Creating a product strategy is a challenging task. I can’t begin to count the number of clients I’ve worked with over the years who struggle with it. Some don’t know where to start; some have created one, but it’s not translating into something the team finds useful; some have a clear one, but it’s not driving the expected growth. Every single one of those clients knew that something was amiss with their product strategy – they just didn’t know what.

It’s no wonder the perfect product strategy remains elusive. A product strategy, by its nature, is complex and nuanced. And it's constantly in flux, being adapted as you learn what elements of it bring about the expected results and what needs revising.  

On top of that, most of us were never taught how to craft a product strategy. We became product managers after working in a function which had nothing to do with strategy, and our initial measures of success were based on mastering delivery, not developing strategy. While there are now a few courses on product strategy, they have only popped up in the last few years, which means most of us have had to suss out the process on our own.

So what I’ve aimed to accomplish in this article is to de-mystify product strategy for those that are new to it and give you some foundational knowledge to get started. It has taken me many years to understand product strategy enough to feel confident creating one. There is thus no way for me to cover everything in such a short space. So rather than thinking of this article as the answer to all your questions, think of this article as your starting line. (But by all means, reach out to me if you do have questions). 

Ready? Ok, let’s go!

Strategy and strategic thinking

Before we get into product strategy in depth, let’s get into the right frame of mind. To get the most out of our strategy work, we need to zoom out from our day-to-day concerns to see the big picture, moving from asking questions like ‘How do we deliver features effectively?’ to broader ones, such as ‘How do we create the most value for the customer and help the business achieve its goals?’.

A helpful way to make this shift is to force yourself to start thinking about things in terms of:

• the business impact you want to achieve first,
• the changes in user behavior that would need to happen to create the business impact,
• the things you’d need to build to cause those changes to happen.

In his excellent book, Outcomes Over Output: Why customer behavior is the key metric for business success, author Josh Seiden describes this as thinking about work, and measuring its success, at three levels: impact, outcomes, and outputs.

Impact

The highest level is the impact you want your product strategy to make. This is typically one of five things (often called ‘the five things execs care about):

• Increasing revenues
• Decreasing costs
• Increasing new business/market share
• Increasing revenue from existing customers
• Increasing shareholder value

Outcomes

The next level, and probably the most important for product leaders is outcomes. In his book, Seiden describes an outcome as ‘a change in human behavior that drives business results’. For product people, that usually means a change in customer behavior that drives one of the impacts listed above. Some common examples are:

• Increased product usage
• Higher purchase value
• Increased customer satisfaction scores
• More customer referrals
• Increased number of users

Outputs

Then at the bottom comes outputs. In product, this is usually the features we ship with the intention of creating an outcome. For example, adding a social share function with the aim of creating the outcome that more customers refer their friends to the product.

How Impact, Outcomes, and Outputs are connected

A very simple example of how the three levels are connected might be as follows:

• Impact: Increased revenue
• Outcome: Higher average shopping cart value
• Output: Feature that suggests things for customers to add to their shopping cart before checking out.

Outcomes and outputs will likely look familiar if you run experiments as part of your current product development process. You could think of the above as the hypothesis ‘We believe that reminding customers of things they often buy before they check out will lead to them adding more items to their shopping cart before checking out’.

Most of the work you do in your product strategy will be at the outcome level and needs to be clearly aligned with a business-level impact if it is to be successful. As you work through crafting your own product strategy, bear this in mind. It will help you focus on the important things, and not get distracted by the outputs that go into creating your outcomes.

Before product strategy comes product vision

Before you can start defining a strategy, you need to know what you're aiming for, what your ultimate purpose is, and why you're doing this in the first place. Enter the product vision.

In Roman Pichler's words from his book Strategize:

“The [product] vision is the ultimate reason for creating your product; it describes the positive change the product should bring about.”

While definitions of product vision vary a little, they generally have the following in common:

• The focus is on ‘why’ rather than ‘how’ and it guides what goes into the strategy.
• Vision sets the context for the strategy and helps the team to be empowered and act with autonomy.
• Product vision describes a future state which is more positive because of the existence of your product.

If you don’t yet have a clear product vision, here is a short article to get your started.

Why have a product strategy?

The purpose of any product strategy is to keep people aligned and focused on building the right product. It supports the product function in:

• Prioritizing the right thing to do
• Making effective decisions which are aligned with the goals of the company
• Motivating the team and enabling them to work autonomously

Some symptoms of not having an effective product strategy are:

• Time wasted on building features that don’t add value
• Conflict between the product team and other areas of the business
• Difficulty aligning on what to prioritize and build
• A general feeling of being responsive rather than proactive and intentional

An effective product strategy is the backbone of the product function, empowering the team to do their best work in the knowledge that what they are doing is in alignment with what the department and organization want to achieve.

