All great products start with a clear strategy that is customer and market-driven. Your strategy defines the direction of your product and what you want to achieve. Establishing this first aligns the organization and keeps everyone focused on the work that matters the most. It tells the team where the product is headed and what needs to be done to get there.
Importance of Product Strategy
1. It helps decide the exact steps to be taken in any event to make the product a success.
2. It prepares the company for response by competitors or towards changing market conditions.
3. It helps the company decide the target market and in market penetration.
Elements of a product strategy
When defining your product strategy be sure to answer the following questions.
Who are you selling to?
Define your target customer or market. Identify whom you are selling to, and what that market looks like.
What are you selling?
Describe how potential customers will perceive your product compared to competitive products. Understand what makes your product unique in the market.
What value do you provide your customers?
Determine what problems your product solves for customers. You cannot be everything to everyone within a particular market, but you can help to solve specific problems. Create a value proposition to position the value you provide and the benefits that customers will receive with your solution.
How will you price your product?
State how you will price the product. Include its perceived value and a pricing model.
How will you distribute your product?
Describe how you will sell your product, and how your target market will acquire your product.
Creating your product strategy
To create your product strategy, start with identifying the market problems you would like to solve. This includes interviewing your target market, understanding the competitive landscape and identifying how you will differentiate yourself.
Your product strategy will change over time as you learn more about your market, and as (if) you decide to enter different markets. Listening to your market and developing your product strategy is a circular process; as you learn more, you will evolve your product strategy and the problems you solve.
The market describes the target customers and users of your product, the people who are likely to buy and to use it. The needs comprise the main problem your product solves or the primary benefit it provides. Think of a product like Google Search or Bing that solves the problem of finding information on the Internet. Compare it to a product like Facebook that allows you to stay in touch with family and friends.
Your strategy provides the foundation for planning your roadmap, defining your features, and prioritizing your work. To visualize your strategy and see how it ties to your execution plan, it helps if you link releases and features to initiatives and goals. This allows you to analyze your roadmap at a high level and to discover any gaps. It is easier to understand the relationships between product lines, products, goals, initiatives, and releases when you can see them all in one view. This also helps you to identify “orphan” goals or initiatives and adjust your plans accordingly.
Definition, together with design, is the part where we shape the product. Think of prior steps (strategy and discovery) as the clay we use to make a ceramic plate. Then, definition and design is when we shape the clay into a plate. And then, Development is the part when we bake the clay to turn it into ceramic. Finally, when the ceramic is ready, we can smoothen the edges, paint it however we want and make it even better. Similar to what we do with optimization.
There is a common misconception about product strategy and discovery that if we work very hard for those then the definition of the product will be very straightforward.
While strategy and discovery mostly describes the problem, it does not focus on the solution. We barely scratch the surface of the actual solution during the late stages of discovery. Problem definition and early testing are extremely crucial to define and design the right product. That’s a fact. However, they are by no means a step by step guide that we can follow to define and design products.
This is because those stages focus on user feedback and company goals to define problems. And we all know that users and companies do not know what PRODUCT they want. They only know what RESULTS they want. It is our job to build the product to provide them with the results they want.
Thinking things through
Writing, especially in a structured way, helps a lot with thinking things through. People who write know the feeling. It’s like observing your thoughts from a third person point of view. It actually is true since while putting words on paper our brains read and evaluate what’s written. We can then evaluate what we have written and come up with a sound, logical plan.
Developing a common understanding across teams
Consistency is key to a better experience, usability and trust. To sustain consistency we need principles, guidelines and design systems for sure. But they are just the beginning. If we do not follow them on each and every product/feature/backlog item we work on then they are useless. That’s why Definition is so crucial. When things get written down in a single source of truth fashion then we get the basis to build up on.