How to craft a product strategy and put it into practice
Because strategy without deployment is useless.
👋 Hey, this is Sergio with a new edition of Product Leadership IO. In every issue, I write about challenges product leaders face in the real world, the 99% not working at FAANG companies or Big Tech. I publish every two weeks, and you can subscribe for free here.
As a product manager, I've lost count of the years that I have spent trying to understand how to even represent a product strategy, let alone craft one.
It always felt like product strategy was something amazing product leaders did, but I couldn't replicate it. This was even tougher because most examples out there were so far away from my reality - I am looking at you
talking about Netflix strategy.
⚠️ Before you start ⚠️
Before any product strategy crafting attempts, the company vision and strategy need to be clear. 90% of the problems I had in crafting the product strategy stemmed from not having this in place. You can't build a house on top of an unstable foundation. Or, you may, but it will collapse. You will never be able to craft a good product strategy without a good company strategy.
If your company's strategy is missing or not up to snuff, read the article “Your company strategy is sh*t” first. I’ll wait here.
Company strategy in place? OK, let's go.
Products strategy or a strategy for a given product?
I want to clarify up-front: this article is to help you build a product strategy for a specific product (or even a large enough feature inside a product). This is usually what PMs and product middle managers (group PM, product lead, head of product, director of product…) have responsibility for.
This article is not about creating the products portfolio strategy of the company - which is something a CPO would have responsibility for.
Product strategy is surprisingly similar to any other product management work
Product management is nuanced but straightforward, it can be boiled down to a few high-level steps:
Desired state: you want to achieve some outcome and/or solve a problem.
Current state analysis: what is the status of this outcome/problem? How do you measure progress?
Opportunity investigation: then you decompose this complex thing into more manageable bits: you investigate the key levers and/or issues most relevant to the goal/problem. These are your opportunities.
Choose opportunity: you pick the most promising opportunity to tackle.
Solution hypotheses: you come up with solution hypotheses, validate them, and finally implement the ones most likely to work.
Track progress and course-correct: as you implement the solutions, you measure if they are delivering the goal impact you had in mind. Based on lessons learned, iterate as needed.
Rinse and repeat.
With product strategy, it's very similar:
Desired state - high-level product strategy: how your product contributes to the company's vision and strategy execution.
Current state analysis: the status of the desired state. Where are we?
Opportunities investigation: possible levers/issues to bridge the gap between the current and desired state.
Choose opportunities - strategic initiatives: the opportunities you choose to act upon, and how you will measure progress towards them.
Solution hypotheses - big rocks: list of the 2-3 main broad solution hypotheses to achieve the strategic initiative.
Track progress and course correct: as you execute on the big rocks, you measure if they are delivering the goal impact you had in mind. Based on lessons learned, iterate as needed.
Let's dive one by one:
1. Desired state - high-level product strategy
This is the first rock I used to trip before I understood the importance of having a clear company strategy. You need to understand the company's vision and strategy to know how your product fits within it. 90% of product managers and leaders’ confusion stems from arguing about product strategy in a vacuum. It's just too hard.
I will try to illustrate with an example of a fictional German neo-bank operating in Germany called Neo Bank (creative, I know). Imagine you are the PM responsible for introducing a new “buy now, pay later” (BNPL) product. If Neo Bank was the typical company with a bad strategy, you would be given the goal of “reaching 10m BNPL transactions” or something like that and that was it. Do you feel empowered already? 😅
But Neo Bank is not the typical company, so there is a clear company strategy to build on top of:
The product leader responsible for BNPL, together with engineering, UX leads, and any other relevant stakeholders, come up with the following product strategy:
We can see how easy the strategic choices of the Buy Now, Pay Later product feel because the company strategic choices are clear. A few examples to highlight:
Winning aspiration: Most of it will come from the company leadership. If not, why would they be investing in this product if they didn't want something from it? You can add a more visionary spin to it too.
Where to play: the target market is derived from the company strategy.
How to win: they didn't need to be the cheapest offer in the market, because the company strategy outlined that they would acquire customers with a free basic bank account, but have “reasonably priced” (not cheapest, not most expensive either) additional products. This is a money maker product, higher margin.
It's also interesting that the team is not trying to convince merchants to adopt a new payment solution. Neo Bank unfortunately doesn't have a lot of relationship with merchants, because it's a consumer-focused mobile bank. So their decision was not enabling BNPL to merchants, but enabling users to opt-in to BNPL in their transactions.
Finally, their machine learning models should be able to predict the risk of the loan and offer an automated decision. This is way easier to Neo Bank because they already have all the user’s transaction data.Capabilities: there is a high overlap between what the company needs to be good at and what this specific product needs. This is good. It's not unheard of that specific products would have different capability needs than the org. But if there is almost no overlap between company and product, it might be a red flag.
A few pointers:
This high-level strategy is an assumption until it is validated. I don't want to repeat myself, so you can just check about strategic assumptions surfacing and validation here.
Once this is done and validated, there is not a lot of change in 2-5 years. More ambitious product strategies might go for an even longer timeframe.
Maybe you are a PM with a feature or use case inside a product with a high-level strategy - if so, you might build on top of it, instead of creating a whole new set of strategic choices.
Also, if the company has just one product, the company strategy is (likely) the same as the product strategy.
2. Current state analysis
Look at your validated product strategy from the step before. Assess which parts are not there yet. What are the main issues you are facing?
One cool idea for doing this came from
's podcast episode with : make a list of the 10 main problems with the product. This is a living document, so as the problems get solved, the 10 top issues also change.In the BNPL example above, one part of the “how to win” is that this is the “easiest BNPL to use”. Let's say that it is not true, we have plenty of support tickets from people who can't figure it out. So that is a gap between the current state and the desired state.
3. Opportunities investigation
Investigate and decompose the problems you listed in the previous step. Following the example, why are users raising too many support tickets about BNPL? Maybe they can't figure out which transactions are eligible. Or maybe they don't understand how much they are paying. Or they don't know how to turn a transaction into buy now, pay later? You get the gist of it.
4. Choose opportunities - strategic initiatives
Pick your strategic initiatives based on what you believe is crucial to progress toward the desired state.
Remember you can't do it all at the same time, so sometimes you have to let some fires burn to fix what is most important. It might be useful to stack-rank the opportunities.
It's important to also pick metrics and set goals for your initiatives. How do you know you are progressing in the right direction?
5. Solution hypotheses - big rocks
You have investigated these problems. You probably have a feel for the most important product changes to address. Don't shy away. Even if your big rocks are wrong (PMs should validate these things) it gives a pretty good idea of where the impact of the strategic initiative is coming from. Also, it gives you an idea if you are understaffed by trying to do too much with too little.
Ah, this should be 2-4 things. The small stuff, like changing a button's label, is certainly helpful, but doesn’t need to be listed here. Leave this for the team's roadmap.
6. Track progress and course-correct
As you execute your plan, you should track your progress toward the goals you defined in the 4th step. Do you need to change the strategy? Or the big rock? Don't wait for the next planning cycle. Do it sooner rather than later.
By now you have a product strategy and a way to deploy it
Congrats are in order 🎉
Let me know how you did, if you stumbled somewhere, or if it was confusing at some point.
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