Product Strategy

In a recent mentoring session, a product manager told me, “I defined the product vision and validated it with the founder, the board, and the entire leadership. But, after the presentation, the conversations returned to the upcoming features and delivery dates.” Sound familiar?

This is common. But why? Defining the vision is essential but does not solve the day-to-day. What is missing is explaining how we will get there, which is the product strategy.

The product vision is the destination — where you agreed you want to go. The strategy is the path to get there. When stakeholders discuss features, they seek clarity about the plan to build that vision and about the path to get there.

So, the next time the conversation with stakeholders turns to features, the product strategy will likely be unclear, even if you have agreed on the product vision.

The product manager is responsible for defining the product strategy and the path to the vision.

To build a product strategy, I like to use two tools: market analysis and SWOT analysis.

Market analysis

To create your strategy, you need to have a good understanding of your market concerning six aspects:

1. Competitors: both direct and indirect, those competing for the time and attention of your users. For example, a competitor to physical activity could be streaming services that motivate users to watch more videos and, consequently, may not want to engage in physical activity.
2. Potential and Addressable Market: how much market do you have? How many people could be your customers? Are there any minimum requirements for someone to be your customer? For example, suppose you sell an online course for medical students preparing for the residency program evaluation. In that case, your potential market is not all people, nor all university students, but specifically medical students in the last years of graduation. This is your potential market. And of this total, how many people can you effectively communicate with and show your product? This is your accessible market.
3. Market Growth: is the number of people with the potential to use your product growing, stable, or decreasing? And what is the number of people you can talk to about your product? It is essential to understand whether the market you envision for your product is growing, stable, or decreasing and whether this movement is short or long-term. Understanding how your market is behaving is crucial to defining your strategy. For example, if you are thinking about a product for the combustion engine car market, there are signs that this market may decrease as electric cars become more popular. It is also essential to understand the dynamics of this market. Is there any factor that could change the dynamics of this market? When I led the digital transformation of Lopes, I learned a fascinating fact about the Brazilian real estate market. It depends on the Selic, the basic interest rate defined by the Central Bank, to help combat inflation. For every 1% increase in the Selic, 1 million people lose access to credit and, therefore, cease to be an addressable market for real estate transactions.
4. Disruptors: as important as knowing your direct and indirect competitors, it is important to understand what products can disrupt your product, meaning they can replace the benefit your product delivers in a better and more attractive way for your users. For example, are people using email less because of raising direct messaging products like WhatsApp and Slack? And e-commerce? What are other ways to sell online besides having an online store? Selling on marketplaces and selling through social networks.
5. New Technologies: we must be aware of new technologies to understand how they can impact our product. When I talk about new technologies, I am referring to both new product development technologies (programming languages, data storage and manipulation, no-code, and low-code languages, etc.) and new technologies that change the way the product is accessed (smartwatches, smart glasses, conversational inter- faces, etc.). In addition to these two categories of technology, there are also new technologies for which we still cannot be clear about the impact, and which may change both the way we make the product and how the product is accessed and even the nature of the product, such as artificial intelligence, NFT, blockchain, metaverse, and spatial computing.
6. Regulation: Is your market regulated? Are you familiar with this regulation? Have there been changes in it? For example, at Conta Azul, we monitored fiscal and accounting regulations daily to ensure that the product was in compliance with them.

This type of analysis has probably been done on a case-by-case basis for specific aspects of your company. I recommend turning market analysis into a permanent discipline. Once you have created the first version with the items described here, update it monthly to ensure you have the most up-to-date information about your market.

SWOT analysis

With your market analysis in hand, the next step is to understand your product’s position in that market — both the current position and the position you aim to occupy when executing your product vision. A helpful tool to aid in this understanding is to conduct a SWOT analysis, an acronym for Strengths, Weaknesses, Opportunities, and Threats.

SWOT analysis

Strengths and weaknesses are internal factors within your product development team or company, over which you, your team, or your company have some control, that either help or hinder your product’s path toward achieving its vision. Opportunities and threats are external elements, i.e., factors beyond the organization’s control that can positively or negatively influence the attainment of the product vision.

