The Product Strategy Stack

Company Mission

The world your company sees and the change it wants to bring to that world.

Company Mission is at the top of a Strategy Stack. The Company Mission defines the company's purpose. A good Company Mission is aspirational and has emotional appeal—it motivates your team to come to work every day and your customers to embrace the role your company plays in their lives.

Great companies are mission-driven and seek to align strategic initiatives to their mission. For example, Google's mission to "organize the world's information and make it universally accessible and useful" is manifest in its products such as Google Search, Maps, Android, and Gmail.

Company Mission is the most durable layer of the stack—typically lasting for years before it is outdated. Your Company Mission shouldn't be limited by execution considerations. Often, a Company's Mission is aspirational beyond its scale (some 10 person companies have as grand a mission as a 10,000 person company). Your Company Mission should only change as the company's view of the world changes (sometimes because the company has made its dent in the universe!). This typically happens over the course of years, whereas the rest of the strategy stack changes on a monthly/quarterly/annual basis.

Some companies define both a vision and a mission. In this case, "vision" is a description of the world your company sees, and "mission" is the role your company plays in that world. For simplicity, we can think about vision and mission as a single layer in the stack. The vision and mission work hand-in-hand to paint an aspirational picture of what your company is designed to accomplish.

In 2017, Facebook changed its mission (established in 2010) from "Making the world more open and connected" to "Give people the power to build community and bring the world closer together." In a letter Mark Zuckerberg published, he acknowledged the shortcomings of the earlier mission statement. With a pivot in their mission, Facebook made more strategic investments in building infrastructure and tooling for users to create and engage with communities.

Company Strategy

The logical plan you have to bring your company’s mission into being.

The next layer in the stack is Company Strategy. Your company strategy flows from your mission. It defines the plan by which your company will achieve its mission and and generate value from that mission. Often, companies think about strategy in quantitative terms (our strategy is to achieve a CAGR of 20% over the next 3 years). However, this conflates strategy (the plan) with goals (the measure of progress).

Instead, strategy should be rigorously logical. It clearly defines the sequence of steps your company needs to take, and it should account for the company's position in the market, unique strengths, and the set of situational risks/assumptions that factor into the plan. Importantly, strategy must be defined granularly enough to be executable—it must provide enough context for teams to be able to define effective roadmaps and goals.

As we saw with Slack vs. Discord, Company Strategy plays an important part in defining what makes a company successful. Get this right—because a well-defined strategy empowers and aligns the entire company.

Company Strategy changes more often than Company Mission. Typically, a well-defined strategy will last 1-3 years, and companies should re-assess their company-level strategy once a year.

Example: Quora's mission is to share and grow the world's knowledge. Google's mission is to organize the world's information and make it universally accessible and useful. Both companies have similar missions, but operate out of completely different company strategies. Google's strategy involves indexing the Internet to provide easy access to knowledge when a user searches for it. Quora's strategy involves accessing knowledge in a structured question-and-answer format.

Product Strategy

The logical plan for how the product will drive its part of the company strategy.

The next layer of the Product Strategy Stack is its namesake. Product Strategy serves an important role in the stack—it is the connective tissue between the objectives of the company (its mission and its strategy) and the work of the product team (product roadmap and goals). Like Company Strategy, Product Strategy is a rigorously logical and executable plan. The Product Strategy defines how the product will drive the company's strategy and enable the company to achieve its mission. As a result, an effective product strategy cannot exist without a clear understanding of what the company seeks to achieve. An effective product strategy cannot exist in isolation.

Product Strategy changes at the same pace (or slightly more often) as Company Strategy. Typically, a well-defined product strategy will last 1-2 years, and companies should re-assess their product strategy once a year.

Quibi and TikTok had similar missions and strategies. Both companies sought to provide bite-sized entertainment uniquely well-tailored to mobile. But, the two companies implemented completely different product strategies. Quibi's product strategy was to enable Hollywood's top creators to bring their craft to mobile devices, and TikTok's product strategy is to enable its own users to create and share snackable content. Quibi's product strategy failed to capitalize on the social nature of mobile devices and the rising importance of the creator economy.

Product Roadmap

How you sequence product strategy over time.

Once a team has defined a clear Product Strategy, the team is ready to plan out how that product strategy will be implemented over time. The result is a Product Roadmap that guides the team in sequencing its efforts. Proper sequencing is critical to success. As we discuss in the Product Strategy program, sequencing enables product teams to unlock compounding value by prioritizing the learning and product outcomes that will have a disproportionate downstream impact.

The Product Roadmap should come before the Product Goals. The Product Roadmap provides a thoughtful, proactive framework that product teams can use to organize their work. A well-defined Product Roadmap helps teams focus on the important task of long-term value creation for customers. In contrast, product teams operating without a roadmap (or tasked with developing a roadmap in response to goals) will be tempted to achieve goals by any means necessary—resulting in a product that is inconsistent, over-optimized, and caters to the short-term needs of the company.

Product Roadmaps tend to be defined on a 6 month to 1 year time horizon. They play an important role in quarterly goal setting and should be revisited every quarter.

Netflix - By 2007, Netflix observed a rapid decline in the DVD market. Instead of investing in improving DVD rental sales, Netflix pivoted to provide a streaming service "Watch Now." By doing this, Netflix replaced their DVD rental strategy with a streaming strategy and fundamentally changed its roadmap. Their roadmap defined an important sequence. Netflix launched its streaming service by working with partners to deliver an initial catalog of 1,000 shows and movies in 2007. It wasn't until 2013 that Netflix launched its first Originals and pivoted from a streaming aggregator to an original content producer.

