What Makes or Breaks Product Strategy
A comprehensive product strategy overview, from dangerous mistakes to leading practices
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Once a month, I share a premium deep dive full of applicable insights. Here’s what you may have missed:
101 PM Skillset: Understand which skills you need to rock the product world
33 Anti-Patterns That Transform Product Managers Into Backlog Managers: Learn how to spot and overcome common anti-patterns that block your growth
Product Delivery Guide: Clarify how to drive value beyond features from end to end
Product Discovery Guide: Understand how to apply discovery that enables you to drop bad ideas fast enough while uncovering hidden opportunities
Product Strategy Guide: Learn how to craft a product strategy that simplifies decision-making.
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A sound product strategy simplifies decision-making, enabling teams to focus on what matters and continuously adapt their actions.
A poor product strategy traps teams into analysis paralysis, making it difficult to define what’s relevant and what’s not!
During this premium episode of Untrapping Product Teams, we will clarify what makes or breaks a product strategy. Here’s what we will cover:
Big Picture: Strategy in a nutshell — framework free
Understanding the Impacts of Your Product Strategy
Common Mistakes Product Teams Face
How to Craft a Strategy that Works
How to Break Free from Bad Strategy
Big Picture: What’s Strategy in a Nutshell
Product teams will remain ordinary without a sound product strategy.
Strategy is fundamental to:
Clarify what matters
Enable team members to say yes or no to opportunities
Understand the value they deliver
Know who they serve and who they don’t
Setting a strategy can be simple, but it often becomes complicated for no reason. If you ask ChatGPT what a strategy is, there's a high chance you’d be confused. Look at the following example.
My definition is straightforward: Product strategy simplifies decision-making. Whenever someone is working on something, they can ask, “Am I following our strategy?” The easier it is to say yes or no, the better your strategy.
In a nutshell, strategies clarify the big picture so you understand your game and what success looks like.
To bring it down to earth, let me take the example of El Bulli, 5 times the best restaurant in the world with 3 Michelin Stars.
As you can see, El Bulli aimed for authenticity and creativity. It didn’t cook anything traditional and even removed the standard menu. Instead, it continuously developed dishes no one else had ever cooked. As a result, it reached a point where it had 2M+ reservation requests, but only 8K people were lucky to enjoy dinner there.
We’ve got a couple of lessons from El Bulli's strategy.
Focus enables greatness. Because it was clear to them who they served and what they were after, they won three Michelin stars.
The strategy needs to evolve. El Bulli reached the top and stayed there for over a decade, but it closed its doors in 2011 with recurrent losses of around 500K+ EUR. Despite having a demand 250x larger than the offer, it remained with the same strategy. Context changes require strategy adaptation to stay successful.
Evaluating Your Product Strategy
Understanding your strategy is critical to take action and improve it.
I recommend leadership members and product teams evaluate its strategy’s strategy at least twice a year. I’d do it quarterly for startups, as learning speed tends to be faster.
Here’s the health check I recommend doing.
Ask the following questions:
Do product teams focus on features, or are they accountable for results?
Does prioritization happen outside or inside product teams?
Do product teams invest significant time in analysis or move quickly on decisions?
Are goals rarely used, or are they clearly defined and used daily?
Do teams coordinate tasks, or do they closely collaborate to drive progress?
The more your answers are to the left, the more opportunities there are to improve your strategy.
As Ray Dalio said in his book Principles:
Pain + Reflection = Progress
Recognizing how limiting our situation is can be painful. Yet, it can also be empowering because you can uncover chances to improve it. I will guide you through common mistakes and how to avoid them.
If you want more in-depth learning on crafting a product strategy, check out my self-paced course. Whenever you’re ready, I’d love to help you grow further. Also, you can get this course for free by updating your subscription.
Common Mistakes Product Teams Face
The following mistakes reflect what I experienced playing the product game over the last 15 years. I contributed to most of them directly or indirectly. That sucks. I’m sharing them with you to help you avoid painful experiences.
7 mistakes you definitely should be careful with.
1. Unchangeable Strategy
No matter how good your strategy is, it will eventually stop working. That happens because of multiple factors:
Disruptive technologies. Netflix disrupted Blockbuster, Spotify transformed the music industry, and AI is here to shake the world.
New competition landscape. Consider what Uber did to taxis and how Airbnb impacted hotels.
