what to do: Should you persevere with the current strategy, pivot and significantly change it, or kill the innovation initiative? For a more detailed discussion, please see my article Product Strategy Discovery.
Don’t forget to involve the members of the extended product team in the strategy discovery work. This allows you to benefit from their knowledge, create alignment, and secure the necessary buy-in.
Continuous Strategizing
As important as it is, product strategy discovery is not enough. To avoid the risk of overlooking opportunities and threats, you have to constantly work on your strategy. This is where continuous strategizing comes in.
Figure 4 shows the strategy work as a stream, as an ongoing process or workflow. This stream guides the product discovery and delivery work and leverages development insights.
In practice, I like to implement continuous strategizing following a dual approach:
- Daily to weekly strategy work, carried out by the person in charge of the product;
- Quarterly strategy reviews, which the members of the extended product team attend.
This ensures that you can quickly respond to opportunities and threats and leverage the collective expertise of the team to look at bigger market developments and make high-impact strategic decisions, as I explain in more detail in the article Continuous Strategizing.
Tools
“If the only tool you have is a hammer, it’s tempting to see every problem as a nail,” Abraham Maslow once said. The same goes for product strategy: If you only use a single strategy tool, your focus is likely to be too narrow, and you are in danger of making suboptimal decisions. It’s therefore important that you have a strategy toolbox with the right items in it — those tools that work best in your context.
The set of strategy tools I generally recommend is shown in Figure 1. As I have covered all tools in my book Strategizeand most of them in the articles listed in the footnote, I’ll focus on what might be the most essential tool in my strategy system — the Product Vision Board, shown in Figure 5.[6] I created the board back in 2011 to offer a simple yet effective way to capture the vision and strategy of a product. Since then, it’s become one of the most popular product vision and strategy tools.
Let’s take a closer look at the four bottom sections of the Product Vision Board, as they cover the key information a product strategy should contain. The target group describes the people who should benefit from the product, the target users and customers, and the market or market segment you want to address. The needs capture the reason why people would want to use or buy the product, the problem they want to see addressed or the benefit they want to gain. The product section describes what kind of product it is and what sets it apart from alternatives. The business goals, finally, state the positive impact the product should achieve for the business. This might be to generate revenue, achieve a profit margin, reduce cost, increase productivity, or strengthen the brand.
You can download the Product Vision Board together with a handy checklist from my website, and you can learn more about it by watching the video below:
No matter which tool you use, clearly state the users and customers, the value proposition, and the business goals in your product strategy. What’s more, make sure that the information is based on empirical evidence and free from major risks, which you can achieve by following a process like the one shown in Figure 3.[7]
You may have noticed that there are two tools marked in grey in Figure 1. Strictly speaking, these aren’t product strategy tools. My Strategy Stack, shown in Figure 6, explains the connections between the product strategy and the business, product portfolio, and technology strategies. The GO Product Roadmap is the template I have developed to capture an outcome-based roadmap. It states how the product strategy is likely to be implemented and which specific outcomes should be achieved.
Principles
While the people, processes, and tools may change, your strategy approach should follow a set of guiding principles like the ones discussed below.
Value Focus
A product strategy’s ultimate purpose is to help maximise the chances of achieving product success — creating a product that benefits its users and customers as well as the company. Any strategizing effort should therefore have a strong value focus: The question of how you can create (more) value for the users, customers, and business should guide all strategic decisions, not individual stakeholder requests.
Here are two examples of how the system in Figure 1 follows this principle. First, it uses a strategy template — the Product Vision Board — that is built on needs and business goals. The former states the user and customer-facing outcomes you want to achieve; the latter captures the positive business impact you want to make. Second, product strategy discovery reduces the risk of creating an ineffective strategy, and continuous strategizing ensures that the strategy stays valid.
Collaboration
A product strategy is only truly useful if it captures the right decisions and if it is followed and ultimately transformed into a shippable product. To achieve this, adopt a collaborative approach and involve the right people. This allows you to leverage their knowledge and it maximises the chances that they will support and implement the strategy. [8]
The product strategy system in Figure 1 applies the collaboration principle by forming an extended product team, involving the team members in strategy discovery and continuous strategizing, and using strategy tools like the Product Vision Board, Strategy Canvas, and Business Model Canvas that visualise information and support teamwork.
