Welcome to our course on Product Strategy!

Welcome to our course on Product Strategy! Our aim is to equip you with the knowledge and tools to create and implement effective product strategies. We'll break down what product strategy is, provide a straightforward framework for developing one, and illustrate these concepts with real-world examples.

Beyond the theoretical aspects, we'll also offer practical advice. Learn how to craft your strategy, gain support from your organization, and successfully execute your plan. Our insights are grounded in real-world experience, guiding you from the initial stages of strategy development to its implementation.

Are you ready to dive in? Let's begin!

What is product strategy?

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Yogi Berra famously said, "If you don't know where you're going, you'll end up someplace else." This timeless wisdom applies equally to companies as it does to individuals. Just like a baseball team needs a clear game plan, businesses require a well-defined product strategy to achieve their goals.

A product strategy is the roadmap that guides a company's decisions. It outlines what products to build, which markets to target, how to differentiate offerings, pricing strategies, positioning, and messaging. Essentially, it's the blueprint for a company's product-related endeavors.

To develop a successful product strategy, start by defining your objectives. What do you want to achieve? Once you have a clear understanding of your goals, you can create a strategy to reach them. This involves making choices such as which features to prioritize, how to price your products, and where to sell them.

Think of it like setting up a lemonade stand. To make money and have fun, you'd need to decide what kind of lemonade to sell, how much to charge, and where to set up your stand. These decisions would form your lemonade stand strategy.

While a real company is more complex than a lemonade stand, the underlying principle remains the same. Product leaders play a crucial role in shaping and safeguarding a company's product strategy. They ensure that everyone understands the strategy, is aligned with it, and is working towards achieving it.

Being a guardian of strategy is a demanding job. It requires a deep understanding of the company's goals, the competitive landscape, and the needs of customers. While it doesn't guarantee success, a clear and well-executed product strategy significantly increases the chances of achieving positive results. As Yogi Berra would say, "If you do know where you're going, it doesn't guarantee you'll end up there, but it's much better than wondering around aimlessly."

Why Strategy Matters

Many organizations struggle to define and maintain a clear product strategy. While some companies operate reactively, responding to events and competitors, others have vague or inconsistent strategies. Even those with well-defined strategies may lose focus over time due to conflicting priorities or poor execution.

The consequences of lacking a strong strategy can be severe. Companies may lose direction, waste resources, and fail to gain traction in the market. Moreover, a lack of strategic focus can erode employee morale and hinder the company's ability to attract and retain talent.

Developing and implementing a successful product strategy requires a unique combination of skills and conviction. Product leaders must possess a deep understanding of the market, technology, and business operations. They need to analyze financial factors, define strategic options, and communicate their choices effectively.

Beyond the skills, unwavering commitment is essential. The real world is filled with distractions and pressures that can easily derail a company's strategic path. Product leaders who possess both the skills and the conviction to pursue a strategy can significantly impact their organizations' success.

Tenets of a Good Product Strategy

A well-crafted product strategy is like a reliable navigation app, guiding you towards your desired destination from point A to point B. It helps you achieve business objectives, choose the optimal path, and navigate challenges along the way.

A good strategy aligns with your business goals. It outlines a clear path to achieving objectives such as revenue growth, market share, or user adoption.

It considers market dynamics and competitive factors. A successful strategy takes into account market trends, competitive landscapes, and potential obstacles to success.

It provides actionable guidance. A good strategy offers concrete steps and decision-making tools to help you navigate towards your goals.

It fosters alignment and collaboration. A shared strategy can unite stakeholders, reduce conflicts, and improve efficiency.

It enables measurement of progress. By defining key metrics, you can track your progress towards objectives and make adjustments as needed.

It involves key stakeholders. Including others in the strategy development process can increase buy-in and ensure alignment.

Remember, while a good strategy is essential, it's not a magic bullet. Success requires consistent effort, adaptability, and a willingness to learn and iterate.

The Elevator Pitch Framework

When articulating a product strategy, it's essential to be able to convey it concisely. While detailed documentation is valuable, a clear and concise summary is equally important.

The elevator pitch framework is a useful tool for distilling your strategy into its core essence. It forces you to express your strategy in just two sentences, highlighting the key elements and benefits.

Here's how it works:

1. Use the template: For [target market], who want/need [benefit], [product/service] is a [unique value proposition]. Unlike [competitors], [product/service] offers [key differentiator].
2. Fill in the blanks: Replace the underlined words with the specific elements of your strategy.
3. Test it out: Read the sentence aloud and assess its clarity, persuasiveness, and conciseness. If it doesn't feel right, revise and refine.

This framework can be applied to any product or service. Let's try it with Netflix and Amazon Web Services:

• Netflix: For young Americans, who want and demand entertainment, Netflix is an online subscription TV service that works seamlessly. Unlike HBO or Hulu, Netflix releases original content for binge watching.   
• Amazon Web Services: For growing companies who need to control infrastructure costs as they grow, Amazon Web Services (AWS) is a cloud hosting service that is highly flexible. Unlike Google Cloud or Microsoft Azure, AWS offers a complete portfolio of cloud services.   

