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Strategy, Goals & Metrics

The Product Manager’s Guide to the Strategy

What is similar between Steve Jobs and a person who put three thousand toothpicks in their beard? They wanted to make history. What is different between Steve Jobs and a person who put three thousand toothpicks in their beard? They chose different strategies for achieving it.

Over the course of my career I worked with a number of companies and startups as a PM, advisor or mentor, and was most interested in observing how they make decisions. With small variations, you could broadly identify three main scenarios:

  • Hierarchy is king. Someone who is higher up than you on the career ladder always knows best.
  • Data is king. Just pick a good metric and move it in the right direction.
  • Customer is king. Build whatever customers ask you to and burn through the backlog of bugs and feature requests.

The word “strategy” was coming up as well but, most often, the connotation was overly negative. The strategy even when it existed was considered to be a part of the corporate “buzzword bingo” rather than an actually useful tool.

However, the most successful companies I ever worked with knew that the “secret” fourth option — using strategy over hierarchy, data and customer requests to make decisions — was the right choice. In this guide I’ll share why it is the case and what are the steps to create a good strategy.

Why you should care about strategy

Okay, I can already hear you saying, “Wait, what? Using strategy over data and customer requests doesn’t make any sense: how can you separate them from one another?”. The thing is that there is a big difference between being informed and being driven. For sure, strategy should be data-informed and customer-centric but it doesn’t rely on a single piece of information, it takes a look at the holistic picture. Let me give you a simple example: imagine that you built a feature but the A/B experiment didn’t show expected results. What would you do next — ship, iterate or kill the project? Your current data and existing customer requests might encourage you to kill it. Looking at it through a strategic lens however, you could have seen this feature as table stakes for unlocking a new market and continued iterating.

  • Strategy gives perspective. It’s sometimes tempting to focus on the known space but, if you want to grow your business, you have to think about untapped opportunities as well. Strategy connects “where we are at” to “where we aspire to be”.
  • Strategy creates alignment. Many founders and execs understand the point above very well and intuitively think about new opportunities. However, the bigger the team becomes, the harder it is to ensure that everyone is moving in the same direction. Imagine a New York City marathon without any guiding signals and guardrails: just thousands of people randomly running around the city. Even if you can track some high-level decisions, there are thousands of smaller ones that you can not possibly be in control of. Unless you give people a framework, they will be reinventing the definition of “important” on their local level and might unintentionally hurt your business.
  • Strategy leads to better focus. Teams without a strategy are just “feature factories”, they are burning through their backlogs and idea lists, and not thinking about what would be the long term effects. These teams are a bit like amateur players in chess, doing a lot of unnecessary moves, not thinking a couple of steps ahead and sometimes falling for a gambit. You can build 10 features for your product and still be behind competition, or you could build just one and win the market.

“People think focus means saying yes to the thing you’ve got to focus on. But that’s not what it means at all. It means saying no to the hundred other good ideas that there are. You have to pick carefully. I’m actually as proud of the things we haven’t done as the things I have done. Innovation is saying ‘no’ to 1,000 things.” (Steve Jobs)

Choosing strategy for a coffee shop

Imagine that you want to open a coffee shop. You already found a place in a high traffic location and bought necessary equipment. Now, only “simple” questions are left to answer:

  • What price should you charge for a cup of coffee?
  • Do you want to hire waiters, or make it self-service?
  • What kind of chairs would you buy: stools or comfy armchairs?
  • What should be the distance between the tables?
  • What kind of music do you want to play?
  • Are you going to sell food, and, if yes, what kind: sophisticated desserts or home made sandwiches?

and so on; there is an infinite list of such questions. How do you answer them?

Option 1: Rely on your gut feeling and make random decisions.

Option 2: Try to be data-driven and answer each question with an experiment. For example, buy an equal amount of desserts and sandwiches and observe what sells better. Even if we set aside a possible difference in quality and taste, how can you make sure that the data you got today is an accurate representation of the following couple of years?

Option 3: Think about your strategy first, then try to answer these questions. Here is some additional information for you:

  • Your coffee shop is located not very far from the university so you decide to focus on students as your primary audience. You want to have low prices and a creative/collaborative vibe.
  • Your coffee shop has a nice view over the river and is not very far from the city centre. You want to turn into an upscale place for couples going on a date.

