Understanding and formulating an effective product strategy is essential for businesses, regardless of their size or industry. It’s a matter of determining where to best allocate resources, whether that’s in developing new product lines, focusing on a single product, or enhancing existing ones.
Businesses, especially startups with a limited resource pool, often grapple with deciding where to concentrate their focus. For instance, a company might have three products in its portfolio, one of which is the flagship product and is driving most of the sales. The company could be tempted to channel all the resources to this main product. But the other two products are also important, albeit more complex and requiring more involvement. The question becomes: should they focus on the primary product only or also dedicate resources to the other two? It’s a classic business conundrum that usually involves a careful trade-off.
Product strategy calls for a strategic approach, hence its name. Strategy is about making deliberate, calculated choices based on the opportunities available. There isn’t necessarily a single ‘correct’ answer, but rather several possible paths.
Typically, companies have a whole spectrum of options. They could equally work on all three, focusing on one, or stagger development – producing one product first and adding others later. Whoever chooses the best alternative can ultimately turn a profit and grow the business more effectively.
Importantly, a decision shouldn’t be rushed; it’s crucial first to understand the value that each product brings to the table, as well as the customer’s preferences. For instance, if all customers liked two features in one product and one feature in another, then it may be a more rewarding strategy to focus on those three features instead of pushing for an expansion of three larger products.
Simplification and streamlining, albeit initially counterintuitive, could indeed benefit both the company and the customers, as long as it’s done based on a sound understanding of the product’s value, the company’s value proposition, and market demands. This approach should remain organic, agile, and tailored to the circumstances.
Digging deeper, we discover that this is fundamentally about understanding customer needs, identifying opportunities, and creating a strong value proposition. Qualcomm CTO, Paul Jacobs, noted that products or features should enrich the company’s value proposition. Simply put, when issues of product strategy arise, businesses should reevaluate their activities in terms of their support for the value proposition.
Additionally, founders should take care not to succumb to the start-stop rhythm of product strategy. Consistency in vision, focus, and approach can often reap larger benefits, even when changes and diversifications seem tantalising. This steadiness can prove invaluable in the face of market volatility and decision-making hazards.
Many tools offer new perspectives on understanding value propositions and facilitating product strategies. One such tool is the activity matrix, a well-known model that proves handy for aligning a company’s activities with their value proposition.
In conclusion, product strategy goes back to the very fundamentals of business – customer requirements and preferences, identification of opportunities, and delivering value through products that meet these requirements. Companies should ensure their products and services align with their unique value proposition, conducting strategies that support and enrich this proposition. Striking the right balance between diversification and focus, while prioritising customer value, paves the way for successful product strategy.