What is a Product Strategy?
A product strategy is a high-level plan describing what a business hopes to accomplish with its product, and how it plans to do so. This strategy should answer key questions such as who the product will serve (personas), how it will benefit those personas, and what are the company’s goals for the product throughout its lifecycle.
Why is Product Strategy Important?
A product strategy serves several valuable business purposes.
It provides clarity for your company.
Your team will be in a better position to deliver their best work when you draft and communicate a clear and well-thought-out product strategy to your organization.
Your developers will understand how the parts of the product that they’re working on contributes to the larger strategic goals. Your marketing and sales teams will be able to articulate the product’s benefits and unique selling proposition. Your customer success team will better understand your product’s use cases and therefore, provide better support for your users’ frustrations.
It helps you prioritize your product roadmap.
After you’ve earned stakeholder agreement for your proposal, it will be time to translate that strategy into a high-level action plan. This means building a product roadmap.
Many product teams skip the strategy-drafting stage and jump right into listing themes and epics on their roadmap. But without a product strategy to guide these decisions, the team is more likely to prioritize the wrong items and find itself misusing its limited time and resources. When you start with a product strategy, you have a clearer picture of what you hope to accomplish with your product, which can translate into a more strategically sound product roadmap.
It improves your team’s tactical decisions.
No organization delivers a product to the market following the exact plan drafted in the initial roadmap. Things change along the way and product managers need to be prepared to adjust their plans and priorities to deal with those changes.
When you and your team have a clear product strategy to refer back to, you can make smarter strategic decisions about how to adjust your plans if you lose resources or have to change your estimated timetables.
What are the Key Components of a Product Strategy?
Product management expert Roman Pilcher suggests a product strategy should contain three key elements:
- The market for the product and the specific needs it will address.
- The product’s key differentiators or unique selling proposition.
- The company’s business goals for the product.
What’s in a Product Strategy?
An effective product strategy should include the following;
A product vision (written as a product vision statement) describes the long-term mission for your product. These are typically written as concise, aspirational statements to articulate what the company hopes the product will achieve.
For example, Google’s early vision statement for its search engine was, “Organize the world’s information and make it universally accessible and useful.”
A product vision should lead to high-level strategic goals. These goals will, in turn, influence what the team prioritizes on its product roadmap. Examples of product goals include:
- Increase free-trial downloads by 50% in the next 6 months
- Improve our average customer rating by one star on the major product-review sites
- Generate $3MM in revenue within 12 months
Initiatives are the strategic themes you derive from your product goals and then place on your roadmap. They are large, complex objectives your team must break down into actionable tasks. (The product roadmap is, after all, only the high-level blueprint.) Examples of product initiatives include:
- Improve customer satisfaction
- Increase lifetime customer value
- Upsell new services
- Reduce churn
- Add customer delight
- Break into new industries or geographical areas
- Sustain product features
- Increase mobile adoption
How Do You Develop a Product Strategy?
After working with thousands of product managers across many industries over the years, we at ProductPlan have found the following 5 steps represents a best practice for developing an effective product strategy. You can use this template:
Step 1: Talk to your prospects
Step 2: Develop your product vision.
Step 3: Define your product’s goals.
Step 4: Use those goals to guide your product roadmap.
Step 5: Refer back to your product vision, to make sure your plan is on track.