Wondering How To Level Up As a Product Manager? Product Strategy is Here to the Rescue!

We have all used Facebook at least once as end users. And If you’ve followed the company’s trajectory as a business, you must have observed that Facebook’s primary objective is to connect people by bringing them closer together. Every business and product decision they take as this concrete goal defines a company.  If we narrow it down to a startup, a product strategy is dictated by what the company wants to achieve as a business. Naturally, product managers/leaders get to shape their roadmap basis this, and everything else follows a downstream approach. 

Understanding Business Goals Better as a Product Manager

“Our mission at Facebook is to connect the world. We often consider this as connecting you with your friends and family — those who matter to you most. But this also means helping people connect with businesses, governments, and other organizations in their lives.” – Mark Zuckerberg, Co-founder, Chairman & CEO – Meta

To continue with the Facebook example, this business goal guides the development of all Facebook features. Let us evaluate the most recent updates in the product. To increase people-to-people interactions, Facebook now prioritizes posts from friends, especially the ones that spark conversations in the comments. This update was introduced to fulfill Facebook’s most basic business objective – to facilitate meaningful conversations between friends to keep friends closer together. This means posts from publishers and businesses would get lesser priority which might hamper their ads business, which is how it earns most of its revenue. 

How Does This Impact Business Objectives?

Now, why do the product managers care about the business objectives and strategies, after all, business strategies define the organization’s vision at the highest levels. Should they not mind the product strategy at all?

The product strategy is defined by the business strategy. Going back to the example of Facebook, because the company’s objective was to bring friends closer together, product managers build products that align with this objective from the ground up. The business objective defines the mission and vision of the organization and lays down a roadmap for the future of the entire organization. However, the product strategy materializes the organization’s vision into reality. It is, therefore, the bridge between the organisation’s vision and its ultimate success. 

Thus, it becomes imperative for those who create product roadmaps and strategies, the product managers, to understand the overall business strategy and how to deliver products that are in coherence with this strategy.

Now that we have established how important it is for product managers or aspiring product managers to comprehend and execute the business strategy let us dive deeper into what the term ‘business strategy’ really means. 

How Does Business Strategy Correlate with Product Strategy?

According to the strategy story, ‘a business strategy is a plan that helps a company achieve its goals. It includes tactics for marketing, finance, operations, and other areas. A business strategy aims to give the company a competitive advantage.

There are many different types of business strategies. Some common ones include cost leadership, differentiation, and focus. A company may use one or more strategies depending on its goals.

For example, Reliance Jio functioned on cost leadership. Hence, the products too were designed keeping this in mind. How do the product managers know which strategies to build their product and/or features around? The product strategy you create should concur with the overall business objective. These strategies are not formed based on gut feeling or a few people’s inputs. They require a well-thought-out structural approach.

One such approach to understanding what business needs the products should fulfill is the GAME approach. The GAME approach stands for Goals, Actions, Metrics, and Evaluation. Let us explore this further.

Defining Strategy That Aligns Well With the Company Roadmap

Before breaking ground on any new product or feature, it is important to understand the business goal. The business goal is usually related to the organization’s or product’s phase. Suppose the organization is in the growth stage. In that case, it should focus on customer acquisitions and user activation, and if it is in its maturity phase, it should focus on monetizing. A business goal is a target an organization wishes to achieve in a defined period. 

Product Strategy Example

For example, increasing the Monthly Recurring Revenue (MRR) by 10% in the next financial quarter. Notice how this business goal comprises a target for one of the metrics measured for the product and a set timeframe to achieve it. Next, you should list all the user actions and create use cases for the most common user personas. After that, define the metrics in a more detailed fashion. For instance, if your objective is to increase the MRR, you should focus on the number of users who have not yet been monetized, % the conversion of non-monetized users to monetized customers, etc. After defining your metrics, you should evaluate your product strategy to see how well it aligns with the overall business strategy. The product roadmap can deviate a little, but it should be duly noted that the result should reflect the organization’s vision.

