In the startup and tech world, some think that strategy is dead. Given markets’ speed, competition and dynamism today, what’s the point in debating a five year strategy if changes on the ground might make it all obsolete in 12 months time? After all, agility, speed and innovation ultimately trump any strategic plan on the way to high valuations, successful exits and millions of happy users, right?
But is strategy really that incompatible with agility and speed? Not if you look at some of the world’s most successful tech players. While companies like Amazon, Alphabet, Apple, Facebook or Tesla might not label what they do a formal “strategy”, their remarkable success is very much due to tried and tested principles of strategy development, with a few modern tweaks. They:
- define a bold path to leadership.
- make difficult product portfolio choices.
- allocate resources strategically.
- build strong capital structures.
- don’t get bogged down in process or complexity.
- stay focused on short and medium term goals, while laying out a clear set of stepping-stones that move the company toward its long-term aspiration.
- Build-in flexibility and anticipate disruption and change by monitoring key trigger points and revisiting their long-term vision regularly which makes strategy development faster, more pragmatic and agile.
“Making the right choices in a truly dynamic environment often requires a future-back perspective…the most successful companies are ruthless about translating this future-back thinking into tangible, near- and medium-term actions that sustain pace.”
Strategy is not your marketing campaigns, launch plan, brand design, business model or product features. Strategy is a set of high level goals that map to a measurable plan on how to get from your “current state” to your grand, long-term vision (while overcoming whatever challenges and unknowns we expect along the way). There are a few simple ways to get your “strategy” right and I’ll be explaining how to crack it below. But first, let’s explore the basics!
What’s not strategy
“Strategy” is defined as ‘a plan of action designed to achieve a long-term or overall aim’. But it’s often misunderstood to either mean a very generic, hyperbolic goal or catchy slogan like:
- “We want to disrupt the travel industry” or
- “We’re the future of self driving cars”.
Others think strategy means a list of the must have ground breaking features, products or capabilities they’re developing which will differentiate them from everyone else:
- “Our app will offer a personalised fitness plan that will send you daily reminders to exercise and enable you to share your goals with your friends”
- “Our website will offer a unique shopping experience with cool features like XYZ, unlike anything else on the market today”.
- ‘We’re building the world’s best and fastest streaming service so users can do XYZ any content, anywhere anytime”
- “All our products will be artisan, organic and vegan friendly”
These may all valid ideas and goals that could deliver a great product that customers love but they’re NOT a ‘strategy’ as such.
“Strategy is not a to do list, It drives a to do list” - Steve Blank
Top 5 most common strategy mistakes
1/ Not doing proper market research
This has two aspects:
a) not understanding the market - i.e. not having a thorough understanding of your market’s size, trends (both locally and globally), who your market is (i.e. demographics, locations, characteristics etc), what industry leaders are saying, what customers are thinking/buying/moving away from/investing in etc, future prediction for how the market is growing and where it’s heading.
b) not knowing your competitive landscape - i.e. thinking you have no or very few competitors, assuming that if there are no competitors the market is wide open (it may be because there’s no market at all), and not being fully across who your direct and indirect competitors are and what they’re up to in terms of products, people, strategy, customers, investors, partners, distribution channels and market share.
For a great explanation of product competitive analysis and how to undertake one, together with FREE and super handy market research templates, click here.
2/ Not understanding your customers and their pain points
Steve Jobs famously said “It’s really hard to design products by focus groups. A lot of times, people don’t know what they want until you show it to them”. Some say Jobs was right and it’s true that slavishly following customer feedback can stifle innovation and confuse the creative process. But Jobs’ comment is sometimes misunderstood. While asking users/customers what they want is probably not that helpful, diving into customers’ goals, motivations, aspirations, barriers and frustrations is.
It’s not about asking customers to design your product. It’s about figuring out who they are, what makes them tick and how your brand and product can solve their pain points and delight them at the same time.
What’s your user demographic and main characteristics?
What are their aspirations, motivations, challenges and barriers to achieving their goals?
Why would they use or need your product in the first place?
Why would they switch to your product from competitors?
What real world problem are we trying to solve?
Are we solving for a critical customer problem or just a ‘nice to have’ (i.e. is it a ‘headache tablet’ or a ‘vitamin’)?
Is this a problem for many users or are we targeting a limited niche market?
How does our product address these pain points? Does it only marginally improve on the competition or offer something that is at least ten times better?
3/ Not having a clear vision to guide your strategy
Once you thoroughly understand your market, competitors and users and can articulate your Unique Selling Point or value proposition, it’s time to define your vision! The trouble is vision is commonly misunderstood and poorly articulated. Everything flows from your vision - the strategy, KPIs/metrics, features and even team structure. When your vision isn’t crystal clear, this has a knock-on effect on everything else.
- A vision is about what you’re building, who it’s for and why it matters. A well defined, well articulated vision:
- is inspiring and forward looking
- is your team’s and company’s north star
- helps you make strategic and tactical decisions as your product evolves
- is easy to explain
- is shared frequently with your team, users, social followers, the press etc.
- A great article about The Recursive Product Strategy That Elon Musk Used To Build An Empire explains how Tesla used a ‘recursive product strategy’ that starts with a grand, innovative vision and end-goals (that could be 10 years, or more, ahead) and works back until you can hit inflection points that propel your company and its customers to the next stage, while ushering both toward the end goal (= building a zero emissions electric, affordable, sports car). (Source: Vinny Lingham’s article: The Recursive Product Strategy That Musk Used To Build An Empire in First Round Review).
- For best examples of companies’ vision statements click on the link.
- Roman Pilcher’s Product Vision Board is a handy tool for crafting your vision.