For sure, it’s not a strategy just yet but it already gives us a cohesive set of choices based on the analysis of our strengths, and we can already use it to make decisions.

In the first scenario, you probably would go for simple furniture, large tables where a lot of people can sit at once, upbeat music and food that doesn’t make a mess (as students work on their laptops at the same time as they eat).

In the second scenario, you need small secluded tables, intimate lighting, romantic (maybe live?) music and fancy food that can make a nice conversation starter.

For sure, this example is simplistic but it already starts to surface some of the key attributes of a good strategy:

  • It can’t be created without understanding your strengths (disregarding the location near the university would have been a huge mistake);
  • It’s an active set of choices (when a new barista joins your romantic coffee shop, she clearly understands why she can’t turn her favourite Rammstein song on);
  • These choices are coherent (imagine seeing a designer sofa in a student cafe or a bread and butter sandwich in the menu of an upscale place).

If you are just one person working on a project, you might not need all of this written down, you still can keep it in your head but the more your team grows the more you need to be clear and explicit about your decisions. Strategy is your tool to create a decision-making framework for the whole company.

How to write a Strategy

“Finally”, you say, “enough of this chatter. Let’s get started on the real stuff!”. Not so easy. Apparently, you can’t create just a strategy.

First, you need a vision. Vision is our “destination”, it’s the change in the world that we are seeking to make. Writing a strategy without it is like standing at the crossroads and choosing to turn right because the green light turned on, not because you actually need to go in this direction. To write your vision, continue the phrase “Imagine a world where…”. Vision usually works best when it is coupled with a mission that focuses on our company/team role and answers the question “What are we trying to accomplish?”. Both statements should be short, opinionated and aspirational, for example:

  • Vision: Make travel available to everyone in the world
  • Mission: Build an infrastructure to support travel in developing countries.

The goal of both is to inspire, it’s the reason why people would believe in your company and follow you.

After we define the “why”, we can start thinking about the “how” — our strategy. It involves:

  • Evaluating the state of the market and recent trends;
  • Identifying the biggest threat/challenge for your business;
  • Understanding your unique strengths/ strengths we can develop to address this challenge;
  • Coming up with a specific set of actions that you are going to undertake; and
  • Articulating your product principles and ethical standards that will guide you along the way.

80% of creating a good strategy is about doing diagnosis and only 20% is about providing a recommendation. According to Richard Rumelt, author of the book “Good Strategy Bad Strategy”, “strategy guides teams on how to deal with the challenge identified in the diagnosis. Ideally it leverages your existing strengths and builds new, complementary ones”.

Questions to help you think about the market:

  • Of course, the first question is always about the problem you’re trying to solve; for which audience you’re trying to solve it and how big is the opportunity.
  • What are the three key events that happened in your industry over the last year? Why do you consider them to be important?
  • Who are your direct and indirect competitors?
  • What are the three things they are doing differently? Why?
  • Who were your direct and indirect competitors 5 years ago and why are they not here anymore?
  • Why have your competitors’ customers decided to look for a new product?
  • What will change in people’s lives if they switch to your product?

Questions to help you think about your unique strengths:

  • People: Can you hire experts/talent with specific work experience and knowledge?
  • Technology: Do you have a unique way of creating your product that is hard to copy?
  • Distribution: Do you have access to specific distribution channels? Do you have a unique understanding/knowledge of some market segments? Do you know how to address some specific challenges related to entering this market (e.g., regulations)?
  • Nature of the product: Does your product have high potential for virality/network effects? Does it tap into human emotions?

Questions to help you think about product principles:

  • What are the things/actions you are never going to do?
  • What does it mean for you “to care about your user”?
  • What are the important things you can’t measure about your product?

The goal of strategy is to provide a set of limitations that will enable the team/company to fulfill the vision. Going back to my NYC marathon metaphor, we are setting up the flags and barriers that will help runners make the right choices and understand where to turn.

BONUS: Here is my template for a new strategy.