The market analysis described earlier provides excellent inputs for items that can be included in your SWOT analysis. In addition to the market analysis, the chapter on Business Models also offers good inputs for constructing the SWOT. Do you have a B2B Enterprise product and struggle with customer-requested customizations? Is each new customer request disrupting your product planning? This could be a weakness to address in your strategy. Do platform or marketplace business models make sense for your business? This could be an opportunity for you to explore in your strategy. In the chapter on Company Type x Digital Maturity, you learned about the concept of digital maturity, and in the chapter Measuring Digital Maturity later on, you will see how to assess your company’s digital maturity, which could be a weakness to work on in your strategy.

Filling out the SWOT should be a team effort. It would be best to have one or more sessions with people who can contribute to this analysis. Leaders from the product development team and company leaders are the appropriate audience for this type of session.

How to organize a SWOT analysis session:

• Review inputs: Before starting the work, reviewing some information about your product and your company is essential. This includes the purpose and vision, which were created with the understanding that a product must simultaneously meet the strategic objectives the product owner has for it while addressing the problems and needs of its users. The market analysis should also be reviewed, as should the current and desired business model. In short, every piece of information that helps you understand where your product and company are and where you want to go.
• Small groups: Divide the group into small groups of 2 or 3 people and ask each group to fill out a SWOT analysis. Limit each group to a maximum of 3 items per quadrant. It is common, especially in the weaknesses quadrant, for people to create a long list of items, often with more than ten weaknesses. By asking to limit it to 3 items per quadrant, people will be forced to make an initial prioritization.
• Consolidation: Each group presents its SWOT analysis. There will be some overlaps and some differences. When there are differences, this is a great time to discuss prioritization. For a new item to enter any quadrant, an item already there must be removed to maintain the limit of 3 items per quadrant.

There you have it! You now have a SWOT analysis with the 12 main items that impact your ability to reach your vision positively and negatively.

Defining the strategy

Once the final version of the SWOT analysis is constructed, you will have 12 items that can serve as the focus of your strategy. I say “can” because you should not work on all 12 items. Anyone with many priorities has no priority. From these 12 items, you should choose 3 to 5 items. A voting process among participants, with each person able to give 3 votes, is a way to make this selection.

A tip I usually give is that items that are strengths typically do not need improvement, only maintenance. The same goes for threats; there is usually not much to do except monitor. An example of a threat to the real estate market is the Central Bank’s decision to increase the selic interest rate. There’s not much to do except monitor and react to these changes.

So, you have six items left, three weaknesses, and three opportunities to choose from 3 to 5 items to be your strategic focus. This choice can be made through voting among the people who participated in constructing the SWOT analysis, with each person having three votes. Each person casts their votes, and the 3 to 5 most voted items from your SWOT will form the strategy to help you get closer to your vision.

I have run this type of activity with my clients with great success. After a few sessions, we can define a very solid strategy to guide the planning for the next 6 and 12 months. Having clarity about your strategy is crucial for defining your objectives and key results (OKRs), a tool that we will learn about in the chapter titled OKRs.

Questions and concerns

In addition to the SWOT, another way to generate inputs for the strategy is through questions about doubts and concerns. When we have a vision and a clear idea of where we want to go, it is expected to have a series of doubts and concerns about how we will get there. This can also be done in a group, where everyone brings their doubts and concerns, and after a vote, 3 to 5 doubts or concerns are defined to be addressed. I used this model of questions and concerns at Lopes and my consulting company, Gyaco.

Reviewing the strategy

Once the strategy is built, it is important to review it because the market and your company change periodically. It’s crucial to understand whether that strategy still makes sense or if new elements have emerged that can influence it.

Every six months or every year is a good frequency to review the strategy, or the strategy should be reviewed when any relevant event occurs. For example, when the COVID-19 crisis happened, all companies had just completed their planning for 2020 and were starting to take their first steps in executing the strategy when the pandemic forced people to stay at home and all businesses to close. All companies had to change their strategy for this new market scenario significantly. Another type of event that can force a strategy review is the acquisition or merger of companies. When one company acquires another, the strategies of both companies will need to be revised to fit into this new scenario.

