4. Business Theses

In product development and strategic planning, one of the most crucial steps is defining business theses. It’s common for stakeholders to present these business theses to the entire team on the first day of planning. This approach gives everyone a clear understanding of the company’s direction and objectives, ensuring that even if someone changes teams, they still have a comprehensive view of the overall strategy.

During these presentations, stakeholders typically focus on customer-centric visions, outlining the business thesis along with its rationale, customer focus, and any hypotheses they have already developed. For instance, a Canvas model might be used to place the customer’s needs at the center, with the goal of solving a specific pain point. This business vision is paired with a technology vision, identifying any obstacles such as architectural issues, API integrations, or other technical dependencies.

Structuring the Hypotheses

Once the thesis is laid out, the team can begin creating hypotheses. These hypotheses will be tested and developed over short-, medium-, and long-term horizons. The focus here is not just on what the company plans to do but also how the team will execute these plans with the mindset and operational strategy of the team for the upcoming quarter. In addition, business KPIs are defined to ensure the objectives are measurable and can track progress toward the thesis.

Example of Real Business Theses:

Here are examples of business theses that were used in real-world scenarios (with some data adjusted for illustrative purposes):

  1. Achieve a 40% market share in a particular segment with a profit margin of $50 million within a year.
  2. Improve the customer experience (NPS) by 20 points.
  3. Boost app sales by 30%, resulting in $X million in revenue.
  4. Increase the new customer base by X%.

Each thesis is divided into three key components:

  1. Business vision: What is the opportunity, and where does the business want to be in 12 months?
  2. Success indicators: How will success be measured? What metrics and goals will be tracked?
  3. Investment thesis: What are the key hypotheses and potential outcomes?

Collaborative Hypothesis Mapping

After the initial presentation, teams come together on day two to work collaboratively. The design team, product managers, and stakeholders join forces to generate hypotheses. Using insights from customer research and previous findings, they co-create a wide range of potential hypotheses. These ideas are then organized into short-, medium-, and long-term opportunities. Each hypothesis is linked to a specific business thesis and is later prioritized based on the value it can generate for the business.

Workshop Execution

During the workshop, a Canvas tool is typically used to help organize these ideas into quadrants. The entire team contributes by brainstorming potential hypotheses. For example, if the goal is to reduce churn, each team member can suggest hypotheses related to that objective. By the end of the exercise, the board will be filled with sticky notes representing various hypotheses.

Next, the team filters these ideas, prioritizing the most promising hypotheses that align with the business goals. This process involves evaluating the impact of each hypothesis on the business and creating cards to present to the stakeholders.

Day Two: Presenting Hypotheses to Stakeholders

On day two, the product leader presents all the hypotheses to the stakeholder. Stakeholders will prioritize the hypotheses based on their expected business impact, assigning a gold, silver, or bronze ranking to each hypothesis. This prioritization exercise ensures that the most valuable opportunities receive the highest focus.

The team must be prepared to justify and defend their hypotheses. If there are disagreements about prioritization, the product leader can argue the case for a different ranking. The goal is to align the team’s efforts with the stakeholder’s vision.

Day Three: Defining Objectives and Key Results (OKRs)

On the third day, the focus shifts to breaking down each business thesis into objectives and key results (OKRs). Each thesis is transformed into clear objectives with a maximum of three measurable results. The team also defines how much progress they expect to make each quarter. For example, they might aim for 10% in the first quarter, 20% in the second, and so on, with the goal of achieving 100% by the end of the year.

During this stage, the stakeholder helps prioritize the OKRs, selecting the key results that will drive the most impact for the business. These OKRs are then linked to four key business metrics: customer attraction, retention, revenue, and satisfaction.

Day Four: Defining Horizons and Mapping Dependencies

On day four, the team breaks down each hypothesis into features and maps out any dependencies. The short-term (H1) and medium-term (H2) features are prioritized first, while the long-term (H3) opportunities are still uncertain. Each feature is then described in detail, noting the context, hypothesis, risks, and metrics associated with it.

The dependency map provides a 360-degree view of the entire process, showing which teams are interdependent and how these relationships affect the execution of each feature. This mapping ensures that technical challenges or external factors are accounted for in the planning process.

Day Five: Presenting the Integrated Plan

On the fifth and final day, the team presents the integrated plan. This includes all the business theses, the prioritized hypotheses, the OKRs, and the mapped dependencies. The stakeholder reviews the entire plan and makes any final adjustments to ensure alignment with the company’s overall strategy.

At the end of the workshop, the team has a clear, detailed roadmap for the next quarter, along with a long-term vision that ties back to the company’s overarching goals. This strategic plan becomes a living document that guides the team’s work and helps them track progress throughout the year.

Conclusion

Business theses provide a structured way to align business goals with product execution. By mapping out hypotheses, prioritizing initiatives, and collaborating closely with stakeholders, teams can ensure that their work contributes to the company’s long-term success. This approach promotes transparency, accountability, and a unified vision across all teams.