1. The Concept of Product Strategy

Welcome to another lesson in the Product Leadership course from PM3. In this class, we will dive into the fundamentals of product strategy. My name is Raphael Farinazzo, and much of what I will discuss is drawn from my experiences at various companies. This lesson is divided into three parts:

The concept of strategy and its associated principles.
The components of a good strategy.
The roles involved in developing a product strategy.

1. The Concept of Strategy

Understanding Strategy

When discussing strategy, particularly product strategy, the term can cause confusion. People often debate whether product managers (PMs) should focus only on tactical levels or whether they should also contribute strategically. Strategy is often misunderstood as something important, but not necessarily strategic.

Let’s begin by examining various definitions of strategy from respected thought leaders in the field:

Stephen Bungay defines strategy as a "deployable framework for decision-making, allowing actions to achieve desired outcomes, limited by current capabilities, and aligned coherently with the existing context." In other words, strategy is about having a framework that guides decision-making within certain constraints and aligning actions with the current situation.
Roger Martin and A.G. Lafley in their book Playing to Win state that "strategy is an integrated set of choices that uniquely positions a company in its sector to create a sustainable competitive advantage and superior value relative to competitors." Strategy is about making choices that create a competitive advantage and higher value in the market.
Michael Porter, another giant in marketing and strategy, emphasizes strategy as a deliberate choice of "a different set of activities to deliver a unique combination of value." This reinforces the importance of differentiation and consistency in actions and decisions.
Richard Rumelt, in Good Strategy, Bad Strategy, explains that the essence of strategy is "discovering the critical factors in a situation and designing a way to coordinate and focus actions to address those factors." He emphasizes focus and coordination to tackle key challenges.

Simplifying Strategy

If we combine all these definitions, we can simplify the concept of strategy to: The first decision that a company makes to move from Point A to Point B.

This means:

Point A: Understanding the current situation.
Point B: Defining the desired future state or goal.
Obstacles: Identifying challenges or opposition that might prevent you from reaching Point B.

Strategy is about making deliberate decisions to move forward, knowing that resources are limited and obstacles exist.

Strategy in Practice: Deliberate vs. Emergent

While strategies are often presented as well-planned, the reality is that they are rarely like the perfectly fitting pieces of Tetris. A more fitting analogy is the game Enduro, where unexpected obstacles appear, and you must adjust your course to continue moving forward. Strategy often combines both deliberate and emergent elements.

Deliberate Strategy: Planned and structured, suitable for established markets where there is confidence in the future direction.
Emergent Strategy: Arises in response to unexpected challenges or new opportunities that emerge as you navigate the market.

It’s important to have a deliberate strategy, but you also need mechanisms in place to detect when new opportunities arise and be agile enough to adjust your course accordingly.

The Role of Vision in Strategy

Vision and strategy are closely linked. The vision answers the question, "What does success look like for us?" Strategy is about how you will realize that vision.

Here's a simplified breakdown:

Vision: What do we want to achieve to consider ourselves successful?
Strategy: How do we plan to make that vision a reality?
Opportunities: What can we explore within this chosen path?
Roadmap: What are the priorities and steps we need to take?
Experiments and Hypotheses: What are the specific actions we will take to test our assumptions?

Strategy as a Leap of Faith

While strategy involves careful planning, it also requires taking a leap of faith. You are making decisions about the future with incomplete information, particularly in terms of technical feasibility and usability. However, you can reduce this risk by making informed assumptions about value and business viability.

For instance, human needs and behaviors do not change drastically from one year to the next, so value assumptions tend to be less risky. Business viability can often be assessed early on, even if some aspects remain uncertain.

Conclusion

In summary, strategy is the process of guiding your company from where it is now (Point A) to where it wants to be (Point B), while considering obstacles, resources, and market conditions. While strategy often involves a mix of deliberate planning and emergent adjustments, the goal is always to maintain a coherent and focused approach that moves the company forward.

This sets the stage for understanding the components of a strong product strategy, which will be covered in the next part of the lesson.