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Many great ideas and opportunities are never realized. You may have experienced this yourself working on a digital product that never came close to realizing it’s potential. One of the reasons that so many organizations fail at delivering valuable products and services is the lack of a well-defined strategy or the complete absence of a product strategy framework, defining the core elements of an effective foundation.
Creating a digital product or service is complex. Identifying the right opportunity, selecting where to compete, and solving a problem for customers in a viable, unique, and sustainable way (a.k.a your competitive advantage) are the cornerstones of a successful product strategy. If you boil all of this down it’s simple — create value for your audience and as a result you will create value for your business. In an interview, Jeff Bezos phrased it this way, “In the long term, there is never any misalignment between customer interests and shareholder interests.”
Unfortunately, product strategy has become a buzzword for many, but it has never been more imperative than it is today.
There is significant confusion today about what product strategy is. There is an overwhelming amount of information, fads, and academic resources. Harvard Business School Professor and a leader in strategy, Michael Porter delineates the importance of strategy in his work. To summarize: the quest for productivity, quality, and speed have spawned a remarkable number of management tools and techniques. These tools and techniques have incrementally, and almost imperceptibly taken the place of strategy, but they are not strategy.
A strategy rests on making essential choices. To help you and your products be as successful as possible we’ve stripped away the noise. Let’s look at what a great digital product strategy needs to include.
A great digital product strategy defines the value you will create in a succinct and tangible way; where to focus, why, and what it will take to achieve that value. This empowers your team to focus on the right things and determine how to facilitate the delivery of a great product or service.
Having a strategic foundation provides clarity. It promotes a shared understanding that organizations, business units, and teams must have in place to pursue, and ultimately achieve their goal. Depending on your business goals your product strategy may be focused on a single product or it may guide a suite of products that become a cross-connected platform.
A strategic foundation is made up of five core elements: the product or service vision, an in-depth diagnosis of the challenges that needs to be solved, the target outcomes for the business and for the user, a coherent set of actions that need to be taken to overcome the challenge and move the business forward, and how you will measure that forward progress.
To be clear: a product strategy is not an ambition, an idea, a set of goals, or a solution. These are often confused as strategy, similar to the management frameworks mentioned above. If these things are presented as the strategy they should be warning signs of a bad product strategy or the complete absence of a product strategy. One of the most common misconceptions is that a plan is a strategy. A plan is not a strategy. This compounds people’s confusion on the subject. Plans are made up of tactics that define exactly what we’re going to do, when we’re going to execute them, and what will follow. Essentially, in following this plan and taking these steps, success will be attained moving forward. Plans don’t address a deeper understanding of the challenge, a chosen set of priorities to overcome the issues, and the steps that need to be taken to identify and validate solutions. A plan also doesn’t account for the unknowns, changes, prioritization, or provide the insight necessary to inform critical decision making. A plan without a strategic foundation gives people a false sense of clarity and security that often leads to failure. When a product initiative is seen as a quick-fix, without understanding the complexity of the challenge that needs to be solved, failure will often be the result. Understanding the difference between complex things vs. complicated things becomes extremely important. (To learn more about this concept check out the Cynefin framework in this video.)
You will want to have a plan, but know that it will change, probably more than once. A plan needs to be adaptive, grounded in facts, and built upon a solid strategic foundation.
The vision is the clearly defined and measurable long-term overarching goal the company or business unit is aiming to achieve, and the reason for creating the product(s). It provides your team with a collective purpose, acting as the product’s true north, facilitating alignment, and effective collaboration.
The importance of vision cannot be overemphasized. You need to provide people with clarity of the big picture goals and how the product will help fulfill that vision. People also want to know how their contributions will make a difference, whether on the product team or working across the organization. A well-articulated vision is also of tantamount importance for people to know what does not require their time, energy, and depletes limited resources.
By anchoring your product strategy to the bigger picture you empower people at every level of the organization.
The second core element is the challenge you’re solving for; providing context for what it will take to realize the long-term vision. By diagnosing and gaining a deeper understanding of the challenge you can then start to differentiate between symptomatic issues and the root causes. You systematically map out the current state.
This allows you to break down the larger challenge into smaller manageable, specific, and actionable issues that you will need to focus on solving. When you look at the issues and their interdependencies to one another you are able to see the true complexity of the challenge. Breaking down a challenge also helps to unveil essential insights that will inform the success of the product moving forward.