By using the elevator pitch framework, you can gain clarity, focus, and a strong foundation for your product strategy.

Identifying Your Target Customers

When defining your product strategy, a crucial step is to identify your target customers. This involves determining who you're building the product for.

While it might seem tempting to aim for a broad audience, focusing on a specific target market is often more effective. By concentrating your resources on a well-defined group, you can create a product that truly resonates with them and builds a loyal customer base.

Consider the examples of Toyota and BMW. Both companies have achieved success by targeting distinct customer segments. Toyota focuses on mainstream families, while BMW appeals to affluent individuals. This targeted approach allows them to tailor their products to specific needs and preferences.

When identifying your target market, consider factors such as:

• Demographics: Age, gender, income level, education
• Geography: Location, region, country
• Psychographics: Lifestyle, interests, values
• Behavior: Purchase habits, usage patterns

Once you've defined your target market, assess its size and potential. Determine the number of potential customers and the revenue opportunity within that segment.

Let's revisit the elevator pitch framework. For BMW, the target customer might be "educated, affluent males, ages 35 to 55." This helps guide product development and marketing efforts.

Similarly, for Salesforce, the target market was "small businesses without a CRM solution." This focus allowed Salesforce to address a specific need and gain a competitive advantage.

By clearly defining your target customers, you can create a more effective product strategy and increase your chances of success.

Filling in elevator pitch step by step

Identifying Customer Needs

The second element of the elevator pitch framework is customer need. This involves pinpointing a specific problem or desire that your target customers experience.

While it's tempting to focus on technology or features, it's essential to start with the problem. Great entrepreneurs are often passionate about solving real-world problems, not just showcasing technology.

Consider the example of Steve Jobs and the iPod. He recognized that people wanted to carry their music libraries with them, a need that existing products didn't fully address. By focusing on the problem, he was able to develop a groundbreaking solution.

Customer needs can be tangible or intangible. They may be practical problems or emotional desires. For example, BMW focuses on the emotional need for excitement and luxury, while Salesforce addresses the practical need for cost-effective CRM solutions.

The elevator pitch framework requires you to identify a single, compelling customer need. While your product may address multiple needs, focusing on one primary need can make it more powerful and effective.

Let's revisit our examples:

• BMW: For educated, affluent males, ages 35 to 55, who seek excitement and luxury.
• Salesforce: For small businesses without a CRM solution, who need to control their costs.

By clearly defining the customer need, you can tailor your product to address it effectively and differentiate yourself from competitors.

Choosing the Right Market Category

The market category is a crucial component of your product strategy. It influences how customers perceive your product and shapes their decision-making process.

When identifying a market category, consider how customers will categorize your product. They'll likely compare it to familiar alternatives. By understanding this category, you can design your product to meet their expectations and differentiate it from competitors.

While you might believe your product is unique, it's often beneficial to identify an existing category. This helps customers relate to your product and understand its value proposition.

The market category is not fixed. You can influence it through your product design, positioning, and messaging. However, it's important to be realistic and avoid overreaching claims.

Let's revisit our examples:

• BMW: For educated, affluent males, ages 35 to 55, who seek excitement and luxury, the BMW Series 3 is a family luxury sedan.
• Salesforce: For small businesses without a CRM solution, who need to control their costs, Salesforce is a CRM solution.

By carefully choosing the market category, you can position your product effectively, target the right customers, and drive adoption.

Identifying the Key Benefit (Benefits are value created for Customer)

The final element of the elevator pitch framework is the key customer benefit. This is the primary value that your product offers to your target customers.

While features describe what a product can do, benefits are the outcomes or advantages that customers experience. For example, an insurance policy's feature is coverage for losses, but its benefit is financial protection.

Customers choose products based on the benefits they provide, not just the features. Therefore, it's essential to identify the most compelling benefit that will influence their decision-making.

Let's revisit our examples:

• BMW: For educated, affluent males, ages 35 to 55, who seek excitement and luxury, the BMW Series 3 is a family luxury sedan that provides a great driving experience.
• Salesforce: For small businesses without a CRM solution, who need to control their costs, Salesforce is a CRM solution that is financially flexible.

In both cases, the key benefit aligns with the target customer's needs and desires. By focusing on this benefit, companies can tailor their products and messaging to effectively resonate with their audience.

Identifying Competitors and Alternatives

The second sentence of the elevator pitch framework focuses on competition and differentiation. It asks you to identify relevant competitors and alternatives.

While it might seem straightforward, it's essential to consider the customer's perspective. Ask your target customers what they consider as options or analyze market data to identify alternatives.

Remember, competitors can include direct rivals as well as indirect alternatives. For example, someone considering buying a car might also consider using public transportation or ride-sharing services.

By understanding the competitive landscape, you can:

• Position your product effectively: Highlight your unique advantages and differentiators.
• Anticipate customer objections: Address potential concerns and objections.
• Identify opportunities for innovation: Find ways to stand out from the competition.