Example: Gyaco

The vision of Gyaco, my company, is:

Gyaco connects businesses and technology through training and consultancy in product management and digital transformation.

Gyaco vision

When I defined this vision and began analyzing the market, I asked myself a series of questions about this new venture:

• Will I continue learning new things that can be useful to others?
• Will I miss having a team?
• Will I miss the practical experience, the more hands-on work?
• Am I engaging with the right clients?
• Am I offering the right services?
• Will I be able to continue generating good results, or was it just beginner’s luck?
• Am I pricing and charging correctly?

Note that, as Gyaco is an individual company (solopreneur), it is natural that some of these doubts are also personal. Based on these questions and uncertainties, I defined the following strategic objectives for Gyaco in 2023:

• Understand if there is a demand and if I satisfactorily meet this demand. Metrics: clients, revenue, and recurrence;
• Understand if I can continue learning and have new practical examples to illustrate what I learned. Metrics: new learnings, articles, and content (with positive engagement).

Recommendation

Once you know where to go, the next step is defining the path. This is your strategy, a crucial step for the success of your digital transformation journey.

Just as the techniques and tools I’ve been sharing worked for me throughout my career in the companies I’ve worked with, feel free to use them or explore other tools — and even create your own — that might be more suitable for your context.

Regardless of your chosen technique, define your strategy as soon as possible. After all, a vision without a path to reach that vision won’t serve you much.

Summing up

• Product strategy is what you will do to reach your product vision.
• To build your product strategy, you will need some inputs: product vision; company’s strategic objectives; understand- ing of the problems and needs of your customers; mar- ket analysis covering competitors, potential and addressable market, market growth, disruptors, new technologies, and regulations.
• These inputs will allow you to start outlining your strategy. SWOT analysis is a good tool to organize your strategy. The advice is to limit it to 3 items per quadrant. The strategy will emerge from 3 to 5 items in your SWOT analysis, usually from weaknesses and opportunities. Another interesting tool is raising doubts and concerns about how to reach your vision.

Digital transformation and product culture

This article is another excerpt from my newest book “Digital transformation and product culture: How to put technology at the center of your company’s strategy“, which I will also make available here on the blog. So far, I have already published here:

• About the book
• Part 1: Concepts
• Chapter 1: The so-called digital transformation — Project and Product
• Chapter 2: Uncertainty and digital transformation
• Chapter 3: Types of company
• Chapter 4: Type of company vs digital maturity
• Chapter 5: Business models
• Chapter 6: Agile, digital and product culture
• Part 2: Principles
• Chapter 7: Deliver early and often — Measuring and managing the productivity — Case study: Dasa Group — Case study: Itaú Unibanco
• Chapter 8: Focus on the problem — O Famoso Discovery de Produto — Why the “business demands => IT implements” model does not work — Case study: Magazine Luiza
• Chapter 9: Result delivery — Outsource or internal team? — Case study: Centauro
• Chapter 10: Ecosystem mindset
• Part 3: Tools
• Chapter 11: Product Vision
• Chapter 12: Product Strategy

Workshops, coaching, and advisory services

I’ve been helping companies and their leaders (CPOs, heads of product, CTOs, CEOs, tech founders, and heads of digital transformation) bridge the gap between business and technology through workshops, coaching, and advisory services on product management and digital transformation.

Digital Product Management Books

Do you work with digital products? Do you want to know more about managing a digital product to increase its chances of success, solve its user’s problems, and achieve the company objectives? Check out my Digital Product Management books, where I share what I learned during my 30+ years of experience in creating and managing digital products:

• Digital transformation and product culture: How to put technology at the center of your company’s strategy
• Leading Product Development: The art and science of managing product teams
• Product Management: How to increase the chances of success of your digital product
• Startup Guide: How startups and established companies can create profitable digital products