What product managers need to know about product strategy
I am often asked questions about the meaning of product strategy and how to develop it. Crafting and executing a product strategy is one key responsibility for product managers and one where they can make a significant impact.
In this article, I’ll explain the concept of product strategy, share examples of product strategies from popular companies, discuss your role as a product manager, and how to craft a good product strategy.
What is a product strategy?
A product strategy is a high-level plan of how your product will win in the market. It’s the reason people buy or use your product.
A well-crafted product strategy has the following characteristics:
It aligns with the overall business objectives
It provides a clear direction for the product team to make product decisions.
It is compelling enough to get leadership’s buy-in and drive action.
It achieves the goals and objectives the product aims to achieve.
It isn’t a one-size-fits-all. If you have different target markets, you can create a strategy for each group.
It isn’t constant. Although product strategy is often long-term, it can change based on research or new insights.
Product strategies of successful companies
Let’s examine the product strategy of successful companies to get a better idea of a good product strategy. Here are a few examples:
Apple’s focus on user experience:
Apple’s emphasis on design, usability, and integration across its ecosystem sets it apart. The company’s strategy includes a deep understanding of customer needs, continuous innovation, and maintaining a premium brand image.
“People don’t buy iPhones by the tens of millions just because they like the hardware, though that’s a huge part of it, but because they’re tied into an ever-growing, sprawling ecosystem of software and services that allow you to do more with the products if you continue to invest in that ecosystem.” Source: CNBC
Netflix’s Delight, Hard-to-copy, Monetize (DHM) strategy:
The Delight, Hard-to-copy and Monetize (DHM) strategy focuses on delighting your customers in a hard-to-copy way that increases profit.
Netflix focuses on delighting customers by providing entertainment, including thousands of high-quality movies, for a low monthly subscription fee. They monetise and increase their profit margins by creating (hard-to-copy) entertainment that drives millions of users to subscribe to Netflix to access the entertainment.
“Netflix predicted that 100 million people would watch their original series Stranger Things. Therefore, they were willing to invest $500 million in that series.” Source: ProductLed.
What's the role of the product manager concerning a product strategy?
As a product manager, it's your responsibility to -
(1) Crafting a product strategy. If you are building a new product, research how it will beat the competition and win in the market. It's much easier, especially for junior and mid-level PMs, to develop/contribute to the product strategy, so don't miss the chance. Present your strategy with data to back up your stance.
(2) Challenge it. For existing products, it's great if you believe the strategy works or would work. However, if you don't, present your reasons to the leadership team. If possible, test your ideas on a small scale to demonstrate the potential impact.
(3) Own the product strategy and execute it. Owning the product strategy means you are "selling" it to stakeholders to get their buy-in. You are also responsible for the execution; you're constantly assessing if it works and finding ways to improve it for better results. If you've done (1) and (2) above, it's a lot easier to own the product strategy.
How to develop a product strategy
Developing a product strategy involves several critical steps:
Define your product vision and goals: Craft a clear and compelling product vision that outlines what you aim to achieve. Set specific, measurable goals that align with this vision. Your goals should be ambitious yet achievable, and they should provide a clear direction for your team.
Set up your North Star metric(s): Identify the key metrics that will help you track progress and measure success. These could include customer satisfaction, revenue growth, or any other relevant indicators. Metrics should align with the company’s vision and goals and measure the company's true success. Regularly review these metrics to assess performance and make data-driven decisions.
Understand the market and customer needs: Conduct thorough market research. Identify your target customers, understand their pain points, and analyze the competitive landscape. Tools like surveys, interviews, and market analysis reports can be invaluable in this phase. The research should focus on how you can achieve your vision measured by your north-star metric.
Craft a product strategy: Now, it’s time to craft your winning strategy based on your company vision and research. Your strategy should enable you to move your North Star metrics positively. Keep your strategy focused on your customers while demonstrating a good understanding of the competitive landscape.
Iterate and Adapt: A product strategy is not set in stone. Be prepared to iterate and adapt based on feedback, market changes, and performance data. Flexibility and responsiveness are crucial to staying competitive and meeting customer needs.
Developing and executing a product strategy is a critical responsibility for any product manager. By understanding what a product strategy entails, learning from successful companies, and knowing your role in its development, you can set yourself up for success.
Remember, a strong product strategy is built on a deep understanding of your market and customers, a clear vision and goals, effective collaboration with cross-functional teams, and the ability to adapt and iterate. Keep these principles in mind to create products that truly resonate with your customers and drive your company's success.
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