Product strategy is the high-level plan that guides a company’s product development efforts. It aligns the product roadmap with the company’s business objectives and sets the vision for the products a company will build. A strong product strategy is essential for creating successful products that meet customer needs.
What is Product Strategy?
A product strategy outlines the goals a company wants to achieve with its products and lays out a plan for how to get there. It answers fundamental questions like:
- Who are our target customers?
- What problems are we solving for them?
- How will our products differentiate from competitors?
- What capabilities and features should we focus on?
The product strategy sets the direction for product development and acts as a North Star that guides business, design and engineering decisions. It articulates the market opportunity, value proposition, and defining features of the products a company will build.
Elements of a Product Strategy
Key elements of a strong product strategy include:
Target Customers
Utilizing market segmentation in defining the target customer segments allows a company to focus its efforts on meeting the needs of those users. Questions to ask when defining target customers include:
- Who are the expected buyers and users of our products?
- What are their demographics, behaviors, and needs?
- What problem will our products solve for these customers?
Value Proposition
The value proposition explains how a company’s products will benefit target customers. It should clearly state the tangible value and outcomes customers will receive.
Product Vision
The product vision paints a picture of the future products and articulates where they fit in the market. It sets the direction for product development efforts.
Strategic Priorities
The strategy outlines 3-5 priority areas to focus on to achieve the product vision, such as expanding core features, entering new market segments, improving usability, etc.
Differentiation
A key aspect of strategy is determining how the product will stand apart from competitive offerings. Factors like superior performance, lower cost, or innovative features can set a product apart.
Capabilities Roadmap
An outline of the key features and functionality to be built over time to bring the strategy to life.
Why Product Strategy Matters
A strong product strategy provides immense value to an organization:
Aligns Efforts to Business Goals
The product strategy ensures product teams are working towards outcomes that will further the company’s business objectives, rather than just building features. It ties product development to revenue, growth and other goals.
Guides Resource Allocation
With a plan for the capabilities that should be built, executives can confidently allocate resources, budget and headcount towards executing the strategy.
Reduces Risk
Taking time upfront to validate product assumptions through customer research, market analysis and prototyping reduces the risk of building the wrong products. A data-driven strategy is more likely to succeed.
Drives Focus
With many possible directions to take, the product strategy helps focus efforts on the opportunities that will have maximum business impact. This leads to shipping higher quality products faster.
Aids Communication
The strategy provides a shared understanding that facilitates coordination across product, engineering, sales, marketing and other groups to optimize execution.
Enables Innovation
By establishing a bold vision for the future, a product strategy creates space for thinking bigger and drives innovation beyond incremental improvements.
Creating a Product Strategy
Developing a winning product strategy involves four key steps:
1. Gather Inputs
Relevant information to gather includes:
- Customer research to understand target users’ needs
- Competitive analysis identifying current solutions customers use
- Market analysis projecting trends that may impact adoption
- Internal interviews with stakeholders on business objectives
- Past product performance metrics indicating what worked
2. Define Your Strategy
Bring together the inputs to make strategic decisions on:
- Target customer segments
- The problem to be solved
- Value proposition and differentiation
- Long-term product vision
- 3-5 strategic focus areas for the next 1-3 years
- Capabilities roadmap
3. Validate and Refine
Validate assumptions in the strategy by:
- Testing concepts with target customers through surveys, interviews etc.
- Conducting rapid prototyping to confirm desired functionality
- Reviewing strategy with company executives and incorporating feedback
4. Communicate the Strategy
Share the strategy across the organization through:
- Executive presentations
- Written documents
- Cross-functional workshops
- Ongoing discussions to align on strategy
This ensures all groups have a consistent understanding to guide their work.
Establishing a Product Discovery Process
Product discovery is the ongoing process of identifying and validating new opportunities that will drive business outcomes. It involves thoroughly understanding customers, generating ideas, prototyping concepts and determining product-market fit. Establishing a structured product discovery process helps companies consistently find and pursue the right products.
Goals of Product Discovery
- Identify new customer problems to solve
- Explore potential solutions to validate product opportunities
- Align business objectives with customer needs
- Inform product roadmaps with validated concepts
Steps in the Product Discovery Process
- Identify Opportunities: Develop hypotheses around problems to solve by researching target customers and market dynamics. Identify opportunities through ideation techniques like design sprints.
- Conduct Experiments: Rapidly validate assumptions by creating prototypes, landing pages with call-to-action tests, customer interviews, surveys and other experiments.
- Determine Viability: Analyze results from experiments to determine if an opportunity aligns with company goals and has strong market potential. Evaluate findings against defined criteria.
- Make Go/No Go Decisions: Decide which opportunities show enough promise to invest in further. Move forward with development or return to ideation as needed.
- Develop Roadmap: Output validated concepts into the product roadmap for further development after resources are committed.
Integrating Discovery into Processes
- Make discovery a regular process that feeds the roadmap, not a one-time initiative
- Build in time for ongoing ideation and experimentation
- Involve cross-functional teams including customers for diversity of thought
- Have a framework to determine when concepts are ready for implementation
Benefits of Product Discovery
- Drives innovation by uncovering new opportunities
- Validates concepts with real customer data
- Prioritizes game-changing products aligned to company goals
- Creates focus by identifying biggest opportunities
- Yields actionable concepts that accelerate development
- Reduces risk of failure by testing assumptions early
An effective product discovery process ensures companies build products that deliver maximum business impact and helps maintain a robust pipeline of new opportunities.
Conclusion
A strong product strategy aligned with business goals, along with an ongoing discovery process to validate new opportunities, allows companies to maximize the value of their product investments. They enable focusing energy on the products that will drive growth and innovation. Product leaders who invest time in developing strategy and integrating discovery principles deliver better outcomes and avoid wasted effort from building the wrong products. With a clear strategic vision and validated concepts from discovery research, teams can confidently build solutions customers want and businesses need.
