Product Strategy 411

In this interview, we will deep dive into product strategy and answer some questions like:

- What is product strategy?

- Why it's important to have one?

- What are the ingredients of a good strategy?

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Lusi

Shayani it's good to talk to you today about what is product strategy. And there you have a lot of experience both from your time at Survey Monkey as well as Meta leading product teams, in addition to being an advisor to different startups at various stages. Let's kick off with what is a product strategy and why is it important? Why do I need to have this?

Shayani

Before we get into product strategy, I think it's important to get a couple of these words right. You hear a lot about mission - So let's start there.

A mission is when a company or a product reimagines what the world would look like without any wording that is company or product specific.

It could be something like we want the world to be more sustainable, or we want people to be more connected or we want to see high-quality education become more accessible etc.

Vision is a step down, explaining how my company or my product line is going to affect this mission.

For example - So it's great that the world is going to be a greener place but you could do it through many, many ways. But if you think about Tesla, Tesla's really thinking about bringing more EVs into the world to affect their mission. They are not talking about solar or water. The vision for our analytics product at SurveyMonkey was to power insights that enabled people to make better business decisions.

A product strategy is the next level down. It's a plan that lays out what we as a business or team are going to be focussing on over a specific time period to make a dent towards achieving our vision and a blueprint of where we will invest or divest.

A good strategy focuses on specific customer segments, has a few strategic themes that build on each-other to make the whole greater than the sum of parts and either doubles down on or creates defensibility. It really binds the organization together and acts as an operating plan - clearly articulating what we focus on, what we don't and points every function in the same direction. And you know, even if investors are really excited about your mission and your vision, well, that's an idea. What they're really interested in seeing is how are you going to accomplish that?

Lusi

Got it. So it sounds like it starts with a mission on a high level then vision is particular to your company. That is the strategy then is the roadmap right? And then I assume under that is like your sprint plans?

Shayani

Yeah, exactly. You could get into smaller and smaller chunks and it becomes more and more tactical. Your roadmap breaks down each strategic theme into specific capabilities or features and you can start getting into like stories and sprints. You also need to break down your strategy for individual functions to have their own version of what they're accomplishing deliverables, goals, metrics and whatnot towards the same strategy.

Lusi

So how long is this document that we're talking about? For example, your mission is a one liner. And we talked about our roadmap which is longer. What about strategy? Is it closer to a one liner or is it closer to like a 10 page document?

Shayani

It's probably like one to two pages max. Enough where you can really explain things like who your target customers are, what problems you are focussing on, specific strategic themes, what value do those things bring to the customers and you also start to explain why these things tend to layer on top of each other to build something truly differentiated.

A great product strategy needs to demonstrate a compounding effect so you really try to make the case for why when you bring these three or four themes together, you get the one plus one equals five effect.

Lusi

Got it. So when and who should be defining this. I know you were part of large companies. Meta obviously has many different products. So does it come from the top, like from Mark Zuckerberg, or does each division have their own product strategy? When we talk generically when and who should be defining it and should you have multiple product strategies based on product lines, or how should those be?

Shayani

Whoever is the head of product is the steward of that product strategy. With more products, you have portfolio strategies for a group of products or product lines or even discrete businesses. At Meta, when there’s almost 100+ products, the portfolio strategy was about defining the narrative of how these fit together towards Meta's vision, who we are optimizing for, where we should focus, why we play in the space. The intent is to provide a little bit more structure and direction to the next level down, but also help the group above really understand what your place in the world is and how you are helping achieve the company's goals. At an early stage startup, you see the founders do this work, where there is no formal head of product. They own the mission and the vision and they're in charge of really articulating that strategy. Once you start bringing a head of product, that will be their role. At early stages with a single product, you will see overlaps between the founder and the head of product, but as you get larger and larger, you see the business founder responsibilities cleaving away a little bit from the product.

Lusi

That's another question that'd be great for another conversation. When do you need a head of product? Does that matter depending on the background of the founders is more engineering or business? We'll bookmark that one for later.

Should your product strategy ever change? How often should you redefine it?

Shayani

Yah - that’s a good topic to park for another post. Like I was saying before, even without any macro changes your strategy is timeline specific. When writing it as the 3-year product strategy even if nothing changes during that time, you will need to refresh your strategy starting at the halfway or sixty percent mark. Real talk, if your strategy keeps changing monthly, it's not a good strategy.

There are a few inorganic indicators that signal needing to revisit your strategy though.

For example, you start seeing large functions like marketing or engineering starting to create their own divergent strategies or roadmaps, it’s a great indicator to revisit, refine or align.

Or when you see significant motion without outcomes in a reasonable time period. Say we've built a bunch of things, but we don't seem to be getting closer to what we were trying to accomplish then it's probably a good time to say well, either our strategy is not working or we're not following it. Time to revisit.

Another is when the market has significantly shifted, or the key assumptions you built your strategy around have wildly changed. You might be facing significant competitor threats, or shifting sands in the market and whatever your strategy was six months ago doesn't apply.

Lusi

You mentioned that for startups, this is what you should show your investors. What do investors look for in a product strategy?

