This book “Strategy Excellence for Product Managers: A Guide to Winning Markets through Product Strategy” combines practical wisdom with theoretical frameworks we are already familiar with. In that sense, it’s a valuable read. The author Greg Cohen has 2 decades’ experience in the industry and the resultant scars are visible in his writing!
The book is divided into 11 chapters, however one can start reading from any chapter. In the beginning, the author tackles the question most business books tend to understate. The distinction between vision and strategy is that although vision creates a shared picture of the future, it does not take into account the fact that markets are dynamic. The author also opines why relative growth in a competitive scenario is validation of a good strategy
Rest of this post summarises key learning from each chapter
Chapter 1
The vision inspires the team towards a better future. The roadmap shows how the vision will be achieved over time while the strategy is about positioning ourselves where the most value will be in the long-term. There are five inputs to a product strategy exercise namely customer, market, competition, technology and business strategy
For developing customer understanding, voice of customer research helps while when doing market analysis, the objective is to understand which segments are most important for the product vision. OTOH when analysing how technology impacts product strategy, it’s important to understand capabilities, adoption rates and its cost structure
As a product manager where often the gaps are noticed is: not realising that the choice of strategy has to be evaluated in relation to the company’s capabilities and culture. So if the company is not investing in cutting-edge tech work, product strategy has to reflect that limitation
In short, the product strategy must incorporate the business outcome a product needs to fulfil for the company and the time horizon to meet that objective
Chapter 2
The product vision is any product’s raison d’etre. It is a high-level articulation that communicates the product’s value, often by painting a picture of the future
Unlike the product strategy, which can be complex and involved, the vision is an easy-to-understand articulation of the most important parts of the plan. The vision keeps three crucial factors
- the target customer
- the in-scope problems that the product solves; and
- the most important dimensions of the product
Chapter 3
A strategic roadmap distills the product strategy into sets of capabilities that one wants to release in a given sequence over a defined time frame. Strategic roadmaps ultimately answers the questions – why and why now
A strategic roadmap helps focus all stakeholders on the pieces of the product that must be developed to achieve the strategy and the roadmap has to be vetted against the team’s capacity to produce a credible plan
The three steps to developing a strategic roadmap are
- Laying out the external environment i.e. tech, regulation, market trend, competitors
- Adding product plans and strategic objectives
- Vetting the plan with dependencies and resource constraints
Chapter 4
In this chapter, the author introduces a few frameworks for prioritising product backlogs. These are summarised as below
- Return on Investment: quickly understood metric for company-wide projects and also easily “sold” to management. However it can sometimes prioritise short-term over long-term sustenance and that not all decisions are ROI led. Sometimes people also forget that ROI calculations are as good as assumptions gone into them
- Voice of Customer (VOC): This provides a good picture into customer pain points and of course VOC is essential component of every other prioritisation method. However sometimes market shifts can be missed if one over-indexes on VoC. Customer cannot quite often tell about new segments or markets to go after
- Must, Should, Could, Won’t (MoSoCoW): this is often hard to apply correctly and is not quite suited for innovation-led products. However it can be useful for first-level prioritisation in a release
- Kano Model: It looks at how the inclusion or exclusion of a feature contributes to customer satisfaction and how that satisfaction changes based on the level of the implementation. However it does not include product strategy or cost view. Typically any feature in this framework can be modelled along three curves: Must Haves, Delighters and PerformanceHowever one has to consider that customer expectations change over time and today’s delighters could be Must Have very soon. Besides, customers are not often a monolith – so not all features are equally important in these buckets for all
Image 1: Kano Model
- Prioritisation Matrix: This s a lightweight, fast, and effective tool to help stakeholders make their beliefs explicit. It is also likely the best way to link product roadmap to company’s strategy, however it is subjective and doesn’t include costs
- WSJF Method: Weighted Shortest Job First method prioritises those items which deliver the most value soonest. The key factors when applying WSJF are: value; time sensitivity; risk reduction and opportunity enablement; and duration/effort. However it does not take product strategy or customer perspective into account
- Feature Life Cycle Based Prioritisation: essentially this method buckets features into proof of concept, validated learning, minimum marketable feature and polish features. This method however considers cost and risk. And based on the company’s strategy, some risky (POC!) features can be front-loaded
- Value, Risk, Cost Matrix: It can help us visualize investment allocation across a “portfolio” of new features. This lens is also useful for evaluating investments across projects. However value is not necessarily connected to product strategy and value and risks assessments are highly subjective
Image 2: Value, Risk, Cost Matrix: Prioritisation Priorities are indicated
One has to frame prioritization in the context of product goals and corporate strategy. Overall objective with prioritization is to develop a winning plan and get stakeholders to understand the prioritization
Chapter 5
As a product manager, one needs to focus on product growth and how the product is doing relative to the market. The Ansoff Growth matrix highlights broad phases per product lifecycle
