Key to a Future-Proofing Product Roadmap
Contemplating product roadmaps is a fundamental aspect of a product manager’s role, and many of us have engaged in this practice numerous times throughout our careers. However, as a product lead with the ability to influence a company’s direction or shape the destiny of a holistic product (rather than just its feature set), strategic thinking takes precedence in your product roadmap, alongside considerations like OKRs, feature pipelines, and priorities.
In my experience, there are two common pitfalls that can arise in such situations, and this is where the McKinsey Horizon Framework steps in to provide guidance.
Please note that if your company is still in the process of finding a product-market fit, the following issues and solutions may not be directly applicable.
Problem 1: Fixation on Competitor Alignment at the Expense of Differentiation
Many of us have encountered this scenario: we’re up against one or a few primary competitors, and they seem to be excelling in certain areas of competition. This often leads stakeholders, CEOs, or even ourselves to feel the pressure to match the competition by introducing a slew of similar features.
Let’s clarify — there’s nothing inherently wrong with benchmarking against competitors. In fact, when you closely compare your product to its direct rivals, you’ll notice that around 80–90% of the features align.
However, problems arise when we overstuff our product roadmap with features solely for the purpose of imitation. This approach turns your product into a perpetual catch-up game with competitors.
Consider this hypothetical scenario: your competitors have already gained an edge and possess resources similar to yours. While your product is busy replicating their features, these leading competitors are forging ahead with new functionalities to maintain their edge. Ironically, your goal of catching up becomes increasingly elusive.
Problem 2: Overreliance on Proven Concepts, Stifling Innovation
Another pitfall is clinging to proven features, which restricts the innovation potential in your product roadmap.
When a feature has demonstrated clear success, it’s tempting to keep funneling resources into its enhancement. After all, the track record makes it seem like an obvious choice. This approach avoids risks and sidesteps potential resistance from stakeholders who may be wary of embracing risky innovations.
But, what’s the downside of populating your product roadmap exclusively with proven features? Your product might miss out on opportunities provided by high-risk MVPs (Minimum Viable Products) that could tap into new user segments or establish a leading position.
Solution: Understanding the McKinsey Horizon Framework
The McKinsey Horizon Framework is designed to help companies balance existing business initiatives while identifying growth opportunities for the future. While primarily intended for business strategy, the essence of the framework is transferrable to product vision, cultivating momentum for growth.
Horizon 1: Strengthening the Core (60–70% Resource Allocation)
In the realm of product management, Horizon 1 represents established products or functionalities contributing stable revenue. These are the proven success stories — the features that have already demonstrated their worth.
As mentioned earlier, the issues we discussed stem from overloading Horizon 1 with features. Attempting to mirror competitor functionalities or relying solely on proven ideas congests this horizon.
Keep in mind, Horizon 1 should ideally consume no more than 70% of your roadmap’s resources. For startups refining core features, 70% remains a reasonable target.
Horizon 2: Cultivating Emerging Business (20–30% Resource Allocation)
Horizon 2 encompasses initiatives based on hypotheses supported by evidence, offering opportunities to fortify core products. These initiatives may arise from various sources:
- Data-driven observations
- User feedback
- Insights from analogous industries
Features within Horizon 2 can demand 20%-30% of your product roadmap’s resources.
For instance, consider an e-commerce platform’s core functions (Horizon 1) focusing on essentials like orders, product onboarding, customer service. Now, imagine recognizing the potential of a membership program to enhance user retention and attract cost-sensitive users — an alignment with your product/company OKRs. Although untested on your platform, this concept has a proven track record in e-commerce rebate websites and is supported by user segment analysis.
Such a concept, or the AB testing of the concept, belongs in Horizon 2.
Horizon 3: Pioneering Transformational Business (10% Resource Allocation)
Horizon 3 is reserved for innovations with the potential to generate substantial long-term revenue streams. Often, these innovations lack clear predictors of success. They stem from:
- Groundbreaking technology
- Exploring new markets adjacent or entirely distinct from the current market
Features within Horizon 3 should not consume more than 10% of your product roadmap’s resources.
Consider the emergence of LLM as a prime illustration. Prior to its arrival, the vast majority of product managers scarcely acknowledged its potential applications within a SaaS company. At the inception of ChatGPT’s journey, uncertainty shrouded its feasibility, limitations, and the ultimate deliverables achievable by integrating it with the product — concrete evidence was a distant dream.
However, had we halted our progress at that juncture, the company risked trailing behind in future competitive landscapes. Conversely, completely upending the product roadmap to accommodate LLM could have jeopardized the core business — essentially the bedrock of the company’s existence and foreseeable growth. Competitors could exploit this shift, generating challenges that undermine momentum.
The Horizon Framework would allocates merely 10% of resources to high-risk explorations, while sustaining the ongoing growth of your existing product. This equilibrium safeguards against undue disruptions and steers your company towards thriving in both innovation and continuity.
In Action: the Horizon Framework to Your Product Roadmap
Incorporating the Horizon Framework into your roadmap is straightforward. Alongside the conventional steps — such as recalibrating OKRs, estimating impacts and efforts, and prioritizing — you need to classify features and allocate resources across the three horizons.
Here’s a simplified example:
- Categorize pipeline features into Horizons 1, 2, and 3.
2. Estimate man-days for each feature.
3. Prioritize and allocate features within each horizon.
For instance:
If horizon considerations were absent, Feature D might remain sidelined despite its potential to open new markets. Thanks to the Horizon Framework, Feature D earns a place on the roadmap, utilizing the dedicated 10% of resources allocated to Horizon 3.
4. Ensure a balanced resource allocation across all horizons.
Additional Insights:
Relevance to Product-Market Fit: It’s essential to reiterate that this practice holds significance primarily for those who have successfully identified their product-market fit. Without this foundational understanding, the Horizon Framework’s application might lack relevance.
Adapting Ratio to Your Product Phase: The appropriateness of resource allocation across the horizons should align with the current phase of your product’s lifecycle. In nascent stages, prioritizing Horizon 1 might demand a larger share of resources, while more mature products can allocate resources differently.
By embracing the Horizon Framework, you’re poised to cultivate a harmonious equilibrium within your product’s growth trajectory. It’s a tool designed to enhance your strategic decision-making and empower your product to thrive.
