Product Vision and Strategy
This article will talk about how to define product vision and strategy by understanding product ideas using Lean Canvas. It also shows how product vision and strategy are related to each other in North Star Framework.
What is Product Vision and Product Strategy?
Product vision is a statement that described the value offered to consumers and the product’s position in the future. Is product vision the same thing as company vision? Usually, it is not. Company vision should be more stretched and stable for a long period but in product vision, we should be more concrete and in a shorter period (2–5 years for digital products).
Product vision is important to align all stakeholders and will help in framing strategies. Based on Product Stack from Reforge, the product strategy is a connective tissue between company/product vision and product roadmap. Hence, the product strategy will consist of a plan on how the product can reach the product vision.
Example
I will take one of the non-unicorn Indonesian companies, Flip, as an example. Flip is a fintech-based payment platform in Indonesia. Flip has some products such as interbank transfer service, digital product payment, and financial management for businesses.
Flip Vision is to be the most customer-centric service company in the world and enable users to make fair financial transactions from anywhere to anyone.
From the company vision, we can see that they are focused to tackle customer problems by providing the fairest financial service. It also wants the service available to anyone and can be used anywhere. This vision was stretched and pointed to the company’s position in the market.
To define the product vision, we can deep dive into the business idea by using Lean Canvas and then determine the product strategy from there. Lean Canvas is a tool created by Ash Maurya to construct a business idea more simply. It consists of 9 segments that need to be filled sequentially, they are Problem, Customer Segment, Unique Value Proposition, Solution, Unfair Advantage, Revenue Stream, Cost Structure, Key Metrics, and Channel. However, the creator also mentioned that there is no absolute right sequence to fill the Canvas after some iterations.
In Indonesia, every interbank money transfer will incur a service fee of Rp. 6.500,- For a single transaction, it might seem like a small fee but when we need to transfer to many accounts and frequently, people might lose their money unwittingly. Transferring money to other banks sometimes also needs more time and it’s not convenience for some people.
From that problem, Flip wants to create a product so people can transfer money to other banks without paying the service fee. At first, they open a holding account in any bank in which the user can transfer the nominal to the Flip account and then Flip will transfer the money from other holding accounts at the same bank as the user destination. They also will build other features to ease and provide convenient service for users such as multiple transfer features and adding payment by virtual account.
The customer segments are people with a single bank account who need to transfer money frequently to numerous people, and as fast as they can, for example, small-medium business owners or university students. We also targeted them as early adopters because every saved penny will mean a lot for them.
The Unique Value Proposition they can provide is user can transfer money to other bank safely and easily without any additional fee.
Possible revenue streams for Flip are transaction fees and convenience fees. A transaction fee is a fee charged to a user if they transfer money exceeding the maximum nominal or number of transactions. A convenient fee can be charged if users want to prioritize their transactions. The cost structure consists of infrastructure costs to build the product, marketing, and operational cost.
Furthermore, the success of the product can be measured by some key metrics such as the number of active users, transactions per month, and volume of transactions. Active users will show how many people get the value of the product and the usage will measure by the number of transactions monthly and the volume of transactions.
Channels describe how the company communicate and reach customer to know the value of the product. In the beginning, we can use social media ads for new targeted customers as well as referrals from active users.
Based on that canvas, the product vision might be to be able to send money to any bank without transfer fees and a far better experience, seamlessly, swiftly, and securely. The product vision was concrete and directly showed value to the user. It also mentions the differentiation from others which is no transfer fee on the interbank transaction.
The strategies that can be applied by the company to achieve the product vision include:
- Build an integrated system with many banks to make it easier for users to transfer money.
- Create a secure system so customers have trust in using the product.
- Improve payment methods to create a seamless and swift experience on money transfers.
The big picture of how the problem, product vision, and product strategy are related to each other can be seen in the North Star Framework. This framework also includes North Star Metrics which can help the company to monitor the execution of product strategy. The analogy of North Star shows the company’s direction and measures product success.
The North Star Metric of the product is the volume of transactions that result from some aspects such as:
- REACH, the reach of the product will be shown by the active users metric. Active users are defined as people who have already used the service at least once. This definition ensures people already get and find the value of the product.
- ENGAGEMENT will be measured using the average volume transaction metric. The higher the volume the better, because it is correlated to user experience concerning security and easiness of the service.
- FREQUENCY shows how frequent users use the product. The more frequent is better because it will impact product lifetime.
This analysis was part of my assignment on the Product Management Program with RevoU. I am open to discussion about this topic to improve my understanding.
