Jory MacKay on March 08, 2022 An In-Depth Primer On Product Strategy: The Essential Elements, Templates and Workflows
🎁 Bonus Material: Free Product Strategy Template
Creating a product strategy is one of those nebulous skills that separate great project managers from good ones. Unfortunately, too many PMs think a ‘strategy’ is the same as a product plan, roadmap, or even just prioritizing features.
‘Well, we’re building feature X next, which should make us boatloads more money!’ is a great thought. But it’s not a strategy.
As Melissa Perri, founder of the Product Institue writes, when you treat your product strategy as a plan or simply a list of features to build, you lose your ability to react to uncertainty and change. Even worse, you lose sight of your larger purpose as a company:
“When we lock ourselves into planning to build a set of features, we rarely stop to question if those features are the right things to build to reach our goals. We stop focusing on the outcomes, and judge success of teams by outputs.”
Product teams love to focus on the next feature. But a proper product strategy balances your short-term goals and customer needs with your long-term vision. It allows you to take big swings while simultaneously making concrete steps towards product-market fit and building valuable and useful software.
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Coming up with your product strategy is a great exercise whether you’re starting a new project or dealing with a huge backlog of features, updates, and requests. In this post, we’ll run you through a simple exercise for defining your product strategy and then show you how to translate it into actionable tasks, goals, and milestones.
Product strategy 101: The 5 essential elements of a powerful strategy
Great products are built on experimentation. You start with an idea (aka your vision) and then test different features, ideas, copy, angles, and markets until you hit that magical bulls-eye: Product-market fit.
Product-market fit is when your business objectives solve your customer’s biggest problems. It’s a win-win situation where your users are more than happy to fork over their hard-earned money for what you’re building.
The problem, however, is that product-market fit isn’t a static state. Just when you’ve found it, the market moves, your customer’s needs change, or a new competitor appears and knocks you off your feet.
If you don’t change with the market, your product is going to fail. According to CB Insights, the #1 reason startups fail is due to building products with no market need.
The #1 reason startups fail is due to building products with no market need.
Reacting to the constant changes of your customers and market requires more than a roadmap.
Your product strategy is a system of goals, visions, and guidelines that continually align your team around work that brings you closer to (or back to) product-market fit, growth, and success. It’s not a single feature, it’s a way of thinking about why you build what you do and what your customers want.
This sounds complicated and vague. But it will all make sense once you break down the essential elements of a product strategy and how they fit together.
1. Your Product Vision
Your product strategy starts with a large, lofty vision of what your product should do and where you want it to be in 5, 10, or even 20 years.
That’s a long timeframe to think about, especially for Agile teams. However, without a clear, overarching vision, you won’t be able to create a powerful strategy for reaching it.
At the same time, your vision shouldn’t be dependent on your product strategy. This way, you can pivot or change course (aka strategy) without destroying the shared vision that you’ve already defined.
Here’s a simple product vision template you can use:
“In [time frame], [Company/Product] will be [Large goal].”
So, for example, When Airbnb launched in 2008, their product vision might have been something like:
“In 5 years, Airbnb will be the more affordable and enjoyable way to stay in a new city or plan a trip.”
If you want another way to think about it John Cutler, Product Evangelist & Coach at Amplitude, calls this the promise.
How you reach that promise can change. But the core vision stays the same.
Try to keep your vision/promise short and sweet. You’ll flesh out more information as you work through your strategy, but the vision should be easy to memorize and share.
Here’s how Cutler frames it:
“The promise our product makes to our customers is to be laser-focused on helping them reach a specific goal.”
Again, for Airbnb, this promise would be something like:
“Airbnb’s promise is to be laser-focused on helping travelers find enjoyable and affordable accommodation and home-owners make extra income on their rooms and homes.”
2. The Challenge
The next key part of your product strategy is called the challenge.
The challenge is the first business goal you need to hit on the way to fulfilling your promise/reaching your vision. This could be a specific feature or a part of your customer journey. It’s a tactical and strategic objective that aligns and focuses your product team.
The challenge is what balances out your vision.
You can have what you think is the greatest product idea of all time. But without a clear understanding of what your customer (and the market) actually wants and how they act, your product will be a flop.
Continuing with the Airbnb example, one of their first challenges was to fill the supply side of their app by making it easy (and safe) for people to rent out their homes.
However, that wasn’t their only challenge. Like Airbnb, you’re probably faced with more challenges than you can imagine. And uncovering the challenge that will set your strategy moving is a process that involves understanding more about your users and market.
This means defining your:
- Ideal customer: Who do you want to use your product? What are their motivations and triggers? You can create specific personas (to help build empathy) or just list qualities and demographics.