Shayani

I think it's really about people trying to make sure that you have thought through and have a point of view of how you are going to make significant progress towards your vision in a specific time period and create a lucrative, growing and defensible business. So things like who are your target customers to start with? Do you understand the problems that they face and why are those painful? What are your differentiators and how do they give you an advantage? Have you thought about how this is going to translate into business outcomes? Have you thought about how the few themes have a compounding effect? I think it's really about creating that confidence for your investors and even your early customers and employees. You want them to think Yep, I get it. I buy where they're going. And I think that they understand enough of how they're going to get there, and what they need in order to get there.

Nothing is set in stone but if you have this well nuanced strategy, that means that you understand the assumptions and the risks and you would be able to look around the right corners and iterate quickly as opposed to you having no clue and being reactive to everything.

Lusi

One of the impetus for this conversation is that you've met a bunch of startups where they have a product or they have a technology, but they don't have a strategy. What is typically missing? What are some pitfalls where they think they have a product strategy, but actually don’t,

Shayani

It looks like a feature factory is probably the easiest way that I can explain it, it looks like a collection of great ideas of features that the founder wanted, what their investor told them to do, some customer has asked for, the competition just rolled out. They've done a "yes and" and strung it all together as a strategy plus roadmap all rolled into one. When you start to ask questions, it starts to unravel - there's not really a good reason why one feature comes before the other or why you should solve for this customer persona over another, or what the ROI is. The lack of principled approach means that you will have a really hard time saying no to things, but more importantly you don’t really have a clear point of view on how to accomplish your vision.

Lusi

I keep hearing this theme of prioritization. It allows you to prioritize, right that's the key.

Shayani

Yes. You should be able to use this product strategy to make the hard decisions like should we build X or Y, how should we organize, what is the right GTM motion to help us accomplish goals faster. If you're finding that you can't use your product strategy for any of the hard decisions you're making, then maybe you don't have a relevant product strategy.

Lusi

Theoretically I get it but do you have a couple of examples of both good and bad strategies? Perhaps one that really helped make important choices and decisions, or didn’t?

Shayani

Let me share a few without getting into too many specifics.

One of the strategies at SurveyMonkey a while ago was to help novice survey-ers to get insights to make important business decisions. Specific themes were evolving the platform to be “Do it for me” from DIY, bringing on more business users and closing the gaps on enterprise grade functionality. This strategy has a clear customer profile giving permission to reduce investment towards expert or power user features. It provides direction without being prescriptive for the roadmap because you can achieve “Do it for me” through AI, integrations, UI optimizations so many different ways. It also has a compounding effect. Making things easier for individuals improves retention and stickiness while focussing on teams and closing enterprise gaps means you are acquiring a higher volume of customers with larger price point. The two together exponentially increase your revenue in a way just one wouldn’t.

A strategy that wasn’t good was when we had something that focussed on making all employees more productive. Sounds good but really hard to use. What does productive mean, which people to what end? We talked about how a strategy is supposed to help you make hard decisions and tradeoffs but with something like this we couldn’t never say no to anything. Everyone started redefining productive for their teams so many divergent strategies emerged rather than the one operating plan. Having a discrete point of view that creates enough clarity that you can ladder up to it, but it has exclusions built in is really important.

Lusi

That's really helpful. What I pulled out is you want to have a point of view rather than make everyone happy. It really comes back to that target customer.

So whether it’s a startup or a large company, you have limited resources. Perhaps a startup is looking for funding. Should your product strategy be dependent on the amount you raise? Should you have three options depending on your end resources, or should the strategy actually be the same? And maybe just your timelines are different?

Shayani

In most cases, I think the strategy is the same, just how much you accomplish among them is different. Doing a little across three strategic pillars will demonstrate the compounding effect better than ignoring one pillar completely. There are some exceptions here where say one of your pillars requires significant investment and with reduced funding you can’t accomplish that.

Lusi

One thing you mentioned earlier is this concept of outsized returns when one plus one equals five. Can you unpack that a little bit more? How do you create a strategy that creates outsized financial returns?

Shayani

Sure. Let’s go back to the SurveyMonkey analytics example with the two themes around teams in business and the easy to use do it for me transformation. When you think about acquiring teams you are reducing the cost of acquisition for individual users, getting a higher volume of customers to sign up at a higher price point. And by making the platform easy and more usable, you are increasing satisfaction and retention. When you layer these together, you get additional retention because in a group of 3 even if only 2 people are happy then the group is way more likely to stick around so you have higher NRR. So you are getting more customers, who are paying you more at the beginning, you are retaining them for longer and they bring on more paying customers to their team which perpetuates the cycle of lowering acquisition costs for you. Hopefully this demonstrates the outsized returns example better.

Lusi

Sounds like having a good product strategy is very important. If I'm a startup and I need some help, can you help me?

Shayani

Yes, yes. Absolutely. My company focuses on helping founders and executives with product and portfolio strategy. So whether you already have something you want a second opinion on, or you have no idea how to get started - feel free to reach out. I’d love to help.