Company purpose, product vision and clear focus are the cornerstones of Product Strategy.
When starting with a new company or project, the first step is understanding the company’s purpose and product vision: what game we are playing, how we are keeping score, and what we are working towards.
These two elements are the main drivers of your product strategy: company goals and product vision.
In this essay, we are going to explore the first component: company goals.
If you want to kickstart a discussion to strategically understand a company, I advise you to ask the most fundamental questions there are to any CEO or Founder:
- Why does the company exist?
- What problems are we solving?
I like to prepare and guide these conversations to explore the topics that give me the context I need, like, what problems we are solving, to whom, how we create value, how we capture value, long-term product vision, company goals, etc.
However, to avoid drifting into an unfocused discussion, I always drive the conversation in a way that by the end of it, I have three core questions answered:
- What are our product’s high-level goals?
- How do we define success?
- How do these contribute to the company’s goals and product vision?
Answering these three questions is not easy, but it will be key for the Product Strategy. Bear in mind that this might not be just one conversation, but usually many.
To help in this process I use a framework inspired by an article from Gibson Biddle, former VP of Product Management at Netflix, the GEM Model. This framework is a “forced-rank prioritization of growth, engagement, and monetization, along with the metrics we used to evaluate each factor”. These will help you define your product’s high-level goals, how to measure success for each, and how to prioritize each, aligning them with company goals and product vision.
Establishing priorities and a clear definition of success is crucial for any product organisation aiming to deliver value. This clarity guides decision-making, fosters collaboration, and ensures the team remains focused on the right objectives.
In a previous project I worked in the past, in the renting business, our key challenge as a Company at the time was to demonstrate to our investors that we could win market share in an already competitive renting landscape. With that in mind, we used the GEM model to define and prioritize our goals:
- Growth: new customers growth YoY - how much do we need to grow YoY?
- Monetization: Customer Lifetime Value - how much money do customers need to spend on our platform during their lifecycle?
- Engagement: Monthly retention - how many customers return to make another purchase within a month signaling they are happy?
The goals must be prioritized, in this case, Growth was our main focus for the quarter, we needed to gain market share to prove that our value proposition was better than our competition and that we could acquire and grow our customer base aggressively. So all the teams in the organization knew what we should strive to achieve. Monetization and Engagement were still critical, however, this approach allows us to understand priorities and clearly communicate them.
Although these goals seem straightforward now, the discussions behind them were complex and you need to analyse and discuss all the details about the business to be able to make a decision and update it over time. That’s the reason behind the starting discussion, which should provide you with context and information to make decisions as you progress.
I can tell you that there was a huge discussion around Growth being prioritized over Monetization and Engagement in the first year, as well as our need to improve our market share and validate our value proposition as part of our investment strategy. All these choices have strategic planning and reasoning behind them. It is vital to document the rationale behind everything to ensure a shared understanding within the team and keep updating them as you gather more information. For this specific project, our priorities and goals were the same during the first year, allowing us to prioritize new strategies and projects as we progressed. However, the process of reassessing these priorities was constant as new information entered our context. By the start of the second year, we understood that we had to improve our units of economics and shift our priorities to Monetization - LTV - and new strategies and initiatives were prioritized around the organization.
This process is challenging but grants a superpower: a unified understanding of the company’s focus and the needed contributions from each team to the product, along with a simple metric to gauge progress.
Why is this important? Because your Product Strategy must align with the company’s goals and priorities. Understanding what is crucial to your company and how it relates to the product enables the team to assess progress and reassess if there are changes. Remember: “A Product Strategy consists of several hypotheses aimed at delivering the highest value to users while ensuring the long-term viability of the business”, the discussion above is about understanding the desired impact of your product, and how it will help the company achieve its objectives.
Having “Growth” as our priority, allowed us to understand that our Product Strategy needs to be aligned with this main goal: delivering a strong and aggressive value proposition to capture market share, which will be measured by “YoY growth rate of new customers”. Retention and LTV are also important but not the main priority of the strategy. In a startup with limited resources, this aggressive prioritization is not only nice to have but is critical for survival.
Furthermore, this structure creates the foundation for goal-setting frameworks across your organization and ensures everyone speaks the same language. How many of you have experienced working in a company where different departments had different definitions for retention, for example? Too many, I suspect! So, a cross-organizational understanding of goals and metrics is essential.
Next post we will talk about how to create an amazing experience for your users.
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