How a Product Manager Can Build a Strategic Roadmap

As a lean, product-driven company, a tremendous amount of pressure is placed on the product management function at Nulogy. There is great demand for a finite set of product development resources which means product managers are responsible for conscientiously distributing disappointment to many product stakeholders in pursuit of focus and the work of highest business value. This puts critical focus on the question faced by all product managers: what is the work of highest business value to focus on right now?

The Product Management Challenge

In my experience one of the greatest challenges for a product manager is effectively converting business priorities into product priorities. Yet I feel like there is precious little written on the subject. In this post I introduce a framework that I have used to address this challenge at Nulogy, which I call The Hierarchy of Strategic Product Needs. I hope that it might also help others.

To help articulate the challenge the framework seeks to address, let’s look at two common methodologies used to determine what to work on in a product roadmap. We’ve used both over the years at Nulogy and they can be quite useful when combined with a proper strategic context so I’ve included links to a Google Sheet you can download and use as a template if you’d like to try these techniques out for yourself.

The Allocation Method

A product manager can balance different classes of work in the roadmap using what I call the Allocation Method because it allocates a certain percentage of time in the roadmap to different priorities. To use this technique you:

1. Dedicate percentages of time in your roadmap for different Classes of work (e.g. features, technical debt, etc.)
2. Group all incoming requests based on these Classes.
3. Prioritize all requests within each Class.
4. Work through the priority queues, respecting your time allocations.
5. Readjust percentage allocations over time as necessary, for example every quarter.

A pie chart visualization of this methodology looks like this. You can see the Google Sheet used to make this here.

Pie chart visualization of The Allocation Method

This approach is easy for everyone to think about, and can be effective for gaining alignment behind roadmap priorities. That is, if everyone buys into the percentage allocations, and this is the big if. More on this later.

The Weighted Matrix Method

Another way of prioritizing is to use what I call a Value Matrix. This is basically a big grid of product requests and weighted criteria that multiply out to get numeric ratings. To use this technique you:

1. Define the key criteria, or reasons why a request could be important, for deciding the priority of a product request. I recommend thinking about both short term and long term criteria.
2. Give each criteria a weighting. I do this by giving more important criteria a larger maximum value.
3. Write out all product requests, of any type, into a single list.
4. Rate each request against every criterion. Here is where the critical product management skill of judgement comes in. A 100% score means that the request is about as good as ideas come for this criterion.
5. Sum up all the scores and sort the requests from highest to lowest score.

The matrix looks something like this if you add color scales to the cells. You can see the Google Sheet used to make this here.

Example of what the Weighted Matrix Method looks like.

This approach is nice because you can tune it for your own organization, and you can get the reassuring comfort of numbers to back your prioritization decisions. Unlike the pie chart approach, this is a single queue strategy, which means the team is technically always working on the absolute most important work at any time which is motivating. This also means you can actually use the two techniques together in fact if you made a value matrix for each class of request in the pie chart approach. However these methodologies, even used together, suffer a common problem.

The Missing Link

The problem is that it can be unclear for a product manager what percentages to use in the Pie Chart for each class of problem, or similarly unclear what weightings to give to the criteria in the Value Matrix. These numbers are essentially a manifestation of priorities in the business strategy, but these methodologies do not provide any insight into what these values should be or where they might have come from.

In practice, a product manager would generally derive these values by applying heuristic judgement based on experience and knowledge of the business strategy. Unfortunately, this approach is very opaque, which leads to two major challenges:

1. It does not maximize confidence and alignment with the roadmap in the organization
2. It is hard to know if the heuristic used is appropriate, or if it can be improved

In a product-based company, these problems can seriously affect business success which is why I feel that the following framework can be very useful.

The Hierarchy of Strategic Product Needs

To help the product management team address these challenges at Nulogy, last year I introduced a framework we could use to help prioritize and also communicate about these priorities. After a few iterations of refinement, it came to be illustrated like this.

Product Manager’s Hierarchy of Strategic Product Needs

By invoking Maslow’s famous Hierarchy of Needs and using a pyramid visualization, I am conveying the belief that a product strategy should focus on meeting higher order business strategy goals only after they have met lower order or foundational business strategy requirements. To understand what I mean, let’s get into some detail on the pyramid and how a product manager can use it.

First Order: Foundation

When a business has its first order business needs taken care of then it has what I refer to as a Foundation. Without these, you are at risk of having no business at all. Here are the four needs:

