Triumph and Failure in Product Strategy
Strategy is a team sport
Startups and products fail for many reasons. In fact, 3 of the top 4 reasons startups (and their products) fail are:
No market need (35%)
Get outcompeted (20%)
Flawed business model (19%)
Each of these is a failure in strategy. Companies build products that customers didn’t want or don’t achieve company goals or both.
Creating a strategy and a roadmap is hard! It’s why management consultants cost so much. That said, nothing beats having the inside scoop on your customers and what’s happening in your industry.
I’ve seen good and bad approaches to product strategy. My goal in this post is to share a couple of experiences with you and the lessons learned from going through both.
‘Pretty pretty good’
The first task I was given at my very first product job after leaving my startup was to answer the broad question: what do we do next?
The company (a jobs marketplace) was well positioned as the leading marketplace in its category. To continue growing, they adopted a business strategy of expanding into new business lines. But what new business lines? That was the task given to me. A product strategy task.
Well before I joined the company, the executive management team had created a list of eight new business lines that could be worth pursuing. I never found out how they narrowed the list to those eight. Based on what I was told at the beginning of the work, each opportunity was discovered through customer feedback (qualitative data).
Management wanted me to assess each of the opportunities and present them with a ranked list based on my assessment. Make (or break) the business case for each. Most of these opportunities would have required a red ocean strategy (red ocean meaning a crowded, competitive market). Some would need a blue ocean strategy; that is creating a new market space.
And so I went about the task. To make the business case, these are some of the questions I tried to answer.
Is there a market need? Is that market big enough to invest in?
Are there competitors addressing the need? How do they do it? What do they do well and what do they do poorly?
Does this opportunity create any synergies with our existing business lines?
How well does this opportunity fit with our stated vision?
I treated each opportunity like a startup.
To answer these questions, I talked to customers and internal stakeholders. I reviewed customer support tickets and comments on NPS scores. I reviewed feedback given on prior MVPs for some of the opportunities. I estimated the size of the total addressable market for each opportunity and created revenue projections where possible. I also conducted a competitive analysis for each opportunity to understand the strengths and weaknesses of rival products. I filled out a business model canvas for each opportunity.
There was also space in this process to discover and assess opportunities, that were not on the list.
It was a decent process. Not perfect, but pretty pretty good. I would soon find out what a bad process looked like.
Top-down roadmaps, oh my!
Later in my career I joined a leading e-commerce classifieds company (think craigslist) as the lead product manager. The company had been around for a while and got a lot of traffic, but revenue was not growing. It was positioned in the market as THE app where you can buy and sell anything, new or used. The marketplace served every vertical you could imagine. Yet only a few verticals actually made the company money. The company’s strategy was to grow the revenue of those verticals. How?
Like my previous job, I got a list of top-down bets that had not been tested.
An ideas backlog that doubled as a roadmap. A mix of feature requests from management, UI changes, and growth initiatives. And all of them were assessed to be ‘must haves.’ There was no rhyme or reason apparent in this backlog. Why were these ideas important to customers and the company?
Management had identified target audiences for growth in key verticals. But there was little interaction with customers. When we received feature requests from customers, we were expected to carry all of them out.
No strategy and so no plan of execution. Only a backlog of feature requests to pin hopes on future success.
I didn’t last long there.
Empowered teams for better odds
In a typical feature factory, roadmaps are handed down to product teams to execute. Management decides what product teams will build next. Product managers translate ideas into features. Designers design those features and engineers turn them into the software.
This process gives management a sense of control and certainty over the future. This feeling is misleading and can lead to a roadmap of initiatives that customers don’t need and/or do not bring value to the business. This is what I saw during my short time at the classifieds marketplace.
What have I seen work well?
Company leadership should have a vision and define the objectives of the company.
And then they should get out of the way. Let product teams discover how the company will achieve both its vision and objectives. This is what I experienced at my first PM job, more or less. And the opposite of what I experienced at the classifieds company.
This is hard to do at startups and scaleups. Founders tend to believe that they know how the company can win because they started the whole shebang in the first place.
When leadership and product teams meet halfway, giving each other the space to do what they do best, the odds of success rise.
And that’s what strategy work for a product manager is all bout. Increasing the probability that the company builds what customers want.