Product Strategy: Capabilities
What’s your unique fuel that takes you to your North Star
In the next few posts, we’ll work through how you can use the Product Strategy Framework to develop your vision-driven product strategy. This particular post will explain how to think about your organization’s core capabilities in the context of your product strategy. By way of a quick recap, the four components of the Product Strategy Framework are:
- Customers: Customer segments and personas you’re targeting, along with their specific pain points or desires that your product vision seeks to address
- Capabilities: The differentiation and innovation (technology or operations) you have (or will build) so you can solve that pain point in a uniquely valuable way
- Design: The features, appearance, branding and messaging necessary to effectively communicate the product’s unique value to your targeted customer segments
- Delivery: Pricing, distribution and logistics of the product — basically, everything necessary to get the product into your customer’s hands so it can begin to address their pain points.
Defining the Capabilities row means answering the question “Why us? What makes us special?” What unique capability does your company have today that lets you create a product with a unique value proposition? What differentiates your product now? What do you need to build next to sustain your differentiation? If you can’t answer these questions succinctly, then you may still need to think about the existential reasons for your company.
Now that we’ve sent you on an existential quest, let’s dive into how you would go about capturing the information to fill out this row. Think about the hard-to-build product competencies. These could be in the form of data, patents, trade secrets, or operational expertise. This row is not meant to describe your entire product feature set, but instead should capture the foundation of your unique value proposition — what does your company own or know that stops competitors with the same idea from addressing your customer’s pain points equally well (or better)? If you are truly on the quest to build Radical Products rather than a “me too” product then it’s important to have clarity about your unique capabilities.
Ideally, a startup’s vision will provide the clues for defining the unique capabilities of the product. The founders usually have a deep understanding of the problem they are trying to solve, and have come up with a unique innovation to solve the problem. When it began, Netflix’s Capability row would have captured their recommendations algorithm, viewership data, (and data) and the operational innovation, i.e. the red envelopes and the system to ship you DVDs quickly. For AirBnB the Capability row would have featured their ability to create trust in the listings on the website by having someone from AirBnB visit the properties listed and taking high quality pictures to verify the claims in the listings.
As with every row of the Product Strategy Framework, when you are identifying what unique capabilities and differentiators you want to invest in, it’s imperative that you evaluate them for vision fit. For example… As we have described in the post about “Three Diseases Your Product Can Catch”, this 2X2 rubric can help frame the discussion with your team. Put each of the capabilities into one of the four quadrants. For the Capabilities row, a sustainable capability (that is, something that will directly help you generate revenue or reduce costs) that also directly supports your core vision will appear in the top right hand quadrant.
For AirBnB the decision to visit properties and invest in high quality pictures was something that prioritized vision over sustainability in the short term. However, by focusing on their vision they were able to create trust in the listings and differentiate themselves from Craigslist and other listing websites. As the properties started getting renters, the “renter review” capability could provide a sustainable way to create trust in the listings.
Clarity on exactly what your core capabilities are is extremely useful beyond just helping you develop your product. It can help define your marketing and sales strategy by focusing on the customers for whom the unique capabilities your product offers solves their biggest pain point(s). It can help you price your products to capture the unique value your product creates. Both of these elements help you differentiate sustainably in the market.
Share your experiences as you explore the existential questions around your product and business! We look forward to hearing your comments and questions.