- Market opportunities and threats: What does the competitive landscape look like? Are there legacy players you’re trying to disrupt? Or is it filled with a host of startups taking different approaches to the same problem?
- Competition: Who else specifically does what you do? Remember, competition isn’t always direct competition either. The competition for a project management tool like Planio is as much email and Excel as it is other software.
- Unique selling proposition: What makes you better or different from the competition? How do you position yourself against them to stand out?
This information will inform how you think about the challenge your product strategy is based on (for now). Who’s the competition? Why are your ideal users still choosing them? What unique aspect makes you a better option?
However, you still need a way to turn this information into a clear part of your strategy. Here are two options.
Jobs To Be Done (JTBD)
The Jobs To Be Done (JTBD) framework, is used by product teams at Facebook, Instagram, and countless others to reframe the raw information about your market, customer, and USP into a statement about your user’s needs and motivations.
Here’s how it works.
Put yourself into the mind of your ideal user and then fill out this statement:
“When I [context], but [barrier], help me [goal], so I [outcome].”
Here’s an example JTBD from Peloton:
“When I need an option to workout, but I can’t go to my favorite studio, help me get a convenient and inspiring indoor workout, so I can feel my best.”
This framework helps you identify the challenges your users face (can’t get to the studio but want a workout) and where in the customer journey you should focus your product strategy (become a better, more convenient indoor workout option).
Not only that, but framing your challenge around a user’s needs and motivations can help you zone in on your go-to-market strategy as well. So once your product is built, you’ll know how to get it out there and into their hands.
Thinking recursively
You can also start at the end (your vision) and work backward through the key milestones that will get you there.
This is what Vinny Lingham, CEO of Civic calls the recursive product strategy:
“Work back from an end goal–five, 10, or 50 years ahead–until you can hit inflection points that propel your company and its customers to the next stage while ushering both toward the end goal.”
A clear example is Elon Musk, who wrote out Tesla’s product strategy over a decade ago:
- Build sports car
- Use that money to build an affordable car
- Use that money to build an even more affordable car
- While doing so, also provide zero-emission electric power generation options
- Don’t tell anyone (which, from his Twitter account, is the only point he’s failed on!)
What’s not listed here is Tesla’s vision: “To create the most compelling car company of the 21st century by driving the world's transition to electric vehicles.”
To reach this vision, Tesla’s first challenge was to gain recognition in the automotive industry (with an electric sports car). Then, they systematically worked their product outward from a small, niche audience to a more mainstream one.
Each challenge in their product strategy coordinated with a clear milestone, product, and increase in market share.
3. Target Conditions
The problem with these major challenges is that on their own, they’re too large and vague to tackle all at once. (Just imagine walking into a product meeting at Tesla and telling the team ‘go build a sports car’.)
Each challenge is made up of tons of smaller problems, features, changes, and experiments you need to get through first in order to satisfy user needs, learn, and adapt.
These smaller challenges are called your target conditions. This is where you break down the challenge into smaller problems that are more easily achievable and can be measured.
- How will you know when you’ve achieved the challenge?
- What metrics can you start exploring today to see if you can impact that larger goal?
This is where product strategy meets project management (and a bit of intuition).
You (or the CEO/product owner) will need to make a bet on the direction your product should go in and the right metrics to track. Then, you’ll want to ensure your target conditions can be translated into KPIs and OKRs without losing the magic of user-centricity.
However, uncovering these metrics isn’t always an easy task. You can’t always guess all the questions you need to answer. And spending too long tracking the wrong number will set you back significantly. If you don’t know where to begin–and most people don’t–start by counting things that happened that you care about.
To do this, Amplitude’s John Cutler suggests you go through a tour of your product with a special focus on:
- Your product vision and reason for being
- Value moments (i.e. when a user’s investment pays off)
- Start and end of key workflows
- Big areas of uncertainty
- Examples of the unhappy path
- New customer vs. existing customer experience
- Key jobs-to-be-done or scenarios
Each of these focuses should yield a pretty sizeable list of events, metrics, and data points you can use to find your product strategy’s target condition. Then, pick the one that feels like it will move you closer to your vision.
4. Current State
Finally, you need to ground yourself in reality by asking what is your current state as it relates to the target condition?
If your target condition is to increase sign-ups to 500-per-month, where are you now? 200-per-month? 20?
It can be difficult to see how far you are away from your target. But you need to be realistic and be absolutely certain that you can measure and quantify where you are now and how your experiments are impacting that number.
5. The Threshold of Knowledge
There’s a good chance you read through each of those product strategy elements and thought ‘I have no idea where to even start!’ That’s ok. The final piece of an actionable product strategy is knowing what you don’t know.