How to communicate your strategy

🙋‍♀️Anna Boyarkina, Head of Product at Miro

Follow Anna on LinkedIn

“When working on strategy, we need not only to think about the way to set some strategic bets but also to communicate the direction we are going to take. Considering the distributed nature of the company and its fast growth, this alignment becomes crucial. Here are some practices that my team and I use to communicate the strategy:

  • Storytelling and “Painted Picture”. A story which is easy to remember is a great way to align everyone around vision and plans. Cameron Herald described the Painted Picture approach in his book «Double Double»: it’s a short story from the future state of your company or product, which is inspirational and memorable at the same time.
  • All Hands meetings. At Miro, we have company-level All Hands meetings as well as department-level ones. They usually happen once per month, and leaders share the updates on results, strategies, and answer any questions from the company employees.
  • Planning around shared goals. This is not exactly strategy communication but one of the best ways to put any strategy into action. At Miro, we’re using OKRs on all levels, and this helps us focus on strategic goals, and allows everyone to contribute.
  • Up-to-date knowledge base. When the company is getting bigger, it’s essential to communicate any updates you have, and everyone should be able to find what is important right now and why. We are using Confluence + Miro for that purpose.
  • Proactive communication through email, corporate messengers and other company channels. Having all the information available is not enough — these days there are a lot of distractions for team members so proactive communication about important things makes a huge difference”.

Why strategies fail

Although it might sound easy on paper, you should be ready for your first strategy doc to be terrible. It will require hours of practice and years of work in the industry before you’ll be able to produce something meaningful. Funnily enough, the best reaction to the doc that you sweated on is “oh my, it’s so obvious, why haven’t we done it before”. 

In this chapter we’ll cover the key pitfalls while creating a strategy and discuss indicators that might suggest that your strategy is not working. 

  1. Misunderstanding what strategy is

Although we kind of discussed what strategy is in the previous chapter, I want to reiterate on this point as it’s really important. Strategy is NOT:

  • Vision or mission (e.g., “make education affordable to all kids in the world”) 
  • Goals (e.g., “have 100 mln DAU in China”) 
  • Roadmap (e.g., “build feature X in May”)
  • A couple of the immediate company’s priorities (e.g., “launch in the U.S.”).

Strategy is more specific than vision but less prescriptive than the roadmap. It’s in between, it helps to align your execution with your vision. Consider the following template: 

“We want to achieve [vision]

So we need to do [strategic choice №1], [strategic choice №2] and [strategic choice №X]

Keeping in mind that [product principles]”.

Example №1 – Me

Vision: get fit

Challenge: I gained 3 pounds, and summer is coming

Strategy: 1) reduce the amount of eaten sweets 2) do more exercise

Execution: this week I did two 30-min yoga sessions.

Example №2 – A job search site

Vision: empower everyone in the world to have the job they love

Challenge: a new competitor is growing fast and stealing a younger audience from us

Strategy: 1) create “future customers” who aren’t looking for jobs yet – college students  2) focus on building long-term relationships with them 3) by connecting them to industry experts and helping find mentors.    

Execution: this month we built a feature for experts to mark themselves as “available for mentorship” on our platform.  

Example №3 – Company producing puzzles

Vision: every human is a creator

Challenge: our business targeting kids is stagnating, we need to find additional streams of revenue 

Strategy: 1) produce collectible puzzles that are easy to assemble 2) target the adult audience 3) lure them into more complex puzzles (main product)

Execution: this month we got the rights to use the “Star Wars” brand for our first line of collectibles. 

NB: For sure, examples above are not a strategy yet; their goal here is to highlight the difference in framing among vision, strategy, and execution.    

  1. Not considering multiple choices

When you see a really clear market opportunity or have an outstanding unique strength, it might be tempting to make the call right away. I’m a big fan of moving fast as well but I can assure you, if you consider at least 1 more alternative, the quality of your strategy will significantly increase. A study on complex strategic decisions suggests that, when the executive board considered more than one alternative, they made six times as many “very good” decisions. It’s not that your first option is necessarily bad but it might be the result of the effect called “narrow framing”: you look at the situation from just one angle and miss the details that you’d see from another one. Considering multiple options allows you to get a 360 view on the problem and get a crisper framing of your strategic choices. 

What choices you were considering and what you decided not to do might be as important as the actual strategic choice you made. If you could communicate this part as well in a clear and concise way, it will be super impactful. 

