PRODUCT STRATEGY

THE BIG PICTURE ON PRODUCT STRATEGY


  • 1. The Key to Unlocking Growth Potential
    Product companies thrive or die based on their product strategy.
  • 2. It’s All About Customer Value
    If you beat competitors at the customer value game, your products will win.
  • 3. The Product Roadmap
    The output of a product strategy is a product roadmap to create killer products.
  • 4. Faster, Better, Stronger
    At the core of great products is an effective and efficient product development lifecycle.

A KILLER PRODUCT CREATES MORE CUSTOMER VALUE VS. COMPETITION


People purchase products to improve their lives or business. The more a product can drive the value equation by improving benefits (both rational and emotional) over price versus the competition, the more the product will retain customers and attract new customers.

Products that dramatically improve the customer value equation are the foundation for explosive growth. If a product company is struggling, always start the turnaround with an improved product strategy.

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IN 2007, THE IPHONE DRAMATICALLY IMPROVED CUSTOMER VALUE



In 2006, these were the top selling “smartphones.” The market was around 60 million smartphones, which primarily competed on email, messaging, performance, battery life, memory, and application integration. The smartphone market was growing at 30% and consolidating, but lacked differentiation, relying more on feature and performance incrementalism.


In 2007, Apple launched the iPhone. Many of the new innovative features solved for the unmet needs of customers, such as a large screen, simple UI, native web browsing, integrated iTunes, multi-touch navigation, and widescreen video. Instead of a phone trying to be a mini-computer, the iPhone was an Apple mini-computer with a telephony app.

By improving the lives of customers and providing superior value versus competitors, the iPhone now sells 200+ million units a year, driving Apple’s sales of over $200 billion a year, and market capitalization from around $40 billion in 2006 to almost $1 trillion in 2018.

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THE VALUE WEDGE IS A SIMPLE WAY TO FOCUS YOUR PRODUCT STRATEGY


If you want your product to win, then focus on growing the customer value wedge. How will your product increase customer benefits? At the same time, how will you reduce product costs? If you cut costs, you can either improve product margins or lower prices for customers.


prioritizing product dimensions & to improve is key


Deeply understanding the vital met and unmet customer needs makes it easier to prioritize the product dimensions to improve to maximize customer value and competitive differentiation. Every product competes on eight dimensions, including features, usability, performance, durability, reliability, serviceability, conformance and aesthetics. From a product strategy standpoint, it is critical to understand what is important to your target customers, how your product(s) compare to the competition, and what needs to be improved, which you should codify into a product roadmap.

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Before we go deeper into product strategy, if you want to talk about your product strategy with an expert, just set up a completely free, no-hassle 30-minute coaching session.



long-term product strategy focuses on creating sustainable competitive advantage


While it is essential to drive the value wedge by improving the important product dimensions, a long-term product strategy also creates sustainable competitive advantage. The eight sources of competitive advantage are below. Competitive advantage creates barriers around the products and business model that are difficult for competitors to reproduce. The barriers can be in the form of customer value (i.e., brand loyalty, innovation, network effect), financial value (i.e., scale, proprietary information), or limited resources (i.e., locked-up supply, locations, intellectual property).

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Apple has created sustainable competitive advantage


Apple develops all eight types of sustainable competitive advantage creating a competitive barrier around its products and business model. The switching costs alone for customers to switch from the Apple ecosystem to another product are prohibitively high, given the proprietary information Apple has with iTunes, iPhoto, iCloud, and other apps. Apple has also developed a formidable network effect as users can inexpensively communicate through iMessage and FaceTime with other users. Apple has also created a competitive advantage through innovation and intellectual property, along with their marquee locations and scale. These sources of sustainable competitive advantage have led to Apple’s pricing premium, customer loyalty, financial performance, and market capitalization.

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A product strategy has two main outputs


A product roadmap outlines the product development goals and the necessary actions to make the product vision a reality. It represents the “what” of a product strategy.


The product development lifecycle strategy outlines the goals and actions (initiatives) to improve the development of products. It represents the “how” of a product strategy.

With a product portfolio there are 3 strategic options


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As you develop a product roadmap, you need to determine whether to rationalize the product portfolio, improve existing products, or develop new products.

What improvements will…
– differentiate the product(s) from competitors?
– drive better customer value?
– create new use cases, open up new segments?

What new products will…
– change the game?
– help sell more of the current product(s)?
– fill-in current holes of the product portfolio?

Which products should be eliminated (rationalized) to…
– free up resources to focus on higher value products?
– better align the business model (targets, go-to-market, org)?

THERE ARE FOUR STEPS TO CREATING A KILLER PRODUCT ROADMAP


To create a killer product roadmap, you should follow the four steps above. People often get stuck on how much effort needs to go into these four steps. For some teams, a few days of deep problem solving or integrating these four steps into their governance is the right answer. While for some teams, with the stakes high and the opportunities a bit nebulous, it may take a multi-month product strategy project to get to the right answer.

Step 1: Generate Insights


To create killer product ideas, you need to immerse yourself in insights about the products, market, competition, and customers. As you or your team conduct various analyses, always focus on turning insights into product ideas or opportunities. Product insights often focus on the fundamentals that current products need to address. Market and competitive insights can help you create the context of the future to architect competitive differentiation. Customer insights help prioritize the met, and unmet customer needs that a product can address.

