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How to Create a Winning Product Strategy

I couldn’t find a single product strategy canvas. So, previously, I created a new one: The Product Strategy Canvas.

I recently realized something was missing — a step-by-step guide on crafting a winning strategy for your product.

So, in this newsletter:

1. A traditional approach to creating a product strategy

2. Why does strategy matter

3. What is Product Strategy

4. A shift from creating to discovering strategy

5. Questions you need to keep asking

6. Monitor your strategy

7. Don’t expect complete focus and clarity from the start

8. Combine top-to-bottom and bottom-to-top discovery

9. Summary

1. A traditional approach to creating a product strategy

Many organizations organize those large meetings. They invite all the “important people” like executives, stakeholders, and sometimes strategy consultants.

And they call it “strategic planning.”

The result is often:

• A plan for the next few quarters (a list of features).

• A “strategic initiative” (“we will enter a new market”).

• An ambition (“we will become the best in the market”).

I agree with Roger Martin. Just because you can combine those two words - strategy and planning - doesn’t mean it makes any sense.

Strategy is not a plan, an action, a unique value proposition, or a business model. Most companies do not have a strategy at all.

Most importantly, you can’t organize a strategy workshop to set your strategy in stone. Any consultant who claims that lies.

2. Why does strategy matter?

Another thing I should have explained in the past was the importance of strategy.

Most companies do not have a strategy at all.

Okay. So what?

Let me tell you a story.

2.1 A person making choices to win

Imagine I had a friend. Let’s call him “Mike” (I’m sorry if there is any Mike here).

Mike knows he would like to be the best, but he’s struggling to make a choice:

• On Monday, he called me and said he wanted to become a race driver. He leased a sports car and started a course.

• He didn't make a career, so he decided to become a developer the next day. He bought five books and started learning Python and JavaScript.

• He couldn't get a job as a developer, so he decided to become an artist on Wednesday.

• On Thursday, he enrolled in a pilot course.

• Just yesterday, when I was finishing this issue, he called me and said he would become the best DJ in the world. I was speechless.

What would you advise Mike?

I said: “Listen, buddy. You need to grow up. Make a choice, put in some effort, and be persistent. See how it goes after some time. That’s the only way to win.”

2.2 Companies making choices to win

While Mike's story might seem absurd, that's precisely what many companies do.

The two most common scenarios are:

• Stakeholders (Sales, Marketing, Success) pull your product in different directions.

• A slightly better version: customers have different needs. You try to satisfy everyone.

Note I’m not talking about The Product Death Cycle Trap. I already assumed the feature requests are translated into needs.

But even in a slightly improved scenario, your customers are not clones. Different clusters of customers have different needs.

For example, if your product is a video streaming platform, some customers prefer watching series, and others are interested in watching live sports events.

If you try to satisfy everyone, you will be like Mike.

Trying to satisfy everyone is the best way to ensure you are not the best at anything. Your product might become mediocre at best.

A common symptom of having no strategy is a product backlog growing exponentially:

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3. What is Product Strategy

Strategy is a single, integrated set of choices. It defines what you do and, more importantly, what you don't.

You can’t have separate strategies for Business, Sales, Marketing, and Product Teams. Those are all aspects and layers of the same strategy that should fit and work together.

A good strategy creates focus, enables collaboration, and brings clarity.

4. A shift from creating to discovering strategy

You can’t define strategy during a single workshop. Strategy is discovered, not just crafted. It requires many iterations.

A good strategy allows you to formulate hypotheses. Hypotheses that can be tested by experimenting.

Discovering a product strategy for a new product is part of the Initial Product Discovery. While many books emphasize the importance of discovering problems, ideating solutions, and experimenting with features and UX, the strategy involves many more choices, like sales channels, messaging, and pricing.

Below, you can find a 4-step process I've refined over the years (important: while I use the word “process,” this is not linear):

Step 1: Explore the Market

Start with a basic product and market idea.

