Key Elements Every Product Strategy Needs to Have
About eight years ago I created my first business plan for my first startup. I recently found the business plan and decided to have a nostalgic look at it. While flicking through the pages, I came to an interesting conclusion:
A business plan and a product strategy have many things in common.
They both require market research, numbers, roadmaps, forecasts, and more.
That’s when I asked myself what the difference between the two documents was. In this article, I’d like to elaborate on the key elements a new product strategy needs to have. I’ll explain how you can create a product strategy, what the time frame is, and the difference between it and other forms of documentation like a business plan.
At the end of the article, you can download my product strategy slide deck with many more examples, templates, and tips.
The Product Strategy Definition
A product strategy is a high-level plan for a team/company to achieve a certain goal or goals with a product/service. These goals are derived from the product vision which plays a key role in the product strategy. Using the product vision I can clearly define the following my product strategy:
for whom we’re building the product/service
which problem it solves
how the product will look like
what the business goals are
etc.
A product strategy should always be related to a product vision. There’s a quote from Dave Ramsey that says:
“A goal without a plan is just a dream."
Let’s check this equation!
Everything starts with a dream. To make it come true, it’s important to develop a plan.
The Timeframe Element of a Product Strategy
I’ve had multiple discussions on the time constraints of building a product strategy. These days you see more and more Product Managers and Leads categorizing everything that’s longer than 6-12 months as “product strategy.” In my opinion, the strategy shouldn’t be longer than 2 years, especially in these very uncertain times.
If goals and milestones are shorter, they fall into the category of a roadmap. I think it’s not easy to nail it down in 6, 7, or more months. It depends on many factors such as the:
industry (e.g. healthcare vs. online gaming)
customer relationship (B2B vs. B2C)
release cycles
promised delivery date/ETAs
and more
The problem with "roadmaps” that are longer than 12 months is that you likely won’t be able to hit them.
Key Elements a Product Strategy Needs to Have
The product strategy needs to cover three different areas:
Business/Financial Goals
Market & Competition
Product Features & USP.
Each of them needs to be further broken down. That’s the tricky part! I’ve seen many product strategies that contain great information but are simply horribly structured. In 2017 I decided to create a “product strategy agenda” for myself. This agenda helped me
to better structure the content & information
to not forget important topics.
Not all of the agenda points are needed or mandatory. If you’ve read some of my articles, you may have noticed that I like to share real examples that you can use as a template and for inspiration.
Let’s have a look at each agenda point. Additionally, you can listen to this podcast episode about product strategy:
#1 Product Vision as the Basis for Your Strategy
The product vision describes the future state of a product that a company or team desires to achieve. The product strategy should always start with the product vision for two reasons:
You set a clear frame and goal
Based on that you can derive and justify the strategy
Keep in mind that a product vision should be a short and clear sentence and not a long piece of text. But that’s a whole other topic in itself. You can read more about it in my article “How to Define a Product Vision (with examples).”
🚨 Important UPDATE: Upon further experience and reflection, I've come to realize that my viewpoint was limited regarding product strategy creation. I’ve summarized my latest learning in this article:
#2 Business Goals For Strategic Direction
Every business has its goals. Without goals and priorities, companies aren’t able to survive. Product goals are always coupled with business goals and sometimes it can be hard to distinguish the difference between the two. Let’s look at a simplified example:
Let’s say we’re a bakery in New York that only bakes whole-grain bread in different sizes, but always the same sort. Product-wise, we have a lot of options:
Start baking other types of bread such as wheat baguettes, croissants, etc.
Start selling sandwiches and coffee to go.
Start baking cakes, donuts, etc…
That all sounds great, nevertheless, the main business goal is to “conquer” the whole-grain bread market and to become the biggest and best in that niche. That’s a much clearer business goal. Find your niche, and own it.
Having such a clear business focus and tailored business goals need to be highlighted at the beginning of a product strategy. It’s important for Product Managers to know this and to align with the key stakeholders/leadership team from the outset.