Product Insights


What are the trends and opportunities in the product performance, sales, warranty, economics, supply chain issues, etc.?

Typical analyses include:
– Trend Analysis – Sales, Economics
– Product Performance & Reviews Analysis
– Warranty Claim & Customer Service Analysis

Market & Competitive Insights


What are the trends and opportunities in the market, with competitors and their products, innovations, etc.?

Typical analyses and tools used include:
– Porters’ 5 Forces, Adoption Curves, PESTLE
– Competitive Benchmarking
– Innovation Scan

Customer Insights


What are the trends and opportunities in customer segments, needs, behaviors, use cases, etc.?

Typical customer research tools include:
– Customer Surveys / Polls
– Ethnography
– Focus Groups

Step 2: Develop Opportunities


The best product development teams have an evergreen list of product ideas they are continually mulling, developing and prioritizing. When it is time to develop these opportunities, flesh them out with customer use cases, requirements, innovations & features, and synthesize the details in a product snapshot.

Customer Use Cases


Customer use cases and requirements identify who is going to use the product, and how and where they may use it. What are the new and existing use cases and requirements the product is going to address?

Typical analyses include:
– Trend Analysis – Sales, Economics
– Product Performance & Reviews Analysis
– Warranty Claim & Customer Service Analysis

Innovations & Features


Identifying innovations and prioritizing the core features is an important next step in developing a product idea. What are potential innovations and features that will create a step-function improvement in customer value and / or product cost?

Typical analyses include:
– Tech & Innovation Research
– Competitive Product Teardowns
Analogy Brainstorming
– Patent Analysis

Product Snapshot


In the latter stages, every product idea needs a snapshot identifying the target customer and their needs, features, economics, differentiation, synergies, high-level development plan, supply chain implications, and overall ROI or size of opportunity. At this point it is critical to validate the concept.

Typical analyses include:
– Customer Surveys, Focus Groups
– Concept Testing, Rapid Prototyping
– BOM (bill of materials) & Capital Needs Analysis
– ROI & Synergy Analysis

Step 3: Prioritize Product Opportunities


Once you have a nice collection of potential product opportunities, the next step is to prioritize the opportunities that the team will work on, given the limited resources and budget. The easiest way to prioritize product opportunities is to create a decision matrix, score all of the opportunities, and then map them on a prioritization matrix. Once you map the opportunities, get the right people in a room to debate, re-score, and finalize those ideas that make it in the top left corner of the prioritization matrix.



Step 4: Create the Product Roadmap


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A well-designed and robust product roadmap will serve as the guidepost for not only product development and supply chain, but also go-to-market strategies (sales, marketing, and distribution). Creating a robust product roadmap takes both art and science in lining up milestones and development blocks in an optimal way to maximize resource productivity, synergies, and downstream dependencies. A product roadmap should always be a living document that is continually reviewed and scrutinized through an organization’s governance.




PART 2: THE “HOW” – PRODUCT DEVELOPMENT LIFECYCLE STRATEGY


The second part of a product strategy is the product development lifecycle strategy. Think about the product development cycle as the “big process,” which is made up of projects and the actions of people, infrastructure and partners. The “big process” creates the “big output,” which in this case is the product roadmap.



THERE ARE 3 STEPS TO A PRODUCT DEVELOPMENT LIFECYCLE STRATEGY


A strategy is simply the goals we choose and the actions we take to achieve those goals. Developing a product development lifecycle strategy takes three steps: 1. define effectiveness goals around the product roadmap, 2. define efficiency goals around the lifecycle and delivery of the product roadmap, and 3. define the initiatives necessary to achieve the efficiency and effectiveness goals.


Step 1&2: set the input & output goals


Step 1 & 2 in developing a product development lifecycle strategy involve setting the goals for the effectiveness and efficiency of the product development lifecycle. Analyzing historical trends, benchmarking, and brainstorming is helpful in developing the metrics and goals that determine the success of a product development team.



Step 3: What initiatives ARE NECESSARY TO ACHIEVE THE PD GOALS?


For a product development team to realize its goals, they need to develop and execute a portfolio of initiatives to improve the effectiveness and efficiency of the team’s processes, projects, people, infrastructure and partners. Below are some of the elements that could be a focus of your initiatives.



use a 1-page strategy to drive execution and success


Documenting your product development lifecycle on one page will help you synthesize the essential metrics, goals, and initiatives that will drive success. Then, it is crucial the product development leaders over-communicate the strategy, incorporates it into the governance of the team, and hold the team accountable for the execution of the strategy.

last thoughts on product strategy


The future of a product company comes down to the quality of the product strategy, which is about driving better customer value for target customers over competitors, in a financially superior way. Developing a strong product strategy takes discipline, customer, market, and product development insights along with excellent problem solving.

If you want to talk about your product strategy with an expert, just set up a completely free, no-hassle 30-minute coaching session.

DOWNLOAD PRODUCT STRATEGY WORKSHEETS & TEMPLATES


To get started on your product strategy, download the product strategy worksheets & templates for free. The PowerPoint includes:
1. Product Benchmarking Template
2. Product Ideation Worksheet
3. New Product Strategy Overview
4. Product Prioritization Template
5. Product Roadmap Template
6. One-page Product Development Lifecycle Strategy