You don’t start on day 1 with a clear vision and a path towards it. There’s just too much that’s unknown or will change with time.
The threshold of knowledge is what you know now that allows you to set goals, plan experiments, and remove obstacles on your way to realizing your vision.
This threshold exists between your current state and your target condition and will grow and change as you try new things and ship new features.
You start with a challenge, define your target condition, measure your current state, and then use your threshold of knowledge to experiment and build features that will help push you forward. Each iteration or sprint helps expand the threshold and show you if your work is aligning with your overall strategy and vision.
The threshold isn’t really an ‘element’ of your product strategy. It’s a reminder that even though you have an idea of the challenges ahead that will bring you closer to your vision, your product strategy may very-well shift as you go along.
You start with what you know, set goals, make bets, and learn along the way.
The final piece of an actionable product strategy, is knowing what you don’t know.
Bringing it all together: How to use a product strategy template in practice
Each element of your product strategy from your vision downwards becomes more and more actionable. If done correctly, your product strategy ensures that every task aligns with your business vision and your user’s needs.
An easy way to see this is to put it all together into a product strategy template:
Now, you might be thinking that this template looks a lot like a business strategy. But why else build your product if it isn’t to hit and maintain product-market fit?
It’s also probably clear at this point that you have so many other moving pieces too.
If you have a list of challenges to face and target conditions to meet, each will most likely line up with major milestones in your product roadmap.
You can even go so far as to map out those conditions and challenges to their specific themes, outcomes, features, and OKRs (what we like to call Agile long-term planning).
For example, if your product strategy relies on onboarding 50% new users each month in order to reach your vision, then you’ll most likely have a whole ton of milestones, features, and OKRs around your onboarding flow.
This is where you can see the clear difference between a product strategy and a product roadmap.
One explains why you’re doing what you’re doing the user behaviors that will get you there (i.e. metrics). The other explains how and what you’re going to build to influence those user behaviors.
Product strategy is all about your user and their needs. But project management often gets stuck in the weeds of planning and executing sprints and building features without stopping to question whether you’re on the right path or not.
By keeping your product strategy front-and-center, you ensure there’s always a clear connection between what you’re making and what your users need.
How to balance your product strategy with customer requests
So far, we’ve looked at how you can create a product strategy that connects to your vision and helps you find and build your product-market fit. But what if you’re not in charge of driving your product vision?
At most companies, there are a few different ways that product strategies develop:
- Executives drive the strategy and roadmap based on product vision
- A single or group of big, large customers drives the roadmap by requesting features
- Your team prioritizes features and drives the roadmap based on the most commonly requested features
Your product strategy ensures that every task aligns with your business vision and your user’s needs.
Matching your product strategy to your ideal customer is an important part of keeping your business afloat. However, adjusting your vision to suit the current needs of a select few is an easy way to sink the ship.
At Planio, we’ve seen more than our fair share of customers saying ‘If you only had this one feature, we’d definitely buy it!’ But the problem with a customer-driven product strategy is twofold:
- Customers don’t actually know what they want and your overall vision gets skewed by chasing trends
- Customers don’t actually end up paying for the features they’ve requested
This isn’t to say that you should ignore customer requests or tell long-time customers to beat it when they come asking for changes. But that there’s an art to detecting product features that not only make sense for this customer but also fit into your larger strategy and can be beneficial to your larger userbase.
Here’s an example:
At Planio, our vision is to be the most flexible and user-friendly way to manage projects of all sizes.
For many of our customers, a big part of managing projects is reporting progress to stakeholders. The problem is that every company has different expectations when it comes to reporting.
We would get a lot of requests for very specific data filters. But rather than build each individual data view for our customers, we created a customizable filter UI that allowed all our customers to create the views and reports they needed.
By generalizing the product request, we were able to keep customers happy and stick to our long-term vision of being flexible and user-friendly.
When you get user requests coming in and you aren’t sure how to act on them, ask a few simple questions:
- Does this request represent a bigger opportunity to bring in new customers?
- Does this request serve your core user persona? Or is it shifting you towards someone else (who may be less ideal)?
- Will people actually pay for the functionality that this request creates?
When you find this alignment, you can even get customers to pitch in on development costs while building features and tools that make the product better for everyone.
A good product strategy is a lot like time travel
In Back to The Future II, an aging Biff sneaks into the Delorean and travels back in time to give his younger self a sports better almanac from the future (which he then uses to build an empire).
In a lot of ways, a great product strategy is like a gift from your future self. You see what an ideal future looks like and break down exactly how you’re going to get there. And even if the path changes along the way, you still know where you’re going.