  1. Not aligning your choices with each other 

Let’s take a look at Apple:

  • Innovative devices 
  • Premium retail experience
  • Well-organised support line
  • Creative advertising
  • High prices
  • And so on

Everything on this list tells one story to a specific customer. Imagine changing even one bit in it: for example, having a crappy support experience where you have to wait for 1 hour on the phone and still not resolve your issue, – the whole thing would fall apart. Your customers are unlikely to be aware of your strategy but some outcomes of it would be clearly visible to them. So, as already mentioned in the chapter about the coffee shop strategy, let’s not put a designer sofa in a student cafeteria. 

  1. Not connecting your strategy to execution

“Strategy without tactics is the slowest route to victory, tactics without strategy is the noise before defeat.” (Sun Tzu)

Or, as I put it, “Strategy without tactics is just a PowerPoint presentation that no one cares about”. 

Strategy assumes good execution. If people can’t execute on your strategy, then you can proudly put this doc in the bin. Strategy should be achievable and operable. 

Your team is supposed to use strategy regularly: when they prioritise their work or make a ship/no ship decision; when they make hiring decisions or choose to kill one feature in favour of another one. Strategy also usually involves unlocking specific milestones on the way to your vision. If these milestones are impossible to accomplish, your strategy will be soon forgotten. 

  1. Thinking that your strategy will not change

There are many external and internal factors that might push you to change your strategy. Some changes in regulations (like GDPR), new competitors, emergings trends – all of it might be happening overnight, and next morning your strategy is not valid anymore. The key mitigation here is to keep your eye on the ball. Don’t think that you write strategy once, and the job is done. The much harder part is what follows: making sure that your strategy stays up to date. Monitor what’s happening on the market and make it a habit to revisit your strategy every 3/6/12 months even if nothing major happens. The younger the company, the more often you should be doing it. 

What are the indicators of a bad strategy

Despite all the warnings in the previous chapter, your strategy still has a chance to be bad. The choices that you made in a coherent and actionable manner are simply wrong. How do you find out about it as early as possible? 

Let’s use another simplified example. Imagine that our vision is to “reinvent the healthcare of tomorrow”. After carefully studying the market and thinking about our strengths, we decide that our strategy is to: 

  1. Create a portable device for any type of blood-testing
  2. That can be used at home
  3. By any American family. 

Each part of this strategy can be further broken down into milestones and the roadmap, for example: 

M1 Create a device for 80% most popular blood tests

M2 Create a device for 100% blood tests

M3 Make this device portable

M4 Introduce protection mechanisms so that it’s safe to keep it at home with kids

Etc.

For each milestone, we should develop metrics to track our progress and timeline that we consider to be feasible. For sure, it’s not a one-man job, and you should involve your key stakeholders in this process (here is a great article on how to do that).  

As soon as you have it ready, you can monitor if these milestones are being achieved and if they are being achieved in a timely manner. If they are not, you have two options: 

  • either your execution is not good enough
  • or your strategic choice is flawed. 

To rule out the first one, you can try to iterate over your existing solution, pivot to a new solution to address the same problem, change people on the team or get advice from industry experts. There is no rule of thumb for how long you should be trying to do that but if you have exhausted your options and constantly see all your execution efforts failing, it’s very likely that something is wrong with your strategy. You can read how this story actually ended in the book called “Bad Blood” 🙂

To sum up, you can’t cure pneumonia with a headache medicine, even if you are doing it really well. The key part of noticing the indicators of a bad strategy is introducing them in the first place, before you start execution. However, the hardest part of noticing the indicators of a bad strategy is actually recognising that you made a mistake and going back to where you started. 

Strategy is hard. Good strategy is even harder, that’s why people who can do it are getting a solid paycheck and a C-level title. However, it’s not a caste of “chosen ones”, it’s people who trained this skill over the years of work. You can do it too – don’t be afraid of trying as at the end it will reward you with a competitive advantage for your company – and yourself.  

Further reading on Strategy

🙋‍♂️Brian Donohue, Director of Product at Intercom

Follow Brian on Twitter

“There are 4 resources I’d point people to:

What really resonated from Marty’s work was that strategy requires insight. You need to do the hard work to get insights to feed the strategic decisions. This usually takes time and effort. You can’t just create strategy out of thin air. And writing the strategy itself just takes time; you need those insights fermenting to get the strategic juices flowing”. 

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