A four-layer framework to create a winning product strategy
Today we are talking about creating product strategy. Our guest is Bob Caporale.
Bob is the author of the book Creative Strategy Generation. He is a strategic practitioner, having spent 20 years leading product, marketing, and business functions for large international corporations. I first heard of Bob when he was the president of Sequent Learning, the product management training company. He has since founded and leads the Strategy Generation company. Bob believes that strategy is derived from a combination of experience, insight, and creativity.
Summary of some concepts discussed for product managers
[2:09] What is product strategy?
Strategy is a plan to achieve a set of objectives under a set of anticipated conditions. What makes strategy strategic is anticipating the situation you’re going to be in and putting a plan in place within that context. Product strategy is doing that at a product level. The job of product managers is to take the company’s bigger strategies and objectives and break them down to their impact on product. They put together a strategy that details what they need to do for their product to contribute to the overall business strategy.
The product strategy is still at a big-picture level. Often, companies approach me asking for help with their product strategy and they’re really focused on the roadmap. While the roadmap and choosing features is the last step of product strategy, it’s not the whole picture. If you’re just focused on what features to build into the product, you could still take a lot of random actions that make no sense because you don’t have the bigger picture.
[9:00] Who is responsible for developing product strategy?
Whoever is responsible for the P&L (profit and loss) of the product is ultimately responsible for the product strategy. I’m a big proponent of developing strategy with a team, but there does need to be one person accountable for it. The P&L owner varies from business to business. In some businesses, the product manager own the P&L and is accountable for the strategy. In small businesses, the general manager or owner may be responsible for the P&L and they would be accountable for the strategy.
[11:03] How is senior leadership involved in product strategy?
If there’s any problem in alignment between the product team and senior leaders, that’s a better problem to have than leadership not being involved in product strategy at all. Especially in larger companies, one of the biggest deficiencies I see is that companies don’t have a verifiable and disciplined product strategy process. Strategy can easily fall to the back burner because product managers are doing so many other things, most of them reactive. If you aren’t required to build a product strategy, you might not. I like to see leaders involved in product strategy, asking product managers to update the product strategy on a quarterly or annual basis and present it to them, because this ensures some level of alignment. As long as there’s a process where product managers are responsible for developing strategy, a negotiation will happen. In lieu of product strategy, the leaders will tell you what you need to do with your products, and some of that might not be right.
The best-case scenario is an organization that has a disciplined strategy process between leadership and product managers.
[14:24] Share your Strategy Generation framework for developing product strategy.
The framework has ten steps in four layers in a circular framework. When you build a strategy, you will go through the strategy in steps, so the steps are numbered. However, I developed it in a circular way because in real life when you’re executing on your strategy plan, things don’t happen linearly. It’s important you follow a process, but if something changes you know where in the process you need to change something.
The first layer is the context layer. Because strategy can be developed at so many different levels in a company, it’s important you know the context. Along with this is the vision—the big picture of your purpose.
The second layer is the analysis layer. This is where you look at your situation, including customers, competitors, and your own company. Try to predict what your situation will be in the future.
The third layer is the planning layer. This is where the strategy lives and where you put together your goals. Look at the options that are available to you based on situation analysis and choose which actions to take from those options.
The final layer is the execution layer. Here you put together your roadmap, determine your investments, and determine what results you will get from your strategy.
If you’re using this framework to develop a strategy from scratch, you would go through each of those ten steps. If you’re using it to manage a strategy, you would see where things might have changed and what effect those changes have on the other layers.
[19:26] Can you tell us more about actions to take during each layer?
First, in the context layer, you must understand what the strategy is about—the product, portfolio, etc. You might have a product that’s failing, in which case you need to fix something, or you might have a product that’s doing well, in which case you want to maintain that share or grow it.
In the analysis layer, first look at your product’s performance. Look at revenue, market share, profitability, strengths, and weaknesses. Look at customer analysis, segmentation, and customer needs. Look at your competition, who the competition is likely to be in the future, and their strengths and weaknesses.
Once you’ve done analysis, the plan almost writes itself. All you need to do is decide which opportunities you want to go after based on your analysis.
In the execution layer, put your resources into an investment roadmap. If you ask your leadership for a certain investment and they say they won’t support it, don’t fall into the trap of letting them say, “But we still want you to deliver on this strategy.” If you don’t get the money, the plan is not going to be valid. You can’t have it both ways. Execution is about making sure you’re getting the resources you need.
[23:31] When do you revisit strategy?
Whenever something big changes, you need to revisit strategy. Typically, companies have an annual planning session around October for putting together next year’s budget and plan. Usually the best time to revisit your strategy is about 6 months before that annual planning process. During this session, define your three-to-five year plan. When you define your annual plan, you should use the first year of your strategy as a basis for your annual plan.
You should review your strategy at your regular product team meetings too.
[27:07] What’s your perspective on analyzing but not copying competitors?
Too often, companies think they’ll be more successful than their competitor by making exactly the same product. If the solution is already out there, you’re not necessarily going to draw any new customers. You have to do something different. Go out to the customers and find out what they are not getting today that they wish they were getting.
Think about competitors that might exist in the future. If a disruptive company like Tesla or Google that isn’t in your space today were to come into your space, what would they do? If you figure out what they would do, why not do it yourself?
- Learn more about Strategy Generation and get free resources
- Learn more about the Strategy Generation framework
- Check out Bob’s website
“People don’t want to buy a quarter-inch drill, they want a quarter-inch hole.” – Theodore Levitt (attributed to Leo McGinneva)
Thank you for taking the journey to product mastery and learning with me from the successes and failures of product innovators, managers, and developers. If you enjoyed the discussion, help out a fellow product manager by sharing it using the social media buttons you see below.