What is Product Strategy — with apologies to Michael Porter

I have been in this business for many years and seen (in many industries) software vendors propose what they purport to be Product Strategies.  I don’t often see one that meets my requirements for a complete and well-defined Product Strategy.  To meet my requirements, a Product Strategy must help me:

• Understand where the product is going. This is important to me in that, as a 1) Consumer, I am going to be making a significant long term investment in the product and if they are going zig when I expect that they are going to stay on the same course or worse zag, in the long run I am likely to be mighty unhappy; 2) Product development leader because I need some certainty in my roadmap.  I need it because changes in course are expensive, not just in terms of the time necessary to “pivot”, but also in terms of mistakes that are likely to be made as decisions are made and unmade causing sub-optimal use of resources as I try to re-use components I developed when I thought we were zigging even though they don’t really work now that we are zagging; and 3) Sales organization because I need to tell a consistent story, over time to my customers about where we are going and not doing that causes all sorts of problems;
• Build investment budgets that make sense to both the finance department and more importantly investors. I would argue that without a good product strategy pitches (which contain enough detail and to be convincing) for R&D budgets are just so much hand-waving and that rejected funding requests are the result of unsupported and therefore unconvincing funding requests;
• Understand, clearly and unequivocally what the strategy is saying. This means that it must be well written and presented in a manner that makes it easy to comprehend.

But, I am getting ahead of myself.  Strategy is defined by three parts:

• A definition of where you want to be. This is a relatively detailed description of the end state.  In the case of a product strategy it includes things like a definition of:  1) the customer set; 2) the value proposition; 3) product attributes (high level design and features); and 4) its positioning within the marketplace.  Some people call with the “vision”, but I don’t like that term because it suggests less rigor and detail than I would like to see;
• A description of where you are. This piece of work is often underinvested in and that is a mistake.  Unless you know where you are, and I mean truly know where you are, the chance that you are going to get to where you want to be is unlikely; and
• Finally, a description of the steps that it takes to get from where you are to where you want to be. And, I would argue that unless it takes several steps to get you from where you are to where you want to be, you are not being ambitious enough with your vision.

In most cases Product Strategy should be discussed at four levels, only two of which are properly part of the Product Strategy work product:

 

• Fundamentally, Product Strategy is driven by the Business Strategy. The Business Strategy provides the context and motivation for a company’s products.  It is therefore rightly the foundation and motivation for the Product Portfolio Strategy and all of its descendants, i.e. the Product Strategy and the products themselves.
• Next comes the Product Portfolio Strategy which, not surprisingly describes each of the company’s Product Strategies in the context of their siblings, i.e. a description of how each of the products’ strategy affects the portfolio strategy and how the portfolio helps to define each individual Product Strategy.
• At the next level of granularity, there is the Product Strategy which defines the vision and outlines the high level development plan for and lifecycle plan for each product.
• And finally, there is the Product Development Lifecycle which is the methodology that takes the strategy (idea) and turns in into the deliverable product and as such delivers each generation of the product (as defined in the Product Strategy) through its maturation and is eventual retirement.

As with many widely distributed “documents”, the various incarnations of the Product Strategy need to have versions tailored to it primary audiences:

• Detailed Implementation Version— this version is focused on the product development team. It provides the roadmap for the product managers and product development teams. 
• Executive Overview—this document is focused on top management and the board. It is designed to make sure that they are bought (both in terms of the direction the products are moving and the financial investment necessary to implement the vision) into the Product Strategy.
• Internal Communications Version— this is used by product planners as they communicate the vision and high level steps that take us from where we are today to where we want to be to the company’s employees. It ensures that everyone is on the same page and working toward the same goals.

While the need for several versions of the Product Strategy might seem obvious, I will state my thoughts on the motivation for multiple versions.  I have two reasons:

• The Product Strategy outlines the things that a company feels will provide their competitive advantage. As such, this material is sensitive and much of it is highly confidential.  Tailoring versions to the various audiences helps to make certain that the extremely confidential material remains private while simultaneously ensuring that public versions have the content necessary for them to be effective; and
• The different audiences will view the Product Strategy from different points of view and are looking for both different levels of detail and at different facets of the product of this work effort. The Board (looking at the Executive Overview) will be interested in the broad strokes from a functions and features point of view, but will want more detail when it comes to the financials (timing of cash flows, ROI analysis, etc.) associated with the Product Strategy.  While customers are more likely to want to understand more detail on functions and features and be less interested in the economics of the product.

In summary, there is a fundamental need for quite a bit of rigor in the approach to developing and maintaining a Product Strategy.  And this rigor engenders:

• Well-designed products that support and advance the business strategy.
• Complementary products that mutually support and enhance their sibling’s goals.
• Support efficiency and effectiveness in the overall process bringing products to market more quickly and ensuing that the products are not only fit for purpose, but likely to improve your company’s performance and the client’s satisfaction with your product.