Let's revisit our examples:

• BMW: Unlike Audi or Mercedes, the BMW Series 3 offers [unique benefit].
• Salesforce: Unlike Siebel or managing customer relations manually, Salesforce is a CRM solution that [offers unique benefit].

By identifying competitors and alternatives, you can develop a compelling product strategy that differentiates your offering and attracts customers.

Identifying Your Key Differentiator

The final element of the elevator pitch framework is the differentiator. This is the unique aspect of your product that sets it apart from competitors.

While features and benefits are important, differentiation is about standing out. It's the reason customers choose your product over alternatives, even if they offer similar features.

To identify a strong differentiator:

1. Analyze competitors: Understand their offerings and how they differentiate themselves.
2. Gather customer feedback: Ask customers what they value and what sets products apart.
3. Leverage your core competencies: Identify what you do better than others.
4. Consider non-traditional factors: Explore differentiation through price, service, brand, or business model.

Remember, differentiation isn't always about offering more features or benefits. It can be about providing a unique experience, exceeding customer expectations, or addressing a specific need in a superior way.

Let's revisit our examples:

• BMW: Unlike Audi or Mercedes, BMW is fanatical about engineering quality.
• Salesforce: Unlike Siebel or managing customer relations manually, Salesforce is quick to set up and easy to use.

By identifying your key differentiator, you can effectively communicate your product's value proposition and attract customers.

How to develop product strategy
Making Strategy Work

While developing a well-thought-out strategy is important, it's equally crucial to consider how you'll implement it. A successful strategy requires broad support and momentum within your organization.

Strategy development is a collaborative process. Involve key stakeholders from various departments to gather diverse perspectives and build buy-in.

Seek input from multiple sources. Consider the insights of investors, competitors, and industry experts. Analyze market trends and customer feedback to inform your strategy.

Share progress and involve others. As your strategy evolves, keep stakeholders informed and engaged. Encourage their input and contributions.

Shift focus to execution. Once the strategy is defined, work with your team to translate it into concrete actions and initiatives.

Remember, implementing a strategy requires ongoing effort and collaboration. By involving your team and effectively communicating your vision, you can increase the chances of successful execution

Identifying Key Stakeholders

When developing a product strategy, it's essential to involve key stakeholders who can provide input, support, and resources.

Consider the following types of stakeholders:

• Decision-makers: CEOs, general managers, or other executives who have the authority to approve your strategy.
• Influencers: Individuals who can influence decision-making, such as board members, investors, or consultants.
• Funding sources: Finance executives or others who control budgets and resource allocation.
• Execution teams: Individuals from various departments involved in implementing the strategy, such as sales, marketing, engineering, and customer support.

Remember, while it's important to involve key stakeholders, it doesn't mean everyone needs to be deeply involved in the strategy development process. Focus on identifying those who have a significant impact on the strategy's success.

By identifying and engaging with key stakeholders, you can build support, gather valuable insights, and increase the chances of successful strategy implementation.

Collecting and Organizing Input

Similar to intelligence agencies, effective product strategy development requires a systematic approach to collecting and analyzing information.

Gather input from various sources:

• Key stakeholders: Conduct interviews to understand their perspectives on the industry, customer needs, and growth opportunities.
• Industry publications: Read articles and reports to stay informed about market trends and developments.
• Thought leaders: Seek insights from experts in your field.
• Internal team members: Encourage employees to share their ideas and perspectives.
• Market research: Analyze market data, financials, and competitor activities.

Organize your findings:

• Identify key trends: Summarize the main industry developments and their implications.
• Analyze competitors: Evaluate their strategies, decisions, and performance.
• Assess your position: Analyze your company's strengths, weaknesses, and competitive advantages.

Develop a strategic direction: Based on your analysis, propose a clear and compelling strategic direction for your product.

By following this process, you can gather valuable insights, understand the market landscape, and make informed strategic decisions.

You have a strategy and now what 
Maintaining and Adapting Your Strategy

Product strategy is not a static plan. It requires ongoing monitoring, evaluation, and adjustment to account for changing market conditions and emerging opportunities.

Be open to change: As you implement your strategy, be prepared to adapt it based on new insights, feedback, and market developments.

Monitor performance: Track key metrics and evaluate your progress towards objectives. Identify areas where adjustments may be necessary.

Learn from experience: Continuously gather feedback from customers, employees, and stakeholders to gain valuable insights.

Don't be afraid to pivot: If your original strategy is not yielding the desired results, be willing to reassess and make necessary changes.

Remember, a successful product strategy is not always a straight line. It may involve adjustments and course corrections along the way. By remaining adaptable and open to change, you can ensure that your strategy remains relevant and effective.

Adapting Your Product Strategy

A successful product strategy is not a one-time blueprint. It's a living document that needs to evolve as market conditions and customer needs change.

Key points to remember:

• Be flexible: Be prepared to adjust your strategy based on new information and insights.
• Monitor performance: Regularly track key metrics to assess progress and identify areas for improvement.
• Seek feedback: Gather feedback from customers, employees, and stakeholders to gain valuable insights.
• Don't be afraid to pivot: If your strategy is not working, be willing to reassess and make necessary changes.