Explore the market by:

• Interviewing customers

• Observing what customers do in their environment

• Social listening (social media, forums)

• Considering problems you might have personally experienced

In the next iterations, consider:

• SEO and SEM reporting (e.g., Moz, SEMrush, Similarweb)

• Research institutions (e.g., Gartner, Forrester, Statista)

• Analyzing public data (e.g., financial statements, government data)

Step 2: Define Specific Market Segments and Needs

Organize your knowledge around:

• Customer needs / jobs

• How important those needs are

• How satisfied customers are with what they have

• Market segments (clusters of customers with similar needs)

• Value proposition (the Value Curve)

Revisit exploration to gather and organize information about:

• Market constraints (e.g., geographic)

• Market sizing (TAM, SAM, SOM) and trends

• Industry analysis (e.g., Porter's 5 Forces, PESTEL Analysis, SWOT Analysis)

Step 3: Brainstorm Solution

Brainstorm and identify assumptions related to:

• High-level concept

• Feature set

• UX

• Channels

• Pricing

• Positioning and messaging

Start with a high-level concept and a market engagement hypothesis, best expressed as the XYZ Hypothesis.

In the next iterations, delve into:

• Detailed features

• Additional channels

• Assumptions for each feature, using tools like Strategyzer Test and Learning cards and a User Story Map

Step 4: Validate Your Assumptions

Experiment to validate your assumptions, starting with simple representations of the product, such as:

• Online ads campaign

• A landing page: fake door, waiting list, preorder

• Explainer videos

Collect "Your Own Data" and "Skin-in-the-Game" points.

Before implementation, revisit ideation to think deeply about specific features and identify assumptions related to:

• Value and usability

• Feasibility

• Viability

Test them by experimenting (user prototypes and tools like Maze and spikes).

For B2B products, it might be a good idea to:

• Create brochures and detailed sales materials (e.g., clickable prototypes)

• Perform sales presentations

• Sign the first contracts

What’s next?

Once implementation begins, continue exploring both the problem and solution spaces. It’s impossible to plan and validate everything in advance.

Consider implementing your first product as a:

• The Wizard of Oz (some activities performed manually)

• Concierge (users are aware, unlike in The Wizard of Oz)

Some assumptions can be tested after the first version of your product is released (e.g., network effects). The data you collect starts informing your product and strategic decisions and experiments.

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5. Questions you need to keep asking

Keep asking yourself:

1. What makes us think competitors can’t or won’t copy your product strategy?

2. Do the various elements of your product strategy fit together and reinforce each other?

3. What needs to be true for this product strategy to work? How can you validate these assumptions?

6. Monitor your strategy

After the first customers start using your product, you need to measure how your product is doing and whether the product strategy is working.

My favorite approach is using the North Star Framework. The North Star Metric:

• Is customer-centric. Reflects how customers get value from the product.

• Represents your progress toward vision/mission.

• Is quantitative. It relies on numbers, not opinions.

• Serves as a leading indicator of your long-term business success.

More:

7. Don’t expect complete focus and clarity from the start

Again, it’s not a workshop.

But as time passes, you will get more knowledge, and your strategy becomes more stable.

8. Combine top-to-bottom and bottom-to-top discovery

It’s not just the CEO or the Head of Product. Involve Sales, Marketing, Success, Stakeholders, and Product Teams.

It’s essential to building a sense of ownership. And people closest to the problem offer invaluable insights executives might miss.

9. Summary

Strategy is difficult because it requires saying “no.” It’s about compromising short-term gains for the long-term success of the business.

But having clarity about where you will play (market) and how you will win is essential.

Choices you make must reinforce each other, fit together, and be shared across the organization. This creates focus, enables collaboration, and clarifies what and why matters.

I believe we must move from crafting to discovering our strategies. Strategy can’t be defined during a single workshop. Discovering a strategy involves working together, identifying hypotheses, running experiments, and collecting data about the strategy's performance.

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Bonus: My talk about How to Craft a Winning Product Strategy @ just product 2023

Thanks for reading The Product Compass

It’s incredible to learn and grow together! 😊

Have an awesome weekend and a fantastic week ahead,

Paweł