Hello and welcome back.
It might seem obvious, but if we want to be world-class product managers, we need a strategy to steer the ship—to guide our roadmap decisions, to set the right priorities with our development teams, and to find profitable growth. Unfortunately, in product management’s rush to the tactical, strategy development often gets bypassed.
I can’t teach you product strategy in a morning email, but I can get you started. We are going to use an approach called “strategy diamonds,” developed by Donald Hambrick and James Fredrickson.
First things first: Strategy work takes discussion, prodding, dissection, and critical thinking. It’s best done in a group. Consider recruiting a small cross-functional team to help you (e.g. representatives from finance, engineering, client services, corporate strategy, etc.). If you can get an executive sponsor and a charter to create and present this strategy, all the better.
Your product strategy should nest and complement a broader corporate strategy. You and your team’s first task is to review your company (or group) strategy. These strategies are not always well-articulated but do what you can.
The second task of the team is to review market sizing and trends, evolving customer needs, and what your favorite competitors are doing. In this process, you should also identify new and emerging market opportunities.
Next, think about the vision and objectives of your product group. What are you trying to accomplish? You will probably have a customer-oriented objective (for example, “provide world-class compliance management tools to hospitals to reduce fines and lawsuits”) and an internal objective (e.g. revenue, profit, and share growth).
Now you are ready to dive into the strategy diamonds. I’ve included Hambrick and Fredrickson’s diagram below.
• Arenas: Define your market space (product category, market segments, technology, geographies, etc.) and the value you bring.
• Vehicles: Review your capabilities and gaps vs. your objectives. Consider how you will fill the gaps to meet your objectives (internal development, partnership, acquisition, etc.). Also, determine how you will prepare for emerging market opportunities.
• Differentiators: Clarify what makes you better than competitors and how you will strengthen your competitive advantage over time.
• Staging and pacing: Determine the sequence of steps you’ll take to meet your goals.
• Economic logic: Spell out your business model and how you will make money.
With your strategy team, you should discuss the interplay of the five diamonds. Your choice of markets and technologies (arenas) and the capabilities you develop over time (vehicles and staging and pacing) should lead to competitive advantage (differentiators) and sustainable profits (economic logic).
At the end of your strategy work, the goal is to get organizational consensus around a statement, something like this:
With the <name> product group, our objectives are to <state your objectives>.
We serve <market segments> in <geographies> using <technology>.
To meet our objectives, we want to do the following: <state your initiatives>.
To do this, we have these strong capabilities today: <name them>. However, we also have key gaps: <state them>.
We will take the following actions to deliver on our initiatives: <list specific steps with timelines>.
We will differentiate ourselves from competitors by <state your competitive advantage today and in the future>.
We make our money by <state how you generate profits>. It is the combination of our products, market segments, capabilities, and competitive advantage that gives us a long-term sustainable business model.
Strategy development is tough, maybe one of the most challenging things we do as product managers. The potential rewards are high: Strategy work, when done well, can set our products up for success for three to five years or more.
Next up: prioritization of product development efforts.
Talk to you then.
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