- 10 tips for product owners on product vision includes a few great pointers and a helpful template:
4/ Not executing your strategy
There’s no point having a brilliant strategy if you’re not going to execute it or if you’re going to work on products or features that don’t align with it or the brand’s or product’s overarching vision. Companies sometimes get sidetracked by launching fun, trendy features or cool products when those aren’t consistent with the vision, don’t really follow the strategy or contribute to a better product only to end up shutting down products. Sometimes, that approach can succeed but many times these products flop and end up in the app graveyard like when Microsoft killed off Microsoft Band last year, a wearable fitness device, after it failed to impress users, Dropbox has shut down its photo-sharing product Carousel, Facebook has shut down Messenger on web to secure its dominance in mobile messaging apps and Google shut down Google+, its social network, in 2019 due to low engagement and significant bugs and Allo, a messaging app replaced by ‘Messages’ their new messaging app for Android phones.
- Continuously check in with your strategy and vision and ask yourself if it all makes sense. Getting it wrong can be costly and distracting.
- Run small experiments in parallel and - importantly - make sure you validate them with data and user feedback before investing in them further.
5/ Blindly executing the strategy no matter what
“As with most things in life, particularly in business, strategies are rarely set in stone. Your product vision statement should be aspirational and high-level enough that it remains steady on the long term. However, product managers should be prepared to revise it (and even course-correct pivot) if necessary. Strategic goals, business objectives, and KPIs, are generally also aspirational. But by nature, they will need adjustments, revisions, and resets in time.” (From Product Strategy Roadmap, ProductPlan).
- Get into the habit of thinking ahead about how your vision and strategy will change over time.
- Set different tiers of strategic objectives for different time frames. Eg: set a 3 year goal (tier 1), then set smaller yearly benchmarks for the next 3 years (tier 2), then break down those benchmarks into smaller milestones (tier 3).
- Timebox the tier 3 benchmarks in a way that keeps them on track to meet your longer-term goal (such as quarterly or monthly check-ins when you’re talking to users, monitoring data and checking your performance against set metrics).
- You can also distill more granular objectives and KPIs to be met along the way (such as weekly goals).
How to craft the perfect product strategy
Product management and business gurus have slightly different views on what strategy means but if you look closely you’ll see a common thread:
- “The essence of strategy is choosing what not to do.” – Michael Porterer
- “A product strategy is a high-level plan describing what a business hopes to accomplish with its product, and how it plans to do so. This strategy should answer key questions such as who the product will serve (personas), how it will benefit those personas, and what are the company’s goals for the product throughout its lifecycle.” - Product Plan
- “Product strategy is about imagining the future of your product: What product will it become? Who will it benefit? How will it create value? It’s a high-level plan that helps you realise your vision or overarching goal. More specifically, the product strategy should describe who the product is for and why people would want to buy and to use it; what the product is and why it stands out; and what the business goals are and why it is worthwhile for your company to invest in it…” Roman Pilcher
“Be stubborn on vision but flexible on details.” – Jeff Bezos
In sum, strategy is about figuring out the high level stuff and breaking it down into smaller, doable and measurable tasks you could kick off tomorrow to get to your goals:
- why your product exists
- who it’s actually for
- the commercial or other future goals of your product, brand or company (i.e. the future state you’re trying to get to) (‘future state’)
- where you are today in relation to the ‘future state’ (‘current state’) - what’s the biggest issue/obstacle/challenge that’s holding us back or we think could be improved?
- What is the first big challenge you need to tackle on your way to your big goal + deadline you could set to test your hypothesis (e.g ‘we need to increase our website traffic by 100% month-on-month by September’ or ‘we need to get to 5K instagram followers by the end of this quarter’).
- What’s the first smaller task you or your team could/should tackle tomorrow to achieve your first big challenge?
“Good product managers know the market, the product, the product line and the competition extremely well and operate from a strong basis of knowledge and confidence. A good product manager is the CEO of the product…They are responsible for right product/right time and all that entails. A good product manager knows the context going in (the company, our revenue funding, competition, etc.), and they take responsibility for devising and executing a winning plan (no excuses).”
- “Good Product Manager/Bad Product Manager” by Ben Horowitz
Whatever model or method you use to define, refine and execute your strategy, always make sure it’s:
- Consistent - by working your way down from the Big Goal to tomorrow’s task you’re making decisions and taking actions that ultimately align with your business goals and make sense in light of the big picture (subject to your plan being adaptable - see below).
- Measurable - by setting a clear quantifiable task and defining a time frame you can check your performance against solid metrics and gain valuable insights from the exercise which you can analyse and quickly act on.
- Adaptable - by tackling your big vision through small doable chucks (that are measurable and time-boxed) you are taking a ‘lean’ approach that will allow you to test your assumptions, tweak and iterate on your strategy along the way.
While large, established companies might be able to dust off product failures, learn from their mistakes and move on, for start-ups or growing companies, it’s a whole different ball game. As your runway evaporates at an alarming pace and competitors are breathing down your neck, there’s a very slim margin for error. Bad decisions can be costly and painful at best, or completely destructive and irreparable at worst. Stick to good strategy core principles, make well informed, well executed decisions as best you can, despite your limited resources and other pressures. And do those with speed, agility and innovation in mind.
Handy tools & further reading
- One of my all time favourite strategy building tools is Melissa Perry’s product strategy canvas which you can download here. It provides a useful structured framework for focusing your mind on the critical path to success by clearly articulating your grand vision, current state, first big challenge and related, smaller task you could start working on immediately.
- The Lean Startup Co’s Playbook for Achieving Product Market Fit
- Shopify’s post on How To Create An Efficient Product Strategy
- An AWESOME guide to how to craft your brand strategy, including helpful templates and creative exercises.
- Vision Statements of Best Brands