What is a product strategy?

Now that you understand the value of a product strategy and you have a product vision upon which to base one, let’s actually define what it is.

When you do a google search for the definition of product strategy, you’ll find a plethora of descriptions. Part of the reason the definition is so varied is because how a product strategy is devised and how it is presented can be quite different wherever you go. But at the end of the day, product strategy is quite simple to define (albeit not simple to create):

Product strategy is the articulation of decisions you believe will simultaneously help you achieve your product vision AND win in the marketplace.

An effective product strategy creates very clear guidance on what is in and out of scope for your product, and thus becomes the guiding framework against which to make decisions. The elements to be spelled out in a product strategy are many, but they broadly fall into three main buckets: WHO, WHAT, and HOW. Who is our customer? What are we offering them? How are we delivering it to market?

It likely goes without saying, but you cannot copy another company’s product strategy and expect it to work for your company. Given your team’s capabilities, position in the market, customer base, current offering, etc are completely unique, so too should be your product strategy. 

Here is an example of how two quite similar solutions have very different product strategies:

Both these strategies evolved over time based on the opportunities the teams saw for their products, as well as what drove results. This illustrates a very important point about effective product strategy: it must center around data and proof. It is reflective of both the decisions you’ve made that have proven successful for your product, as well as new decisions you are betting on, but have yet to be validated. And thus, product strategy is not a fixed directive. You constantly need to be monitoring and adjusting elements of your strategy as customer expectations change, as market dynamics shift, and as business priorities are revised.

The difference between product strategy and vision

The line between strategy and vision can become a little blurred at times, especially if you are working on both at the same time, and because product strategy documents often also contain a vision statement.

Marty Cagan explains the difference well in his book INSPIRED when he likens vision and strategy respectively to leadership and management:

‍"Leadership inspires and sets the direction, and management helps get us there."

At its simplest, the difference is that vision focuses on the why behind the product whereas strategy makes the vision real and actionable by introducing how you will achieve your product vision. So, as with leadership and management, vision is the north star and strategy is the map to get you there.

What is included in a product strategy?

So far, we've covered what a product strategy is and what it's for, but what about the actual content of the strategy? Again, this differs depending on who you ask; however, as mentioned earlier, it tends to be a variation of the following:

• Who your product is for
• What value it creates for the customer
• How you are going to deliver that value

Some of the key points I personally like to communicate in a product strategy are:

1. Product vision. Why your product exists
2. Target market. Who will buy the product.
3. Value proposition. How the product improves your customers' lives
4. Goals. How you will know whether your work in creating the product is successful
5. Roadmap. How you will approach building the product over time

Depending on the breadth of your responsibility within your organization, there may be some additional pieces of information that are relevant to include in your product strategy. These can include revenue model, team structure, underlying product architecture, or risks and assumptions that are driving your decision-making. 

What form should a product strategy take?

A product strategy takes many forms. It's usually a combination of decks, documents, canvasses and a roadmap, which explain how you will achieve your product vision.

The strategy is consistent across the documents, but the presentation and level of detail is tailored according to the audience. For example, it might be:

• Condensed into a few slides for a presentation at an all-hands company meeting
• In a detailed roadmap to collaborate with engineering on resource planning
• In a pitch deck for investors
• In a business model canvas as a working document to collaborate on

Remember, though, a product strategy is more than just the documents that represent it. Your product strategy is a living, breathing thing encompassing all the activities that go into maintaining it, communicating it, and bringing it to life. It isn’t just the deck you present. It’s how people talk about it afterwards, the stories they tell about the product and, most importantly, the framework they use to make product-related decisions.

When it comes to product strategy, alignment is what counts. However you prefer to visualize and present your product strategy the important thing to remember is that your product vision and strategy must be aligned with the broader vision and strategy of the business. 

Conclusion

As a product manager, your ultimate purpose is to build successful products that create value for the customer while helping the company achieve its goals. When you operate in a world of unending customer problems to solve, shifting market dynamics, internal stakeholders with competing priorities, and the constant pressure to increase revenue, how can you evaluate and prioritize all the possible opportunities for your product?

Your product strategy is the answer. By clearly defining who your product is for, what value it provides to them, and how you’ll go about delivering that value, your product strategy becomes the guiding framework that empowers you to evaluate, prioritize, and make informed decisions. It serves as a map that charts the course for your product's success, ensuring alignment with customer needs and business objectives. With a well-crafted product strategy in place, you can navigate the complex landscape of product management, effectively steer your team, and build products that resonate with your target audience, ultimately driving growth and achieving success in the market.