Product Goals

The outcomes that measure strategic progress.

The final layer of the Product Strategy Stack is Product Goals. The stack is a system that enables product teams to translate an aspirational company mission into effective product goals, with Product Strategy acting as the connective tissue between those concepts.

Product Goals are set within the context of the Product Roadmap and Product Strategy. They are not valuable in and of themselves, but as a measure of progress towards a pre-determined plan that generates value for the customer.

A good Product Goal is objectively measurable. Most often, a goal is defined as an impact to a quantifiable metric—such as "increase first day return rate by 5%". However, this doesn't need to be the case. Sometimes, the best way to measure progress is to set goals for deliverables—such as "launch new onboarding flow by March 5th." Teams should set goals that reflect their understanding of strategic levers. If a team does not know how to move a metric, then they should not commit to moving that metric. Instead, they should commit to product work that increases their level of understanding.

Product Goals are typically set quarterly and tracked on weekly or daily basis. Teams should revisit Product Goals at least once a quarter to both measure achievement of the goal and assess whether that goal has led to strategic progress. Sometimes, missing a goal means that something needs to change upstream from the goal—often the Product Roadmap or Product Strategy. Other times, missing a goal simply means that the goal was defined incorrectly. In this case, the Product Roadmap and Product Strategy stay the same, but the team should redefine the goal to better measure strategic progress.

In 2013, Tripadvisor added Instant Booking to the product. Up until that point, Tripadvisor had helped travelers pick a hotel based on the opinions of hundreds of millions of travelers, but travelers needed to leave the product to book those hotels. At the time, one study found that Tripadvisor influenced more than 60% of hotel bookings—bookings happening outside of Tripadvisor's product (primarily through online travel agents and hotels that advertised their prices on Tripadvisor).

The Product Strategy for Instant Booking was clear: make travelers' lives easier by giving them the option to shop and book directly on Tripadvisor. But, the product team struggled to make Instant Booking successful. The problem was that the team's Product Goal was not updated to match the team's new Product Strategy. The team was tasked with maintaining or increasing average revenue per traveler, and Tripadvisor's price advertising business continued to be very good. As a result, the product team faced a contentious decision: optimize Instant Booking at the expense of revenue or maximize revenue at the expense of strategy. In this case, the team achieved its Product Goal but did not make enough progress towards its Product Strategy.

Getting Your Product Strategy Stack Right

The Product Strategy Stack is a powerful tool to help you connect your product team's work with company objectives. However, it can be difficult to diagnose strategy problems. Often, these problems surface as low-level execution issues. In these cases, it's helpful to use the layers of the Product Strategy Stack to work backwards towards the root cause.

Let's look at the symptoms of a poor strategy stack, common strategy gaps that many companies face, and an example of a well-defined and well-executed strategy stack.

What does a poor Product Strategy Stack feel like?

Difficulty prioritizing

The most common symptom of a poor strategy stack is difficulty prioritizing. For example, a team may struggle to evaluate the trade-off between optimizing a flow for new users vs. catering to the needs of power users.

Miscommunication within teams

Difficulty prioritizing often leads to a break-down of communication within teams. Some teammates will want to go one way, and others will disagree. Without proper context, people will rely on their individual opinion, rather than align to a shared purpose.

Muddied UX

The lack of clear priorities can take its toll on the user experience. A clear strategy leads to a simple UX. When the strategy is not clear, the team may make inconsistent or compromised choices. Over time, this can have a disastrous impact. The history of tech is littered with bloated products that got disrupted by more opinionated and streamlined upstarts.

Lack of coordination across teams

Without a clear overarching strategy driving roadmaps, teams across a company can get easily misaligned and prioritize different things. This is especially true when teams prioritize different outcomes which make sense locally for their group but do not move the company forward. For example, an enterprise sales team may implement a complicated feature for a single customer, while the core product team is focused on streamlining the product to better support SMBs.

Diminishing returns

In the absence of strategy, teams tend to focus on short-term optimization of metrics rather than long-term value creation. In time, teams over-optimize. They reach a "local maximum" and hit diminishing returns on their efforts. Each "win" is less impactful and harder to reach.

Product-market fit saturation

Eventually, companies hit the limits of their product-market fit when strategy is poorly or incompletely defined. Teams cannot improvise their way to new sources of product-market fit. Instead, product leaders need to anticipate saturation and proactively expand their product market fit to reach new audiences and/or new value.

Negative impact on morale

Over time, a poorly defined strategy weighs heavily on a strong team. The lack of clarity makes a team's work burdensome. They may lose pride in shipping a product that feels unfocused, or feel defeated as diminishing returns set in. They may feel they are not getting the context and resources they need from leadership. Eventually, high performers will churn if they don't believe in or can't understand the strategy.

Great vs. Incomplete vs. Poor Product Strategy Stacks

A Product Strategy Stack is one of three types: Great, Incomplete, or Poor.

• Great stacks have clearly defined components which are stacked in order: Company Mission, Company Strategy, Product Strategy, Product Roadmap, and Product Goals. Great stacks help build great companies.

• Incomplete stacks usually have one or more components missing. Often this component is company or product strategy. Working on incomplete stacks leads to misaligned priorities across teams and shipping product with unclear strategic direction.

• Poor stacks may have some components missing, but most importantly - the components exist in silos and lack connection with each other. Poor stacks make it almost impossible to set concrete goals. Managers are often found filling templates without a clear understanding of strategy.

from Hacker News https://ift.tt/3kYpwEQ