A well-crafted product strategy is the key factor that can determine whether a company succeeds or fails in today’s digital world.
A product strategy defines how the product delivers value to customers and the business in a way that withstands competitive pressures.
It lays the stepping stones that guide a product along its journey from conception to market.
In three previous articles, my amazing colleagues have explored three important aspects of product management.
First, Kylie Upton highlighted the need for organisations to adapt their culture to encourage innovation, advocating for patience and focus on problem-solving.
Secondly, Neil Walker pointed out the benefits of adopting the product operating model, a change that can give companies a competitive edge and help them overcome obstacles.
Lastly, Alice Kavanagh explained how important it is to become an expert in the minimal viable product (MVP) approach to innovation. She advocated for embracing minimalism, agility, and experimentation as the key strategies to unlock the full potential of products.
These insights have set the stage for this article about product strategy.
What does a product strategy cover?
Whether you’re a startup aiming to disrupt the market, or an established company striving to stay ahead, knowing how to create and implement an effective product strategy is vital.
The strategy should cover several important points:
- Who is the product for? Identifying the target audience is crucial. Understanding their needs, preferences, and behaviours can inform the product’s design and functionality.
- Why would people want to use it or pay for it? You need to articulate the product’s value proposition. What problems does it solve? How does it improve the user’s life or work?
- What makes it stand out? This is about differentiation. In a market with lots of options, what unique features or benefits does the product offer?
- Why should the business spend money on it? Here, the focus is on the product’s potential return on investment. How will it contribute to the company’s bottom line?
The ‘missing middle’ is a clue that you need a product strategy
Let’s start by explaining why at BJSS and Sparck we sometimes refer to a product strategy as the ‘middle’.
It’s called that because it bridges the gap between the overarching company and business strategy and the more detailed product roadmap and backlog.
Product strategy is not an isolated concept. It is an integral part of a bigger picture, serving as a crucial link within the company’s strategic framework.
It has to line up with the company strategy, providing a clear direction.
The ‘missing middle’ can manifest in various ways.
1. Reactive rather than proactive strategy
Without a clear product strategy, companies may find themselves constantly playing catch-up.
Instead of proactively driving their product’s direction, they’re just reacting to market changes and competitors’ moves.
This can cause problems all the way down to the ‘delivery chain’, in the Scrum team world.
The teams might face constantly changing requirements, lack of priorities, a lack of clarity on desired outcomes, or poor planning.
As a result, they might keep missing deadlines.
2. Lack of focus
Without a product strategy to guide decision-making, teams may spread themselves thin across too many initiatives, and possibly, features.
3. Misalignment
Without a shared product strategy, different teams or departments may end up working towards conflicting goals – which can make it harder to achieve any of them.
4. Customer dissatisfaction
If a product doesn’t meet customer needs or expectations, it may be a sign that the product strategy is off track.
What if your product strategy is just bad?
Not all strategies are made equal. The symptoms above can also arise when there is a strategy in place but it’s not the right one.
Some common pitfalls include:
- The strategy is too vague or is not written down. It just lives in the Head of Product’s mind (or whoever does that job in companies without such role).
- The strategy is based on wishful thinking. This happens when the strategy is built around what stakeholders hope will happen, rather than on solid research about market or what users need.
- The strategy follows the highest-paid opinion. Sometimes, decisions are driven by the most senior person in the room, or the loudest, rather than based on a well-planned strategy.
- The strategy isn’t based on facts and data. A good strategy should be grounded in data and insights, not just gut feelings or assumptions.
How to develop a product strategy that works
To address a missing or flawed product strategy, consider the following steps:
1. Go back to the product vision
It’s important to cover the basics first. What is the overarching goal or reason for the product? Keep in mind that visions should be grand and inspiring.
2. Define the target customers
Who will be buying your product and who will be using it? These might be the same people, or they might be different.
I hope your team has already done market research. If they haven’t, pause here and do that first.
Market research involves many steps but at the very least it will help you get some numbers, figure out how big the total market is, find out if there’s a cost of customer acquisition, and estimate the lifetime value of a customer.
When you define your target customers, be specific enough to enable effective user research to uncover their needs, but at the same time be broad enough to encompass a viable market.
3. Identify core needs
I cannot stress how important this is: before identifying the core needs, you need to really understand your target customer (see step 2).
And specifically, you need to know all about their needs and the pain points that relate to what your product does.
Once you’ve done that, you can answer the big question: What are the key needs your product will address for your users?
4. Highlight differential features
What makes your product different? Why would someone from your target customer group choose your product over a competitor’s?
This is where you need to really think about what makes your product special.
Tools like the Kano Model or Strategy Canvas can help you figure out how your product delivers value to customers in a way that can stand up to competition.
5. Outline business goals
I mentioned above that the product strategy sits within the broader company strategy. We need to articulate how the product will help the company reach its objectives.
To really get this part right, we first need a solid understanding of where our product or service fits into the overall business strategy.
Validating your product strategy
When you’ve put in the hard work and created a draft of your product strategy, it’s time to validate it.
If you’ve been reading our previous articles, you’ve likely noticed a recurring theme: we keep talking about the importance of experimentation and making iterative changes based on what you’ve learned.
The goal of testing your product strategy is to determine a clear path forward. The validation process can lead to three possible outcomes:
- the strategy is solid and ready for implementation as is
- there are issues with the current version, indicating the need to change your approach
- the strategy is flawed, suggesting that the entire idea may need to be scrapped
There are various ways to test a product strategy but the only true way is by talking to customers. If anyone tells you otherwise, they are just plain wrong.
I am addressing product managers here: validating a product strategy is not a task that the product manager should do alone. It should be a collaborative effort involving the entire team.
The team can engage with a representative group of your target customers in various ways, for example running focus groups or showing them wireframes of the ideas the team has in mind. (But do not confuse this with usability testing, this comes later.)
My personal suggestion is not to make things too polished at this point.
First of all, you don’t want to waste your designers’ time on polishing ideas that might not work out. At Sparck and BJSS, we like to do these as discovery phases.
The team will have to prepare for these sessions, and you’ll want to make sure that what you’re proposing in wireframes is actually feasible by having your technical lead or technical architect by your side.
The aim here is to confirm that your product strategy is correct by making sure the product is desired, feasible, and viable.
Hopefully, you’ll eventually land on a product strategy that everyone is comfortable with – the business that needs to invest in it and the team that will spend their days making it happen.
If the product strategy is considered solid, the next big step is to create a compelling product roadmap. This will shape the product backlog and guide the product’s development. But that’s a topic for another article.
Get help fixing your ‘missing middle’
Having a well-defined and validated product strategy is crucial for your product to succeed.
Whether you’re dealing with a ‘missing middle’ or a strategy that’s not quite hitting the mark, taking the time to build and validate a clear product strategy can set your product on the path to success.
And remember, you don’t have to tackle this alone. BJSS and Sparck can provide valuable guidance and support along the way.
If you want to hear more about our Strategy Workshops or Discovery Work reach out to me through our contact form or connect with me on LinkedIn.