#3 Market Analysis For Your Product Strategy
To truly understand what the product is and where you want to be in the future, it’s important to look at the market. Every product strategy needs to provide clear information about the market. There are many techniques and ways you can define the market size. I don’t think there’s a one-size-fits-all solution. The deeper you go, the better. Here are a couple of methods, you can use to analyze the market:
Top-down or bottom-up market analysis
Competitive analysis
Comparison landscape & matrix (feature/product level)
SWOT analysis
PEST analysis
The market needs & trends
Market positioning (e.g. longtail vs. upmarket)
More…
On top of that, it can be helpful to share the market history or the evolution of certain customer behaviors or trends. That helps people to understand where we’re coming from. 😉
#4 Persona(s) Using Your Product or Service
Depending on your product and its complexity it can have more than 1 (product) persona. Nevertheless, I’d try to keep things clear and simple with the main information about the persona(s) being something along the lines of:
Name
Age
Gender
Education/job
Income
Interests/motivation
Technology they use
…
It’s, by the way, never bad to link to e.g. a Google Drive where people can find all the research, interviews, and more information. I like presenting the persona slide after the market analysis slide. However, I’ve seen product strategies where this was reversed.
#5 The Product Development Team
A slide or slides about the team are optional. This all depends on the size of your company and whether or not it’s worth listing every member of your team. For bigger organizations, I recommend adding a team slide. Presenting a picture, name, and title is more than enough. If you’re hiring new team members, it’s worth mentioning the hiring plans and open positions as well.
For bigger product strategies with a cross-functional team impact, it can even be helpful to present the outcomes of “skill mapping” in combination with the hiring plan. I’ll write more about this in the future.
#6 Product: Features, Priorities, and USP
This part of the product strategy outlines key features and priorities as well as the unique selling proposition (USP) of the product/service. Depending on the state of the product (new vs. existing) I always define the key features/priorities.
Example: Let’s imagine Facebook doesn’t exist and we decide to build the very first social media platform in 2020 from scratch:
Since most people use their smartphones these days, one of the highest priorities would be having a mobile-first approach.
Having a mobile-first approach means that user experience would be very important. Therefore, we would focus on the best user experience.
Based on the MVP we would then map out the user story mapping and focus on account creation, a timeline, and connecting to other people.
I’ll leave it at just those three points because I’m not an expert when it comes to building a social media platform. 😉
It’s important to share with stakeholders and with your team the “frame”. Something I forgot to measure multiple times in my product strategies was explaining how we actually measure success! I recommend adding at least one slide that highlights the key KPIs you use to measure success/failure. You can learn more about this in my article about “Product KPIs that make all the difference.”
#7 The Product Roadmap
The whole “art of road mapping” is worth an article in itself (see below). For the product strategy, it’s best to keep it simple though.
I present the roadmap in two parts:
The long-term outlook (2-3 years)
The short-term roadmap (6-12 months)
I create e.g. a Gantt chart and highlight different features or steps in different colors. This can be very helpful to show the planned high-level progress. Visualizing the roadmap on a higher level helps to avoid discussions on all the nitty-gritty details with your stakeholders. The short-term roadmap is what my team and I commit to. After that, it becomes vaguer and less specific to give people an outlook on the future.
In my product strategy template, you can find a couple of examples of how to present a roadmap. Here you can read more about “the agile way of creating a product development roadmap.”
#8 Numbers and Data to Validate Your Product Strategy
Despite the product strategy not being a business plan, it’s good to equip it with numbers and data. Depending on your product or service you can present:
Revenue Forecast
Profit & Loss Calculation
Conversion Rate Prediction for
Signup
Sales
Monthly active users (MAU)
and many more others
When I get asked how long the numbers should look into the future I reply:
“How far are you confident in predicting this?”
Make sure the data is as accurate as possible. You’ll be measured by the outcome.
Product Strategy Template and Framework
To summarise, the product strategy should focus on business goals, market needs, and key product features and priorities. To create a well-structured strategy paper you can use the following agenda:
Product Vision
Business Goals
Market Analysis
Persona(s)
Development Team
Product Features & Priorities
The Roadmap
Numbers & Data
If you’d like to get some inspiration on important elements of a new product strategy, then feel free to download my product strategy template. I’ve created many different examples, versions, and templates of the mentioned agenda points which you can use as a framework on more than 40 slides. On top of that, I’ve added many more useful links if you want to dig deeper into certain topics.