1. Healthy Company Financials: This could be revenue, profitability, or other key financial metrics as determined by the leadership team or board. For most, cash is king, and without it your company won’t be able to execute on even the most brilliant of product strategies. Furthermore, with more cash, you can execute on more difficult product strategies. Product managers should make sure their strategy will ensure the right financial metrics are met.
2. Loyal Customer Base: I am a believer that a successful business is based on bringing true value to its customers, which means they stick around. It feels a little bit ridiculous to have to state this, but it’s not as pervasive a philosophy as it should be. If you don’t have loyal customers, then moving on to other product priorities is kind of like trying to fill the bathtub with the drain unplugged. As much as you try, you’ll never really get to your goal, or you’re going to be extremely wasteful to get there, and you won’t be able to maintain your position without wasting more and more. Product managers should prioritize that which ensures customer retention stays at a satisfactory level.
3. Consistent Quality, Security and Reliability: I am sometimes asked what I see as being the biggest risk for our business. An answer I often give is violation of our customers’ trust. Customers can forgive many forms of mistakes, however breaking their trust in any significant way, is one of the few mistakes that can be irrecoverable. Fundamental issues with quality, security, and reliability are what can break this trust. In the internet age, such problems will spread from your current customers to prospective ones in an instant. Product managers should never neglect quality, security, and reliability issues that will endanger customer trust.
4. Strong Team Culture and Engagement: Most business leaders will readily identify that people are their greatest asset. Nonetheless it is common for a product strategy not to explicitly call out what priorities will motivate high engagement and the ability for teams to work effectively together. If people are really the secret to success, then it’s important to treat their needs as a first class priority. Work that falls into this category would be features which improve the quality of life for developers, QA, and customer support. Product managers must be sure to consider the needs of their own people when prioritizing.

Second Order: Direction

When a business has its second order needs addressed then it has what I call Direction. Building upon its solid Foundation, it can focus on moving business forward. Here are the three needs:

1. Formula for Winning Customers: You have to be able to get customers in order to have a foundation for your business. What you want to get next is a systematic approach, a formula, for winning the right customers consistently and predictably. At this point you should have a solid grasp of your unit economics and know how to scale your sales and marketing to grow your top line. Product managers can use the product to help drive this formula. How this is done will differ a lot depending on the type of product or business, but in almost all cases, ensuring the true capabilities of the product fully deliver the business value promised by sales and marketing is a good place to start.
2. Competitive Differentiation: Nothing new here. Every business has some form of competition. If you don’t yet, then you will soon if you’ve got a formula for winning customers because someone else is going to start noticing. To give the company clear direction, product managers must steer their product away from the alternatives with a clear differentiating value proposition.
3. Referenceable Customer Successes: A step better than having loyal customers is having ones that are willing to be active advocates for your product. These customers will not only have a greater customer lifetime value, but also help drive new sales. In order for existing customers to want to recommend your product to others though, product managers need to ensure that they are addressing their needs, which could well be different than those of prospective customers. The hype cycle and Kano model provide a framework for understanding why this is the case.

Third Order: Momentum

Once a business is able to work on its third order needs, I consider them to be trying to generate Momentum. The concerns of the previous level are about ensuring your business model is robust, whereas at this level you are trying to establish an ability for your success to beget more success. Here are the two needs:

1. Compounding Value: At this stage, the business is moving beyond just being able to clearly differentiate from competitors with your value proposition, to being able to provide increasing value with every new customer that is won. The most commonly talked about concepts here are leveraging economies of scale, or network effects. In each case, the more customers you have, the greater the value your company is able to provide to the existing customers. After achieving value differentiation, product managers should be trying to figure out how to create systems and architectures that will provide customers with compounding value.
2. Fanatical Customers: The other dynamic to strive for here is to have customers that are so fanatical about your product and business that they actively encourage others to become customers of your business. Product management can only really work on this when the business has satisfied its earlier needs and can move on to focus on the finer details of customer experience (CX) and user experience (UX).

Fourth Order: Disruption

If your business has managed to achieve momentum, the ultimate pursuit is what I call Disruption.

Paradigm Shifts: At this point your business has established the strength to attempt the high risk and high return challenges that have the potential to change the value equation completely and revolutionize an industry. A paradigm shift is the hardest goal to achieve, and also the one with the greatest potential return. A product manager must think more radically now to completely reinvent the offering at this point which starts a cycle of renewal, and effectively a new pyramid.

The interesting thing about reaching this point of disruption is that it marks what I think is not only the pinnacle of business opportunity, but also the requisite leap to prevent a company from stagnating. After achieving so much, there will come a point where a business must make a dramatic shift in its strategy in order to continue being successful.

The Benefits

We have not used this formal framework for a long time, however it has been how I have thought about strategic product prioritization in my mind for quite a while. Now that I have it, I have certainly found it very helpful to explain product priorities in the context of overall business strategy to others. It may not apply to all business models, however at Nulogy it has helped provide greater alignment, particularly outside of the product management team, and also gives everyone a better way of engaging in a discussion of why certain projects are prioritized the way they are in the roadmap. (This is another important responsibility that I talked about in my last post.) One of the most frequent ways I have used it is to explain to people why we might be working on something which does not appear to be related to a strategic goal that has been emphasized heavily. The pyramid helps people understand what foundational priorities need constant attention to ensure that we are in good shape to pursue higher order goals that likely receive more airtime. I also like to reference the pyramid to provide focus to my thinking about the future direction of our business and products.

I hope others may find this framework useful, and would love to hear any feedback on it as I expect it to evolve and refine over time as it gets more use in practice. I would also love to hear how others are tackling the same challenges of achieving organizational alignment, and aligning business strategy to product strategy!