Building a Product Strategy

In the age of lean, fail-fast, gradual exposure, and feature flips; I believe that organizations are ripe for disruption by confusing product strategy with tactics.

I also believe that in a world where 'documentation for documentation's sake' is considered a negative; structured documentation as a template for strategic thinking of the product management professional is critical. Organizations need to realize that the end document isn't the goal, but the insights and learnings along the way can help crystalize a clear point of view. I remember many years ago in academia where a research paper started with an outline; then you wrote the content, then the conclusion, and then the intro. You needed structure and thinking to be in place before you could crystalize in a succinct way the direction you were going. This approach holds true for a strategic planning process as well.

Furthermore, I believe that a strategy that looks out many years is still relevant in the fast paced world of software. Remember this is strategic planning and not product planning. It will become the foundation for product plans and should be revisited annually versus every release. Lastly, it's my belief that successful product management organizations can balance between dollars invested in strategic innovation and incremental product implementations.

Note: I won't cover Organizational or Company Strategy (Vision/Mission) and will only touch on go-to-market strategy. This is primarily focused on the product management professional and the activities used to develop a point-of-view on a market as the basis for a strategy.

Researching Market Trends

My teams throughout the years know that I'm tough on market research, market analysis, and market data. I believe that leveraging market insights from analysts can help product management professionals develop questions or hypothesis that can be tested via quantitative research or refined via qualitative research.

Generally speaking, as a product management executive; I tell my teams these are the broader trends that are impacting the market from my point of view and from the research I have personally done. Usually this is no more than five core areas and generally focused around things that are happening in the near term and things that are potentially impactful a few years out. From here, we dig into market trends in these areas. It's immensely interesting to see areas that dollars are expected to be spent in the future.

Understanding the Market Trends Impact on the Business

It's important to understand market trends and dollars spent as it's up to the team to understand the next steps. If these trends happen the way the market seems to be transitioning; what's the impact to us?

Note: This doesn't mean building a product roadmap at this stage or how do we address the trends. It's just what does it mean? What should we consider? This should drive hypotheses or theories that we need to research and test. In many cases this will drive primary research including focus groups, questionnaires, or surveys. The results of this research will drive product plans and those plans should be influence by segmentation exercises.

As an example, what would a future look like for a team that develops testing and quality management tools if AWS Lambda functions becoming a predominate tool in software development? Now metrics like function execution duration and startup latency become a critical quality metric. (You can see how this might change our thinking in the future for how we build our products).

Core Market Analysis

After analyzing the trends and given our own expertise, we should now have a general idea of the markets we play in and the markets we may decide to play in. This is where the product management team will spend time understanding the size or total addressable market. (Note: The analyst firms can give a good rough sizing and growth curve. Each analyst firm has a different taxonomy and nuances; however, comparatively speaking you should be able to land on an agreed upon TAM). This exercise is really meant to be the basis for conversation especially where investment trade-offs are made.

Consider this table:

| Market | Size | Growth | Leader Market Share | |--------|------|--------|-------------------| | Market A | $150M | 35% | 25% | | Market B | $500M | 15% | 85% | | Market C | $75M | 10% | 17% | | Market D | $25M | 95% | 5% |

These are all adjacent markets. As a product manager, I now have the ability to ask some questions. These are some questions that might come to mind:

Market A:

Looks Attractive and I might be able to enter it early enough.
The Leader in Market B could pivot. I should consider the likelihood of that and how I would respond.

Market B:

This is a tough market. Only one game in town and they are fairly monopolistic.
Perhaps, I can compete on price and take the low end of the market and drive the leader up the value chain searching for larger more established customers where good enough isn't good enough?

Market C:

Knife fight between three established players.
The market is relatively small meaning only $24M is available for everyone else. Maybe not that interesting on its own.

Market D:

Wait what? It's reflection time. Is there something missed? Is there a way to segment all three markets to create a new uncontested market? Given the research you've done on trends, you might see something that no one else sees because they're focusing on what's happening today as opposed to where the markets are going in the future.

Competitive Analysis

After I've decided on the market that I think is attractive and I want to play in, I need to get the lay of the land. Who are the main competitors? Who are the fringe competitors (that could make an adjacent move in the space)? How big are they? What are their price points? What channels do they use to go to market? Do the competitors have unique value propositions that will need to be countered? Or weaknesses that could be used to de-position them?

Building the Strategy

The strategy should be clear, crisp, and something everyone on the product team can articulate. The strategy can cover both product initiatives as well as route to market initiatives. The strategy should have a horizon. You should be able to articulate this is what you're going to do and this is when you're going to do it. There are books upon books on developing a strategy. However, I focus on being pragmatic with my teams.

At one point in my career, I had the opportunity to report to a seasoned business executive who would later go on to lead a major business. When it came to product strategy, he said, "Generally I like to know two things. First, how large is the market (to understand if it's worth playing in)? And second, how fast is it growing?"

That quote stuck with me and I expect that information as back up material for my teams when I ask them to develop their product strategies. Their strategies should also be able to articulate the following (and my team has heard me say this time and time again):

What are the three things we are going to do?
How or why are these things different from everyone else (product, channel, price, marketing, technology)?
What assumptions do we have to believe are true in order to do what you said we will do?

In a world where it's not acceptable to do "documentation for documentation's sake", it is my humble belief that developing a product strategy that can be captured on a single slide and answers these questions; doing a little research and a little documentation can do an individual PM a lot of good.

Recap

A product management professional is inherently a professional gambler.

We don't gamble with chips on red or black; we gamble with dollars and essentially the livelihoods of businesses. Good Gamblers tend to focus on a few things. Either they are born with intuition or gain it with years of experience. Or for mere mortals such as many product managers, we study the odds and we study our opponents. Studying market trends, then analyzing growth projections, then looking for weaknesses or habits of our competitors allow us to make bets. Some bets pay off in the short term and some are strategic and pay off in the long term…and sometimes we make bets that lose.

One thing is for sure, we as product management professionals owe it to our peers and our colleagues to study the odds and assess the competition. We should come out of the above exercise with the three main things we want to accomplish in the future from near-term and longer term. We should set this strategy to guide our direction, to guide our sprints, and to ensure that we can spot the difference between tactical product enhancement and strategic investments.

We are product management professionals. We are professional gamblers.