What Do Companies Exist?

This is probably the very first question one would get asked in a business school. So what do you think? If you said something like ‘to maximize the business’s profitability or to deliver profits to the company’s stakeholders, ‘you are right.

The bottom line is true, as many of us would call it. A product could be innovative, transformational, and ground-breaking. However, if it doesn’t generate profit, or doesn’t show profit-generating potential, ultimately, it is going to be shelved. Case in point, Segway. It was attractive and fun and generated all the buzz. 

What was the Company’s Vision?

‘To simplify the movement for people and things, as succinctly stated in the company’s long-time motto “Simply Moving”.’ Its product did somewhat deliver on this mission. However, there was little use for such an expensive product, so it generated no revenue. Nowadays, its only use is as an example of ‘product fails.’ 

Hence, a product manager should treat not just the business objectives as a guiding star. There are other guiding principles as well. A profitable product is one example. Building a product that users want is another. 

Building Products That Make Impact Strategically

Sounds simple? It is. Well, mostly (Segway would disagree). Therefore, product managers should adopt a structured approach to product design. The CIRCLES framework provides a good structure for designing strategically impactful products. It’s also one of the most popular frameworks that’s used in product manager interviews to solve problem statements. It goes as follows:

• Comprehend the situation
• Identity potential customers
• Report customer’s needs
• Cut money through prioritization
• List possible solutions
• Evaluate trade-offs
• Summarise recommendations

Product Strategy Framework

It is a simple and comprehensive framework to gauge the user pain points and deliver solutions that have utility in the market space and will ultimately generate profit for the organization. All one has to do is implement the above steps holistically in the context of their organization. This framework is essential to carry out the product design effectively. 

However, as discussed above, besides a strategic design, a product should also deliver a good ROI. How do product managers decide if a product is worth investing its limited time and resources? Should it just be a decision made after a brainstorming session? Several frameworks have been designed to solve such dilemmas. One such framework is the SWOT analysis, which you would have used by now in many other contexts. It is a very simple yet effective framework to analyze the current state of your product and make an effective roadmap to create and deliver an effective product.

This framework lets you analyze your organization’s internal and external factors directly impacting your products. The internal factors include the Strengths and weaknesses of your organization. You must know what are the strengths of your organization to leverage them. The strengths include experience in a particular domain, human resources, geographical advantage, etc. It would be best to keep a tab on your organization’s weaknesses. Weaknesses may act as barriers to your product’s success. Product managers need to account for these factors. Opportunities and threats are the external factors that affect product strategies. It is impossible to foresee each of these. However, good product managers should prepare a contingency plan for the most plausible threats, such as threats from competitors or supply chain distributions.

Product Strategy: Google’s Answer to ChatGPT

Recently, when ChatGPT posed a direct threat to Google, its CEO, Sunday Pachai, announced Google’s AI-powered chatbot, BARD. Even though Google works at a multi-billion user scale, it’s still agile enough to react strategically to competitor’s As many of you must know, before becoming the CEO of Alphabet, Google’s parent company, Pachai, too was a Product Manager. 

You can use the following template to create a possible response to possible scenarios.

Opportunities are external factors that will contribute to your product’s success. A good product manager should keep an eye out for all such possible opportunities. For example, when Twitter got banned in Nigeria, the Indian social network platform Koo was quick enough to tweak its product and launch it in Nigeria. This is a great example of why product managers should be aware of developments, especially in their product domain. 

The responsibility of a product manager is not just to deliver good products or products that the users need, but also products that the organization needs – a product that generates value not just for the customers but the organization as well, a product that strategically aligns with the organizational goals and objectives. All product managers might create a superior product roadmap and strategy, but the best ones create product plans that extend their organization’s mission. 

The article above explains the core areas in detail. As a product manager, you can make rational calls when choosing a product strategy. If you are looking for professional product management courses, explore Emeritus’ offerings today.