Product Strategy Series 3# First draft of your product strategy

With Company Goals and Product Vision defined, now is the time to start crafting your Product Strategy. 

In the previous two essays, we detailed the company objectives and the product vision, the two essential drivers of a product strategy. 

These two elements are critical because it is not enough to create a product that solves customers’ problems, we also need to create a product that creates value for our business. That is why your product strategy needs to consider those two dimensions, or as Marty Cagan puts it, your product strategy needs to consider “valuable viability”. On one side we need to make sure that our product strategy delivers a product that customers will buy and use, delighting them, and on the other side it needs to contribute to our company’s objectives and success.  

That’s why valuable viability needs to be an obsession for you as a product lead and be present within your product strategy. This will allow you to iterate and refine your product strategy as you progress and learn. 

Based on the previous work, this essay will explore how we can get valuable viability in our product strategy. 

The first thing I like to do is to put side-by-side the outcomes from the previous two essays, the GEM Metrics/Company Goals, and the high-level hypothesis for the problems we believe we need to address for our customers. This way we have side-by-side the viability and value components, and we “just” need to connect the dots. By this, I mean working through both lists and deciding which problems will impact customers’ needs and company goals the most. This might seem easy, but from my experience, these strategic discussions are some of the toughest you will have, because the main outcome needed is strategic alignment between all stakeholders on the challenges we will pursue and the expected impact on the customers and the company. There will be many assumptions at this stage, you will need to be alright with that and plan your strategy to validate them. 

I usually do this process in several sessions with the C-Level, Product Leaders, and sometimes with Engineering and Design leaders to assess feasibility and usability. However attendance will depend a lot on the company you’re working with, and each stakeholder’s responsibilities. Don’t forget that product strategy is all about alignment, it is important to involve in this process the relevant stakeholders of your company. I also advise you to have structured and organized support elements like wireframes, customer interviews, customer data and insights, storyboards, market data, competitor analysis, etc. These resources should help you contextualize your product strategy and enrich the discussion.   

To help with this exercise I will use a highly abbreviated summary of this process, based on the renting business mentioned in the first essay. 

In this example, we were not building a product from the ground up, but instead, we already had a functional simplistic MVP. As discussed in the first post our GEM metrics were clear and prioritized: 

• Growth: new customers growth YoY; 
• Monetization: Customer lifetime value;
• Engagement: Monthly retention.

Growth is our main focus, and the metric guiding our business is new customer growth YoY.   

From the process of the second post, we easily get the main problem hypotheses. Here are some problem hypotheses that we found for this particular case: 

• Customers need to rent materials from different suppliers as most of them don’t have all the goods the customers usually need for their operation. This creates lots of confusion in the process and error-prone activities. Customers spend lots of money on human resources managing orders from different providers.   
• Customers struggle to get their renting confirmation on time, creating misexpectations, planning issues and uncertainty in a low-margin business with many suppliers. This is a great risk for our customers, creating operational risks, loss of money, and frustration. This is a major pain point we got from customers’ interviews and data. 
• Customers operate in a low-margin market they need to be very cost-effective, while looking at our offer they ask for used goods to rent at better prices.  
• Customers want to see their issues solved quickly. They have multiple orders from different providers, need extreme coordination and cannot waste time in exhausting support queries. Lengthy support can cost lots of money, delay their operation and reduce their already thin margins. This is one of the main reasons for the low customer loyalty in the field.   

With these two lists in mind, the discussion starts, with a simple goal, which strategies maximize valuable viability? 

In this specific project, the discussion led us to two main strategies, that based on our problem assumptions would have the biggest impact on customers and growth, “Easy and Quick Ordering” and “Personalized Support”: 

• 1# Easy and quick ordering: Customers are most satisfied when they receive quick rental confirmation. This strategy will differentiate us from competitors who prioritize confirmation from the supply side first. Delays in order confirmation frustrate users, not because of the time itself, but due to the operational uncertainty and associated frustration. The best experience for the user would be to have order confirmation right away, the supply side is our problem to solve. We believe this value proposition will contribute to acquiring new customers (growth), and give us a strong selling point for our sales team. We also believe that quick confirmations will create happier customers, improving customer loyalty and therefore they will come back more often (monetization and engagement). 
• 2# Personalized support: Customers struggle with time-consuming support queries, particularly when it is an email or an online chat. Customers prefer talking to human agents because their specific environments change constantly, requiring quick adaptations to their rental details. Direct phone support with their sales representative resolves issues faster than email support, reducing frustration due to the urgency of their needs. Tailored phone support is another value proposition that will contribute to acquiring more customers (growth) as it is a unique advantage compared with current main competitors. 

We define these strategies as hypotheses, this is critical because as we start implementing these (usually in non-scalable ways to turn the hypothesis into a thesis), we will get more data and they will change. One funny thing that we noticed when we started implementing 2# Persoalized support, was that this strategy was more important to monetization rather than growth. During support calls, customers usually requested more products to be added to their renting order, contributing to their CLTV in ways that we were not expecting. 

While I’m only presenting two hypotheses here, there were projects where we had several hypotheses to explore. However, with the limited resources of a startup, prioritization was crucial. The effort behind these hypotheses cannot be overstated, and both qualitative and quantitative data are essential. With the advent of AI and LLMs, we now have the superpower to quickly analyze and compile large amounts of qualitative data from interviews, one-on-ones, and testing sessions with users. AI can also analyze videos and transcripts from test interviews, helping understand early adopters’ interactions with the product and craft better and more accurate problem hypothesis

Bear in mind, that during this post I didn’t talk about things like legal compliance, operational risks, regulatory compliance, the business model sustainability, new competitor entries, technological changes, etc. These are very important and part of the Product Lead’s responsibility. I like to bring these elements as part of the data that feeds these discussions. In a previous project in the healthcare space, many compliance and safety risks were part of our product strategy. We address them in the company goals section (for example the need for HIPAA compliance), but also reflect the effects of those certifications on the customer’s experience and expectations of the product vision (our customers feel safe because we are compliant and sales need this value proposition).   

With sound strategies in hand, we are now positioned to “help our users be awesome.” These strategies represent the high-level foundation of your Product Strategy. It is all about solving hard problems in ways that our customers love, and yet work for your business, contributing to our goals. But your strategies are still hypotheses that will need validation and therefore a thorough process to measure progress and a clear definition of success is needed. For each strategy, the product team will be fully focused on experimenting to prove or disprove each hypothesis.

That is exactly what we are going to talk about in the next essay, how to turn strategies into progress.

Updated Index of all articles released so far:

• Intro
• 1# The core of a good strategy
• 2# Which problems to solve
• 3# First draft of your product strategy
• 4# From strategy to success
• 5# The Mighty Morphin Roadmap