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How to Evaluate a Good Product Strategy
Evaluating Your Strategy Artifact Beyond Templates
In a past article, I wrote about how to (primarily how not to) use strategy templates. In it, I described one fundamental problem that moves us toward using templates: identifying if we are doing the right thing when creating our product strategy.
When we work with templates, we expect that, if we complete all the sections, we have done an excellent job.
Unfortunately, this is far from the truth in strategy. How “good” the strategy is would be defined in its content, not in its format or its “completeness.” As Richard Rumelt said, “A good strategy is a coherent mix of policy and action designed to surmount a high-stakes challenge.” So your goal is to make sure you have identified a high-stakes challenge and that the set of measures you have included are coherent and do indeed surmount that challenge.
You can imagine this can be very subjective and prone to opinion-based evaluation of the strategy. While I don’t believe we can avoid that by writing any “checklist” to evaluate a strategy (which would be similar to the templates problem!), we can at least provide some guiding questions to go through your content with different lenses that can help you identify weak spots.
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1. Useful Questions
Where are we playing?
Are user groups and geographies clear? For some product strategies, you will merely continue to target the same users and groups in different ways. But this focus is especially important when you are planning to expand, either to new niches or new geographies. If you are pursuing an expansion strategy, it should be clear what markets you plan to conquer, why, and in what order.
How will we differentiate and provide unique value?
In the end, we must create a distinctive proposition to position ourselves as better than alternatives in a particular need that is important for our target user group. This doesn’t necessarily mean being the best product in the market. But it does mean that you need to find a way to be better for at least one important need for one user group.
For example, if you want to create a streaming service, you don’t need to beat Netflix, Amazon Prime, and Disney Plus. You need to select a (big enough) niche that is not fully addressed, for example, concerts and festivals streaming (disclaimer: I know nothing about this niche). And then, for this particular niche of users or needs, create a superior experience that can either be more content, better quality, less friction, or any attribute(s) you identified as underserved and important.
Combined with the previous question, the differentiation we want to build needs to become a defensible advantage.
Following our previous streaming example, it would be useless if we find and solve a need that Netflix or any other player can easily replicate. So we need to answer the question: why are we positioned to fulfill the needs of concert and festival fans better than our competitors? Do we have exclusive access to this content, exclusive proprietary technology advantage, or exclusive channels to get to the customer?
Of course, these differentiations come in all sizes and shapes, but you need to find what would make you successful in the long run by pursuing this path.
Depending on your product and context, indicating why this is the right time to do it may also be very relevant. For example, considering a product that relies on network effects, if an important international player is expanding into your market, you may have an urgency to further strengthen your “local network” to create your strategic advantage and prevent a takeover.
In case of any time constraints, it would be essential to make that explicit, creating the needed sense of urgency for the execution.
What do we need to stop doing to pursue this path?
While this is not necessarily evaluating the content of your strategy, it is worth checking if you are making the trade-offs explicit.
In the book “That Will Never Work,” Marc Randolph, an early founder of Netflix, shares the story of when they were approached in the early days by Amazon, which was looking to jump-start their DVD vertical. The deal never happened, but Netflix decided that day to double down on renting DVDs by email and stop the focus on selling DVDs. The problem was that, at the time, selling was the majority of their revenues.
In our strategies, it can be easy to say what we will do, but explaining the cost of what we are saying NO to is equally relevant.
2. Useful Frameworks
Besides these very fundamental questions, there are some high-level frameworks that, while you don’t need to follow verbatim, may help you identify potential blindspots.
Here are 4 useful examples of such frameworks.
Strategyzer 7 Questions of Business Model Design
While focused on business models, these questions are interesting from a product perspective, especially focused on the positioning we mentioned previously.
Strategy Feedback Questions
In Product Direction, I stated 17 questions helpful to collect feedback about your strategy that can be used for a self-assessment.
Does your strategy leverage any of the powers described in the book 7 Powers by Hamilton Helmer (one of my top 5 strategy books!)
Depending on the maturity of your product and company, does your strategy consider investing in bets for future growth?
There are multiple ways to evaluate a strategy. I strongly suggest focusing on the critical questions that must be solved rather than following a check-the-box template that can lead to weak content.