The next step in diagnosing the challenge is to look at why it matters to our customers. We need to step into the shoes of our customers and users to see the challenges and related issues from their unique point of view. Building empathy to understand another person’s circumstance(s) from their perspective is necessary to get a complete picture. The ability to develop empathy is at the very foundation of effective problem solving and the disciplines of customer experience (or user experience) and systems design. By understanding the challenge you begin to define the real work it will take to address it as well as expectations for a viable solution.
Next, we need to identify and understand the impact of the issues on the business and the audience. This helps to clearly define the current business state. Understanding the impact also allows you to highlight qualitative and quantitative metrics to support the business case by using a single variable or a cumulative effect.
The third core element of your digital product strategy foundation is identifying the target outcomes you are working to achieve by addressing the issues that make up the larger challenge. Outcomes are the near-term and measurable goal that is feasible. If accomplished, this will move the business forward, deliver value to the user, and enable your long-term vision.
What is the future state or results you want to achieve? Where will you focus your capabilities and resources? How will this feature, product, or suite of products address the individual issues? If done correctly, how will this promote long-term potential benefits and enable other outcomes? While the vision articulates the big picture goal, outcomes focus on the results of addressing issues in an incremental, measurable way that moves the organization forward. Ultimately, this also helps ensure everyone involved is on the same page, providing a shared interpretation of success. It allows benchmarks to be established that will measure the progress toward the vision and desired outcomes.
Your actions identify critical steps that you will take as you move forward to find the right solution. What needs to get done in order to address the challenge for customers in a viable, unique, and sustainable way. They reflect your vision, align with the challenges you’ve uncovered (and continue to uncover), and help you move forward from your current state, based on the near-term outcomes you have chosen.
It’s important to point out that we’re not talking about tasks. We’re focused on the larger picture of actions (or work streams,) and how they will need to be coordinated to make your future state possible.
The fifth element to your product strategy is measurement. How will your organization measure forward progress? What key performance indicators (KPIs) can you leverage to track, monitor, and assess the effectiveness of overcoming the challenges you have prioritized? Your KPIs might highlight either qualitative or quantitative measures that are pivotal to achieving your intended outcomes and the long-term success of the organization.
Deliverables don’t define success, outcomes do. You need to focus on specific key performance indicators that can be owned by the team. Often forward progress will be measured by business metrics such as revenue, timing, cost, or Net Promoter Score. While these are all valuable, they are also poor measurements of progress. Each example is a lagging indicator. These measurements are rarely controlled by a product team, or provide opportunities to adapt and pivot.
Having a strong strategic foundation is imperative. It is essential to providing clarity, team focus, informing better decision making, accelerating the speed of delivery, and team collaboration. Conversely, poor execution of a great idea can be as detrimental as not having a strategy at all. Shifting from product strategy to effective execution is not an easy process. It requires alignment, excellent continuous communication, additional skills, and a culture that supports change. This is where proper planning comes into play. A plan that focuses on deploying the appropriate capabilities, processes, tools, and resources at the right time.
There are significant considerations in leadership, management, and across the entire product development lifecycle (i.e. waterfall, agile or a hybrid model). However, with a solid foundation in place, you’re forging the right path toward success.
As you and your team work to identify solutions to your prioritized issues, you will have the necessary information to ensure you are working on the right things. It enables you to do the right things in the right way.
You can now begin to understand who across your organization will need to be involved to create, execute, and support your product strategy. This defines a clear picture of roles and responsibilities.
In exploring each solution you can also start to map out and understand the interdependencies. Interdependencies in this scenario are the relationships between people, processes, and systems that will be essential to bring your product to market. When business cases are developed prematurely in the process without this insight, things will often fall apart. When executed correctly, this is when business cases can be defined and outline the true potential investment ahead. This information brings potential complexities that need to be managed to the forefront, which is crucial to your product’s success.
As you define the solution, you can now also start documenting your requirements addressing key business, design, and technical considerations essential to delivering your product.
A strong strategic foundation becomes a powerful advantage. It gives you critical insight, galvanizes your efforts into essential focus, and empowers your people to be at their best in any role. The market may decide who the next generation of winners and losers are, but by mastering your digital product strategy you can take control of your own success, not skip the steps that so many do, and inevitably realize your opportunity.