Adaptation
Traditionally, a strategy is seen as largely static or fixed. Once it’s created, it is executed, often over the course of several years. In today’s fast-changing world, this approach is hardly effective. It’s therefore better to see the product strategy as adaptive and changeable.
The system in Figure 1 achieves this by using a continuous strategizing process as well as tools that support strategy changes. These include the various canvases, which make it comparatively easy to change the choices captured, as well as the product lifecycle model. The latter recognises that the strategy must change to help a product evolve and grow, as I explain in more detail in the article The Product Strategy and Product Life Cycle.
Integration
Strategic decisions are made at different levels, and businesses usually employ different types of strategies. These include a business strategy, a portfolio strategy, and a technology strategy in addition to a product strategy. What’s more, the product strategy is useful only if it is transformed into a value-creating product, as mentioned before. It’s therefore important to ensure that a product strategy effectively integrates with higher-level strategies as well as more detailed plans like a product roadmap and product backlog. To put it differently, any product strategy system has to have clearly defined connections to the portfolio and business levels as well as the product discovery and delivery realms.
The strategy system in Figure 1 achieves this by using my Strategy Stack, shown in Figure 6, as one of its tools.
Without wanting to discuss the Strategy Stack in detail — I do this in the article predictably called The Strategy Stack, the framework in Figure 6 connects the product strategy to the portfolio strategy and the product roadmap: The portfolio strategy guides the product strategy and the latter directs the product roadmap. Additionally, bigger roadmap changes can trigger product strategy adaptations, and a bigger product strategy change may cause a modification of the portfolio strategy.
Learn More
I hope you found this article helpful. You can learn more about establishing an effective product strategy system by attending my Product Strategy and Roadmap training course and reading my book Strategize.
Notes
[1] More specifically, the system is based on my book Strategize, 2nd ed. and several articles I’ve published in recent years, including Product Strategy Discovery, Continuous Strategizing, The Strategy Stack, and Building High-Performing Product Teams. Note that the model in Figure 1 is inspired by Harold Leavitt’s Diamond Model with its four components — structure, people, tasks, and technology.
[2] If you are familiar with my work on strategy, you’ll be aware of my product strategy model, which explains how product vision, strategy, roadmap, and backlog relate. The product strategy system introduced in this article builds on and extends the model. You can therefore use both frameworks together.
[3] For more guidance on forming extended product teams, see the articles Building High-Performing Product Teams and Should Stakeholders Be on the Product Team? Note that the system in Figure 1 focuses on product strategy. It doesn’t consider other strategies, like business strategy and portfolio strategy, for simplicity’s sake.
[4] A helpful tool to determine the key stakeholders is the Power-Interest Grid, which I discuss in the article Getting Stakeholder Engagement Right.
[5] For a product that is managed by a group of product people rather than a single individual, all product people should be involved in the strategy work and may join the extended product team.
[6] For your convenience, here are the links to the other strategy tools discussed on my blog: Product Lifecycle Model, Strategy Canvas, ERRC Grid, Personas, Product Success Factors, and KPI Selection Framework. For an in-depth discussion of the Business Model Canvas, refer to the book Business Model Generation by Osterwalder and Pigneur.
[7] While the Product Vision Board captures the core strategic choices, it is usually not enough to help an executive sponsor or management board understand why a specific strategy should be followed. Many of my clients use a slide deck for management presentations that shows the various canvases used together with the relevant data.
[8] No matter how experienced you are as the person in charge of the product, it is virtually impossible to be so knowledgeable that you’ll always make the right strategic product decisions. Even if you were, you would be in danger of being misguided by cognitive biases like confirmation and optimism bias. The former leads you to prefer data that confirms your preconceived views. The latter causes you to underestimate the likelihood of undesirable outcomes and overestimate favourable ones.
This article was first published on https://www.romanpichler.com/blog/.
