The first thing that comes to mind when thinking about strategy is ‘long-term’, as opposed to immediate action items that will have an impact on short-term goals, but less impact on where we want to be eventually. Looking at long-term goals is definitely one of the things that make any strategy hard to build, but for product strategy that is not the hardest part.

Fill the Void Between Vision and Action

The goal of product strategy is to take the usually existing company vision or mission and bring it to life by explaining how the company and product are going to achieve that vision. Of course, in the process, the vision might be changed or refined, but it most likely wouldn’t be reinvented altogether. That’s why although CEOs sometimes tell me that they want the vision to come from the product leader, I believe that what they usually mean is that they want the product leader to take their own larger vision and shape it into something that the entire company can work with to bring this vision to life.

Since product strategy is so hard, many companies simply skip it. They define the bigger vision and immediately start acting upon it. In startups, it means building an MVP right away, and in larger companies, it would be yearly goals and initiatives that are pushed down to the people who need to execute on them. But as soon as you want to make sure that your actions will actually make the impact you want to make and achieve your vision or mission, something is missing. 

The odds that everyone’s actions will miraculously translate into success without defining in advance how exactly it happens are really low. First, there are synergies that need to be created throughout everyone’s actions to meet your goals. But even more importantly, the mere definition of what you are creating that will lead you there, is still too vague at the vision level.

God Is in the Details

To help everyone understand what they need to do, and make sure it leads you to where you want to be, you must create a strategy that includes at least the following:

Detailed goals: it’s not enough to have an ARR goal, for example, because the real goal is probably reflected in more than the ARR number itself. The real goal can include small churn rates, market penetration goals (for example, at least X% of the ARR needs to come from a new market segment), new logos vs. expansion, and so on. If your goals aren’t detailed, it’s hard to make sure that they are met, and more importantly, it is hard to identify issues with the goals themselves (for example, unrealistic conversion rates that would be needed on your existing funnel or market, or price range that would be too high for your customers to pay but is the only way to meet the goal). 

Even higher-level goals can be refined and detailed. For example, are we looking now to build the product that will make us a unicorn within the next five years, or are we looking to meet this year’s revenue goals despite a change in the market? Understanding these would make a major impact on the strategy you eventually choose, so you better generate that clarity from the get-go.

What you are choosing to do: for product strategy, this means defining – in detail – which problem you want to solve for your customers (and for which customers exactly), and how your product (current or future) will actually solve it. You want to add color to this part. You should be able to explain from your customer’s point of view what their pain points are, and how the lack of a solution impacts their lives. You should use their own words as much as possible, discuss their alternatives and explain – from their point of view – why they aren’t good enough. The lean canvas is a great thinking tool here when used the right way. I typically only focus on the parts at the top (Customer, Problem, Solution, Value Proposition, and Unfair Advantage) as the starting point. Everything else needs to be considered at a later phase.

In this part, you are seeking a definition of the customer problem that is worth solving. You can think about it as finding the easiest entry point into your vision, the foot at the door that you can set with the customer segment who needs you most. This is true for any business goals that deal with revenue – whether you are a startup on its way to product-market fit or already in the growth stage. If you are in a larger company, you might have other types of goals, like reducing operational costs and getting to profitability. Some of the impact here can be made from processes like operational excellence, but oftentimes the major impact comes from finding a problem or a market segment that can be served with higher margins, which leads us again to the detailed definition of the problem and the customer.

At the end of this part, make sure you have clear decisions and guidelines and not simply a generic description of the world.

Why this is the right choice: this is the most overlooked part in strategy documents, albeit maybe the most important one. Everything you explained above should include your thought process and reasoning as to why this is the right decision to make, and how this will lead us to our longer-term vision. This serves a number of purposes: first, writing it down helps you think. Second, it helps your readers understand, align and agree with you. And third, it serves as a knowledge base for future strategic decisions and can help you connect the dots even when things change. Make your product strategy document a journey that leads the reader to the inevitable conclusions that you should go in a certain direction. If you truly want it to be inevitable, you must explain what leads you to think this way at a very detailed level.

Drill an Exploration Well

The product strategy process is like seeking oil deep in the earth. You want to find oil, but you can’t be sure that you will until you drill very deep and find evidence that oil exists in the spot you were drilling in. This is called an exploration well, which is build and maintained differently from a product well that is meant to provide oil on an ongoing basis. The location of the exploration well is chosen based on geological markers, so that before you drill you have a reason to believe that oil indeed exists there. However it is only after drilling that you can know for sure, and in some cases, you won’t find it as easily as you hoped or even at all. In this case, if you still want to find oil, you will need to find another place with good potential, and drill a new exploration well there.

In our world, it means that to find the right customer problem to solve, you can’t stay on the surface. You must make the (informed) assumption that this is a potentially good problem, and work with it all the way until you feel you have either proved (on paper) that it is the right one, or reached a deadlock which means you must move elsewhere. I will write another article on how you know if it is indeed a good problem to solve. For now, I will say that if you can – at a very detailed level – explain why it is good both for your potential customers and for your company, then it is indeed a good problem to solve.

Note that this is still just on paper, so your effort here is meetings and writing and thinking, but not the development of the actual product at first. It’s not that the development isn’t part of the exploration, but when you use this very expensive resource make sure that you have a good reason to believe it would work. As I always say, not everything that works on paper works in reality, but if it doesn’t work on paper, it never will in the real world. Make sure your paper works.