The Startup
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The Startup

The Product Manager’s Guide to the Strategy

What is similar between Steve Jobs and a person who put three thousand toothpicks in their beard? They wanted to make history. What is different between Steve Jobs and a person who put three thousand toothpicks in their beard? They chose different strategies for achieving it.

Over the course of my career I worked with a number of companies and startups as a PM, advisor or mentor, and was most interested in observing how they make decisions. With small variations, you could broadly identify three main scenarios:

  1. Hierarchy is king. Someone who is higher up than you on the career ladder always knows best.
  2. Data is king. Just pick a good metric and move it in the right direction.
  3. Customer is king. Build whatever customers ask you to and burn through the backlog of bugs and feature requests.

The word “strategy” was coming up as well but, most often, the connotation was overly negative. The strategy even when it existed was considered to be a part of the corporate “buzzword bingo” rather than an actually useful tool.

However, the most successful companies I ever worked with knew that the “secret” fourth option — using strategy over hierarchy, data and customer requests to make decisions — was the right choice. In this guide I’ll share why it is the case and what are the steps to create a good strategy.

Why you should care about strategy

Okay, I can already hear you saying, “Wait, what? Using strategy over data and customer requests doesn’t make any sense: how can you separate them from one another?”. The thing is that there is a big difference between being informed and being driven. For sure, strategy should be data-informed and customer-centric but it doesn’t rely on a single piece of information, it takes a look at the holistic picture. Let me give you a simple example: imagine that you built a feature but the A/B experiment didn’t show expected results. What would you do next — ship, iterate or kill the project? Your current data and existing customer requests might encourage you to kill it. Looking at it through a strategic lens however, you could have seen this feature as table stakes for unlocking a new market and continued iterating.

  1. Strategy gives perspective. It’s sometimes tempting to focus on the known space but, if you want to grow your business, you have to think about untapped opportunities as well. Strategy connects “where we are at” to “where we aspire to be”.
  2. Strategy creates alignment. Many founders and execs understand the point above very well and intuitively think about new opportunities. However, the bigger the team becomes, the harder it is to ensure that everyone is moving in the same direction. Imagine a New York City marathon without any guiding signals and guardrails: just thousands of people randomly running around the city. Even if you can track some high-level decisions, there are thousands of smaller ones that you can not possibly be in control of. Unless you give people a framework, they will be reinventing the definition of “important” on their local level and might unintentionally hurt your business.
  3. Strategy leads to better focus. Teams without a strategy are just “feature factories”, they are burning through their backlogs and idea lists, and not thinking about what would be the long term effects. These teams are a bit like amateur players in chess, doing a lot of unnecessary moves, not thinking a couple of steps ahead and sometimes falling for a gambit. You can build 10 features for your product and still be behind competition, or you could build just one and win the market.

“People think focus means saying yes to the thing you’ve got to focus on. But that’s not what it means at all. It means saying no to the hundred other good ideas that there are. You have to pick carefully. I’m actually as proud of the things we haven’t done as the things I have done. Innovation is saying ‘no’ to 1,000 things.” (Steve Jobs)

Choosing strategy for a coffee shop

Imagine that you want to open a coffee shop. You already found a place in a high traffic location and bought necessary equipment. Now, only “simple” questions are left to answer:

  • What price should you charge for a cup of coffee?
  • Do you want to hire waiters, or make it self-service?
  • What kind of chairs would you buy: stools or comfy armchairs?
  • What should be the distance between the tables?
  • What kind of music do you want to play?
  • Are you going to sell food, and, if yes, what kind: sophisticated desserts or home made sandwiches?

and so on; there is an infinite list of such questions. How do you answer them?

Option 1: Rely on your gut feeling and make random decisions.

Option 2: Try to be data-driven and answer each question with an experiment. For example, buy an equal amount of desserts and sandwiches and observe what sells better. Even if we set aside a possible difference in quality and taste, how can you make sure that the data you got today is an accurate representation of the following couple of years?

Option 3: Think about your strategy first, then try to answer these questions. Here is some additional information for you:

  1. Your coffee shop is located not very far from the university so you decide to focus on students as your primary audience. You want to have low prices and a creative/collaborative vibe.
  2. Your coffee shop has a nice view over the river and is not very far from the city centre. You want to turn into an upscale place for couples going on a date.

For sure, it’s not a strategy just yet but it already gives us a cohesive set of choices based on the analysis of our strengths, and we can already use it to make decisions.

In the first scenario, you probably would go for simple furniture, large tables where a lot of people can sit at once, upbeat music and food that doesn’t make a mess (as students work on their laptops at the same time as they eat).

In the second scenario, you need small secluded tables, intimate lighting, romantic (maybe live?) music and fancy food that can make a nice conversation starter.

For sure, this example is simplistic but it already starts to surface some of the key attributes of a good strategy:

  1. It can’t be created without understanding your strengths (disregarding the location near the university would have been a huge mistake);
  2. It’s an active set of choices (when a new barista joins your romantic coffee shop, she clearly understands why she can’t turn her favourite Rammstein song on);
  3. These choices are coherent (imagine seeing a designer sofa in a student cafe or a bread and butter sandwich in the menu of an upscale place).

If you are just one person working on a project, you might not need all of this written down, you still can keep it in your head but the more your team grows the more you need to be clear and explicit about your decisions. Strategy is your tool to create a decision-making framework for the whole company.

How to write a Strategy

“Finally”, you say, “enough of this chatter. Let’s get started on the real stuff!”. Not so easy. Apparently, you can’t create just a strategy.

The full version of this article is now available on my personal website https://nfng.pro/2020/05/08/strategy/

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