Image 3: Ansoff Market Growth Matrix. Product development is a depth strategy
Chapter 6
This chapter focuses on product-market fit. PMF typically requires focusing on 3 areas: problem, product and business model. If one takes business model as constant, we have 4 scenarios which product managers find themselves in
Image 4: Problem-product Solution Mix by Greg Cohen
When the business model itself is uncertain the hardest business models to test are those involving channel distribution. It takes time to grow channel relationships, and further time and effort to get those partners active
A nifty trick author proposes when doing customer research is to probe customers around 5Ws. Probe means asking ‘why’ without sounding like a 5-year old – Whys uttered 5 times! One can use phrases like “Tell me more”, “would you describe the last time that happened”, “what is the implication of that”, “how do you deal with that”, “what do you do next”
Chapter 7
This chapter focuses on purposeful learning. The sooner companies, product teams, and product managers are willing to acknowledge that they don’t always have all the answers, nor will they have the complete set of answers upfront, the better they will do at managing the uncertainties and risks of new product development
The most we can ask of any team is to deliver validated learning at all stages of the development process. To do this, you have to do two things: become a purposeful learner and create a learning plan
Few techniques to become a purposeful learner are
- PDCA: Plan, Do, Check, Act. Also known as the Deming cycle.55 This model assumes the scientific method can be applied, and that a statistically significant data set can be acquired. It works very well for web analytics and quantitative studies
- OODA LOOP — Observe, Orient, Decide, Act: OODA explicitly incorporates cultural context. With the continuous application of the OODA loop, you can navigate an ever changing landscape
- Build, Measure, Learn. Within all these processes, the core is to describe how one believes the world works and test it frequently
OTOH learning plans have a question and a test. The team should first formulate a question and then generate a hypothesis or prediction for each test
Chapter 8
This chapter focuses on basic strategy frameworks. There are two components to strategy – where to compete and how to compete. There are 3 ways in deciding where to compete: scale, depth and innovation. Whereas in choosing how to compete – there are 3 positions: leadership, value and low cost. Leadership companies (Apple) focus on delivering superior capability or performance at a premium price. Value companies (Amazon, Flipkart) focus on delivering a high value to price ratio, and low-cost companies (Dell) look to compete almost purely on price
Niching is when a company selects to serve a narrow segment of the market with a product that matches that segment’s unique needs and preferences. Author opines that the companies choose niching when they will struggle to succeed in the mainstream market. This can be contested, niching is sometimes quite a viable strategy to outcompete a behemoth. Think classifieds as a business model are still thriving – surviving 2 decades of technology disruption!
Chapter 9
This chapter provides introduction to familiar frameworks for doing industry analysis. Porter’s five forces framework is touched viz. threat of rivals, threat of new entrants, threat of substitutes, bargaining power of suppliers, and bargaining power of customers
- When threat of new entrants is high, profit potential becomes limited
- Non-consumption, or doing without, is also a substitute
- Suppliers also have power if they offer highly differentiated offering or where there are no substitutes. Scale strategies and standardizing inputs allow you to improve your bargaining position with suppliers
- Depth strategies are a way to gain power with customers
- Innovation strategies, along with leadership or value differentiation strategies, are a way to avoid pure price competition with rivals. Relative market share is calculated by dividing your market share by your largest competitor’s market share
Porter’s Five Forces analysis allows us to understand the pressures on the different players in the industry
Chapter 10
This chapter can be avoided without much loss of information. This focuses on market Maps – powerful visualization tools to compare companies’ strategies for deciding where to compete
Chapter 11
This chapter focuses on pricing. There are three factors that influence the price one can command for the product: value to customer, competitive intensity, and costs. As an example, airlines successfully charge travelers different prices for the exact same product, a technique known as yield management
There are three basic pricing strategies from which to start: Penetration, Skimming, and Maximization
- Penetration pricing is when a company prices a product low relative to its value. Jio’s earlier plan in Indian telecom industry is one such example. Freemium pricing strategies are a version of this pricing strategy
- Skim pricing is when a company targets a segment of the market with a high willingness to pay, favoring high margins over volume. Apple’s pricing strategy in India is one such example
- Maximization is when a company focuses on optimizing total profit or revenue. Amazon as company seems to follow this
- Contribution margin is the money left over after all incremental costs have been subtracted from each additional unit sold. Thus, contribution margin is the money that is available to cover the fixed and sunk costs of the organisationAfter subtracting all these costs, any additional money left over is true profit. To maximize profitability, you maximize contribution margin. This decision is independent of fixed and sunk costs
How you charge for your product is a key pricing strategy decision that is as important, if not more important, than what you charge because it is easier to adjust your price than to change your pricing model
You should not miss reading the appendix of this book where the author explains different kinds of product-business fit challenges through the case study format. Overall this book is a good read for a mid-senior level product professional!
The Learning Curve: Interesting Readings for Product Leaders 