The Ultimate Guide to Product Strategy
A no-BS practical framework you can start applying today to boost clarity and direction for your product teams + a template that use immediately
In this article you will learn:
👉 Strategy Basics:
What is a product strategy and what it is not;
Key principles of an actionable product strategy;
Structure of a Strategy;
👉 “Strategy Mapping framework”
How to identify future trends;
Assessing business context, key opportunities, and challenges;
Placing the bets and aligning your team structure.
👉 Setting up the process
The process that you can implement within your teams;
A downloadable template that you can use right now.
No-fluff Intro
Strategy is an esoteric term that has been twisted and misinterpreted to the extreme. Over the course of my product leadership career, I faced three major biases that teams have toward strategy:
we need to hire a strategy consulting company that will fix the problem for us;
we don’t need a strategy, there’s plenty of stuff we need to do and we know exactly what it is (just look at our OKRs or worse - backlog);
there’s a C-level messiah, who’s going to show us the light.
None of those approaches is sustainable, because they lack one fundamental aspect of strategy - making a trade-off decision and taking responsibility for it.
Let’s dive deeper into how you can avoid the same traps and make a truly actionable product strategy.
Strategy Basics
My personal belief is that the misunderstanding behind the term lies in two root causes:
Academia has abused the word and made it overly complex with layers of theoretical meaning (which is useful only in the academic context, but isn’t actionable for business);
In the common-sense everyday slang, it can be easily (and mistakingly) applied to whatever task at hand (I have a strategy for unclogging the bathroom).
A good illustration of this is Goodread’s list of strategy books. The list contains 9,999 entries that are either directly or vaguely related to the concept of strategy. Meaning strategy can be endlessly stretched to the point where its essence is lost.
In order to make some sense of it all, over the course of my career, I’ve been to three extended strategy-related bootcamps, sat through dozens of strategic planning sessions, passed Reforge, and read a gazillion of books on the topic. Even though all this prep work was helpful, I felt there still was a gap between theory and practice. I was still puzzled at how to apply the learnings to my everyday product challenges. It was only when I started practicing the strategy proactively with my teams, I was able to grasp the meaning of it.
Definition of a Strategy
There’s plenty of content written on that topic so instead of bringing another rehashed definition into this world - I’d rather turn to prolific thinkers. The most succinct explanation of strategy that I’ve met was written by JK (Bolt’s CPO & President), so without further ado:
A complete set of high confidence high impact bets on the long term evolution of the domain based on the deep understanding of the domain and a sufficiently broad understanding of the external forces affecting the domain that can be readily communicated and converted into execution plans.
There’s another definition that helps to set up the right frame of mind for strategy planning:
The essence of strategy is about what not to do.
Michael Porter “What is Strategy”?”
Key principles of an actionable product strategy
If you skim through existing business literature on the topic of strategy, broadly there are three main principles:
A strategy must start with an understanding of the current context
(“Where to play?” in the words of Alan G. Lafley)From an external perspective (key trends that can either challenge or create new opportunities for the business);
Internal perspective (deep understanding of the existing business model)
A strategy must have well-defined problem areas
(“Diagnosis” in the words of R. Rumelt)From external forces;
Key bottlenecks within the existing business.
A strategy must have a series of “Key bets” that would allow addressing the highest-leverage problem areas
(frequently termed as either “How to win” or “The Guiding policy”)
Structure of a Strategy
The same principles morph into the three key building blocks of strategy:
Context Definition (Long-term external context or “The Future map” / Mid-term internal context or Business Context)
Challenges (Both external threats and internal gaps)
Key bets (as a derivative of a bigger context and the existing challenges)
If your plan lacks any of those - it can’t be considered a strategy.
Strategy Pitfalls
Goals = Strategy. Goals shouldn’t be conflated with strategy. They are a byproduct of a well-crafted strategy and not the other way around. Otherwise, your focus is going to get diluted.
Large scope. The larger the scope, the more ambiguous your strategy becomes. Strategy is about making trade-offs and focusing your limited resource on the highest leverage opportunities (ideally 1-3). Try to look at it from the lens of the military strategy - if you spread your troops too thin across the whole front, most likely you’re not going to succeed anywhere. The same applies to your product teams.
No fluff. Hand-wavy declarations/slogans are not a strategy, they are just mere declarations. Try to unwrap the context and the problem to the level of granularity that is actionable (a good framework to use here is “The 5 Why’s”).
Strategy Mapping Framework
(Context) 📈 How to Identify Future Trends
The initial step in the whole process is trying to understand what is going to happen with the market/industry in the forthcoming 3-5 years. I call this exercise “The Future Map”.
Questions for starters:
Is your addressable market growing organically?
What customer segments are still unserved? What’s their year-over-year growth?
What trends can potentially disrupt your current business?
What trends can be seen as opportunities for growth?
Are there any emerging governmental/compliance risks that you need to factor in?
How is consumer behavior going to change? (Gen-Alpha vs. Gen-Z vs. Millenials).
Where to look for trends?
TechCrunch, Gartner, Forbes, McKinsey studies, Deloitte studies, HBR, New York Times, Washington Post, niche-substacks, or just Google them.
It’s totally ok to spend 4-8 hours spread over a few days just researching trends.
How do you know if it’s not a fad?
The web is now filled with a bunch of ambiguous nonsense about tech trends, written mostly for SEO purposes. How do you know which trend to pick?
Three key rules that I follow:
it’s data-backed;
comes from a reliable source;
doesn’t contradict your own common sense.
But most importantly, you should buy into the validity of claims.
How to tell that the list is exhaustive?
The only sanity check you can have here is relying on your own / your team’s intuition. Once you realize you start going over the same google searches again - probably it’s time to wrap up and cluster your findings.
In my teams, each product manager goes through the trend clusters and gives an overview of the future within her domain to the rest of the team. The team is then free to challenge/ add their own inputs. This collaboration solidifies the findings and aligns everyone around the same context.
Clustering trends
Since our brain doesn’t process scattered information well, we need to give him a helping hand and reduce the cognitive load by clustering all the newly found trends into groups. Ideally, each cluster should consist of 2-10 trends.
Example:
Cluster “Consumer trends around online shopping”
If your cluster consists of only a single trend, most likely it’s a fad that needs to be discarded. On the other hand, if all of the trends fall into a single cluster - you need to rethink the splitting criteria and make it more granular.
(Context) 💰Unwrapping your business
The second step in the process is breaking down your business model into variables. This helps your team to understand the fundamentals of the business and align on the semantics.