How to define a winning product strategy
We all want to build products that are successful- products that meets users unmet needs and delights them, products that are clearly different than what competitors offer. But how does one orchestrate that success? Planning is key and the key components of the plan are — having a clear product vision, defining goals to achieve the vision and the strategy which outlines the how.
Omidyar Network and Women in Product recently hosted a workshop on “How to Determine Your Product Strategy” where Dan Olsen presented a framework to put together a strong product strategy. Here is a summary of the key takeaways from the workshop to help you with defining your winning product strategy.
What is Product Strategy?
Let’s start off by defining what Strategy is before delving into Product strategy. Strategy is the long-term plan for how you are going to win informed by competitor analysis. Strategy is also the ability to say no to a multitude of other great ideas to stay focused on the big picture and make decisions that are not easily reversed.
“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.” — Steve Jobs
Product strategy is the plan that defines how the product will create more value for customers by meeting their needs in better ways than the alternatives. In addition to taking into account the users needs product strategy should also be informed by your Business strategy so that you are building products that ultimately leverage your unique strengths as a company.
Finding your Product Market Fit
In his book, The Lean Product Playbook, Dan defines a framework for building a product strategy that is clearly differentiated from competitor offerings and focuses on serving the users underserved needs.The model consists of 5 layers broken out into 2 areas: Market and the Product.
Market
Determine your Target customer- Identify the target customer segments. Common user segments include:
- Demographic — age, gender, education, income
- Psychographic — attitudes, interests
- Behavioral — what they do and how often
- Needs based — users with specific needs (Example: parents who need a baby monitor)
Try to get past the superficial segments. For example: instead of saying that my target segment is “Millennials”, think of which Millennial needs your product can address. You might start off with one or two segments and user testing could reveal new segments that you could go after.
Identify Underserved Customer Needs
Once you identify the target customers, identify the customer problem, need or benefit that the product should address before diving into the product features and specifics.
Product
Products typically change more frequently than the market needs. For example, the need to listen to music on the go has existed for a long time. The products to address that have evolved over time from transistors to Walkmans, Discmans, iPods and now mobile phones. Product Market-fit exists in the space between Market and Product. There might be solutions to your users needs out there now but strong Product strategy looks for innovative ways to build a better solution that will delight users and provide them ways to meet their needs in a more efficient or fun way.
Three layers within product to focus on are:
Value Proposition: How are you going to meet the users underserved needs in a way that is better than the alternatives out there? Product Strategy fits in this layer and requires you to have a good understanding of the market and the available solutions.
Feature set: Functionality that we will build that will relay those benefits to the customer.
User experience: The interaction layer that will allow the user to enjoy the benefits of the feature set.
Defining your product strategy
To tie it all together, Dan talks about Problem space vs Solution space and the Kano model to compile all the market and product information.
“People don’t want to buy a quarter-inch drill. They want a quarter-inch hole” — Theodore Levitt
Problem space helps you clearly articulate the problem you are trying to solve vs. Solution space focuses on how to solve those problems. Problem space can be messy to figure out since different customers will have different needs and might even express the same need differently. Parsing through that noise and taking the time to clearly identify the problem space/user benefits upfront will help with defining the scope of what needs to be built better (solution space) and hence will help save time and effort.
Dan referenced the Kano model as a framework to identify user needs and satisfaction. The framework categorizes user needs into:
- Must have benefits — Eg: Seat belt is a must have when buying a car
- Performance Benefits — Eg: Car with high mpg is preferred over another car with lower mpg even if all the other features are the same
- Delighter Benefits — Eg: When car navigation first came out it delighted users. A delighter feature can transition into a performance benefit and then become a must have benefit over time.
Using the Kano Model, list out the customer benefits in rows, the competitors and your product offering in columns. Fill out the table by marking how competitors and you rank in each of the benefits.
This exercise should help you identify areas where competitors are not strong or don’t play at all and can help drive the strategy for your product.
References:
- Video recording of the workshop
- Dan’s presentation deck
- Book: The Lean Product Playbook — Dan Olsen
- Book: Thinking Strategically — The Competitive Edge in Business, Politics, and Everyday Life — Avinash K. Dixit and Barry J. Nalebuff
- Book: Crossing the Chasm — Geoffrey A. Moore
Follow Omidyar Network on Twitter at @omidyarnetwork, Dan Olsen at @danolsen, and Women in Product at @womenpm to learn more great insights for startups and hear about upcoming events.