Market saturation. It occurs when the market becomes overloaded, and customers move around. While Netflix was once the only streaming company, many others exist, including Apple, Amazon, Disney, and HBO.
What worked yesterday may not work today.
You must continuously review and adapt your strategy to remain relevant. Companies like Apple, Microsoft, and Amazon continuously review their business models, try out new ones, cut losers, and double down on the winners.
2. Fail to Iterate Fast Enough
No matter how good your idea is, you will pivot before you thrive. Don’t believe me? Let’s look at a few examples:
Twitter. It started as Odeo, a podcasting platform. Then, they pivoted to microblogging when podcasts weren’t taking off.
Instagram. It began as Burbn, a check-in app. Then, they focused on photo sharing, adding filters to stand out while stripping off all other features.
Slack. It was a gaming startup that couldn’t thrive. After investors' pressure, it transformed an internal communication tool into a product as they realized the chat system was more valuable than the game.
The question isn’t if you will pivot but when you will do.
3. A Set of Artifacts Nobody Cares
A good strategy is memorable. Simple to understand, easy to use daily.
You will not care about your strategy if it’s something like this:
10+ page business plan
20+ slides on how to capture the market
Yearly roadmap
Complicated spreadsheets reflecting the business objectives
The above distracts you at best. The plan becomes the goal while everyone forgets the goal itself. Discussions move from how we can deliver value to how to follow the plan.
You may have a few artifacts, but they should aim for simplicity and clarity rather than overloading people with complicated information.
4. Fail to Differentiate
A good strategy will focus on making you stand out from your competition. Your customers will see your uniqueness and quickly connect with your offerings.
Failure to differentiate results in bloated products because no matter what you do, you will always be copying the competition's offerings.
Here’s how you can differentiate:
Offer less, but better — Basecamp offers simple project management but is better than the competition; they limit their offering to small companies
Offer something nobody else provides — Nintendo Switch, a hybrid console bridging handheld & home gaming.
Use different business models than your competition. Airbnb offers peer-to-peer renting, which is different from standard accommodation.
Differentiation is a choice in your strategy.
You can use the value curve from the Blue Ocean strategy to do that. Get my free template on Miroverse.
5. Serve Everybody, Serve Nobody
Focus is critical when launching a new product. The more general your idea, the harder it will be to succeed. Let’s look at examples that tried servicing everyone but failed to please anyone.
Google+: Launched as a Facebook competitor with circles, photos, hangouts, etc. It tried to serve every social need but never offered a unique reason to switch.
Windows Phone: Attempted to acquire both business and consumers. It lacked a strong app ecosystem and couldn’t compete with iOS and Android.
It’s easier to start with a niche idea, make your audience love your product, and then scale up. Netflix didn’t start with streaming; they began with DVDs per mail. Airbnb didn’t offer global peer-to-peer rent; it started with air mattresses and simple home-sharing for budget travelers.
Define a niche audience, focus, and scale only after they love your product.
6. Top-Down Strategy
Who’s responsible for crafting the strategy?
There are different responsibilities across companies. A person with decision-making power will craft the strategy, but they shouldn’t throw it over the fence to teams.
A top-down strategy will annoy teams and ultimately create apathy, which is dangerous. Leaders may be better equipped to set strategies, but doing so alone can demotivate teams.
Leaders should involve product teams to understand the opportunities collaboratively. Collaborate, exchange, learn together, and then craft the strategy. By involving the team, you can gain their buy-in more naturally.
7. Copycats
Copying successful products can be attractive, and you may think you’ll find enough customers. Yet, this often leads nowhere.
Let me give you an example from Brazil.
Nubank started as a credit card-only company (niche), and it quickly got many Brazilians in love with the simplicity of the product and outstanding customer experience. Eventually, they created more offerings, including bank accounts, which unlocked unprecedented growth.
To avoid losing customers, other traditional banks in Brazil started copying Nubank. Yet, Nubank remained ahead of the curve no matter what they did. What happened was simple: Nubank innovated while the others only copied. You can never be a better shadow.
Nubank is one-tenth the size of the biggest banks in Brazil, but it has an equivalent market valuation. They are innovators, not copycats.
How to Craft a Strategy that Works
By now, you know how to assess your product strategy and the common mistakes teams face, so it’s time for us to address how to craft a strategy that works in life, not in theory. Let’s get into it.
