Strategize: Product Strategy and Product Roadmap Practices for the Digital Age

by Roman Pichler

A journey of a thousand miles begins with a single step. Lao Tzu

The product strategy describes how the long-term goal is attained; it includes the product’s value proposition, market, key features, and business goals. The product roadmap shows how the product strategy is put into action by stating specific releases with dates, goals, and features.

FIGURE 1: Product Strategy and Roadmap in Context

In Figure 1, the vision describes the ultimate reason for creating the product, the product strategy states how the vision will be realized, and the product roadmap states how the strategy will be implemented. The product backlog contains the details necessary to develop the product as outlined in the roadmap, such as epics, user stories, and other requirements. Note that the relationships between the elements in Figure 1 work in both directions: the product backlog can cause changes to the roadmap, for instance, which in turn may affect the strategy. For example, if the feedback from the customers and users indicates that the product does not adequately address their needs, or if the development progress is slow, then this may lead to product roadmap changes. Similarly, larger roadmap changes can cause product strategy adjustments. And if you cannot find a valid product strategy—a strategy that helps you realize the vision—then you may have to change the vision or look for a new one.

Doing the right thing is more important than doing the thing right. Peter Drucker

A product strategy is a high-level plan that helps you realize your vision or overarching goal. It explains who the product is for, and why people would want to buy and use it; what the product is, and what makes it stands out; and what the business goals are, and why it is worthwhile for your company to invest in it. Figure 2 illustrates the elements of the product strategy. FIGURE 2: The Elements of the Product Strategy Let’s take a look at the three aspects captured in Figure 2: the market and the needs, the key features and differentiators, and the business goals.

Note that a product strategy is not a fixed plan or something you only create for a new product: it changes as your product grows and matures. As a consequence, you should review and adjust your product strategy on a regular basis—at least once a quarter as a rule of thumb.

An effective vision has four qualities: it is big, shared, inspiring, and concise.

As powerful as they are, the vision and the product strategy are not enough to create a successful product. What’s missing are the tactics—the details required to develop a great product, including the user stories and the design sketches. Figure 4 shows how the vision guides the product strategy and how the strategy directs the tactics. FIGURE 4: Vision, Strategy, and Tactics

TABLE 1: Vision, Strategy, and Tactics

FIGURE 6: The Innovation Ambition Matrix The matrix in Figure 6 considers the newness of the product on the horizontal axis and the newness of the market on the vertical axis. This allows us to distinguish three different innovation types: core, adjacent, and disruptive.5

Instead, a disruptive innovation typically solves a customer problem in a better, more convenient, or cheaper way than existing alternatives.

TABLE 2: The Three Innovation Types and Their Impact

FIGURE 7: The Product Life Cycle Model

Summary Table 3 summarizes how the life cycle stages shape the product strategy. TABLE 3: The Product Life Cycle and the Product Strategy Life Cycle Stage Strategy Development Develop a valid strategy: a strategy that results in a product that is beneficial, feasible, and economically viable. Introduction Adapt and improve your product to achieve product-market fit (PMF). This may require incremental changes such as improving the customer experience, adding new features, and refactoring the architecture. But it may also make a more drastic change or pivot necessary. Aim to achieve the break-even point for a revenue-generating product by the end of this stage. Ensure that your business model is scalable. Growth Sustain the growth by penetrating the market and fending off competitors. Keep your product attractive, and refine it. Manage the growth by unbundling your product or by creating variants, for instance. Ensure that your product is profitable (if it is meant to generate revenue). Maturity As growth stagnates, extend the life cycle and revive growth by taking the product to a new market, for example, or bundling it with another product or service. Alternatively, milk your product by serving the late majority. Defend its market share and focus on profitability for revenue- generating products. Decline Reduce cost to keep the product profitable for as long as possible, then start phasing it out.

Capture Your Strategy with the Product Vision Board Even the best strategy is useless if you can’t communicate it effectively. The Product Vision Board is a simple yet powerful tool that helps you with this. I have designed it to describe, communicate, test, correct, and refine the product strategy. The Product Vision Board consists of the five sections shown in Figure 11. The top section captures the vision; the bottom four sections describe the product strategy. FIGURE 11: The Product Vision Board The top section in Figure 11 is called Vision. It captures your overarching goal, which is expressed as a brief vision statement or slogan. The leftmost bottom section is called Target Group. It describes your market or market segment, the customers, and the users. The next section is called Needs, which states the value the product creates for your target group, the problem that the product solves, or the benefit it provides. The Product section captures the actual product; it explains what makes your product special and why it stands out. It also asks whether it is feasible for your organization to develop the product. The last section, titled Business Goals, captures the desired business benefits—the value the product should create for your company. Examples include opening up a new revenue source, achieving a profitability target, reducing cost, or being able to provide a service or sell another product. There is also an extended version of the Product Vision Board with add...

FIGURE 12: The Extended Product Vision Board The first and second rows of the board in Figure 12 are identical to the standard Product Vision Board. The business model is captured in the bottom row, which is inspired by the Business Model Canvas and provides the following four sections: •Competitors describes the strengths and weaknesses of the competition and their products. It uses your insights from performing a competitor analysis and helps ensure that your product stands out. •Revenue Sources captures the way your product generates money: for instance, by selling licenses, subscriptions, or online or in-app ads, or by charging for premium features. •Cost Factors states the cost incurred by developing, marketing, selling, and supporting your product. This includes the cost of acquiring users and customers, purchasing third-party components, and paying for the services and products provided by partners and suppliers. •Channels are the ways you will contact your users and customers to inform them about your product and to sell and deliver the product. The latter can range from implementing the requirements of an online app store to working with retailers to get some shelf space for a shrink-wrapped product. Consider if the appropriate sales and marketing channels already exist, or if you have to create or acquire them. You can download the Extended Vision Board for free from my website, where more information on the tool is available.

Track the Product Performance with a Product Scorecard Once you have selected the right KPIs for your product, you should collect the relevant data and regularly analyze it. A product scorecard or dashboard can help you with this. I like to work with a balanced product scorecard that considers the four perspectives listed in Table 4: financial, customer, product and process, and people. This ensures that you take a holistic approach to determining the product performance, and it reduces the risk of overlooking important trends. Figure 13 shows a balanced product scorecard. FIGURE 13: Balanced Product Scorecard The scorecard in Figure 13 is inspired by the work of Norton and Kaplan (1996) on balanced scorecards, which are a business-performance management tool. It states the business goals at the top and the four perspectives underneath. As mentioned in the last section, you should be clear on the business goals your product serves. Prioritize them and ensure that they are measurable. Select only relevant indicators that will help you determine if you are meeting the business goals. If you find the product scorecard in Figure 13 helpful, then download it from my website, where you can find more information about the tool.19

I recommend capturing these goals on the product roadmap together with the relevant metrics for measuring when a goal is met (described in more detail in Part 2). In an agile context, product goals are delivered in a stepwise fashion by a number of sprints, which should have their own goals and success criteria. This results in the three-tier goals-and-metrics approach described in Figure 14. FIGURE 14: Goals and Metrics As Figure 14 shows, the business goals captured in the product strategy provide the context to identify the right product goals. The latter describe the specific benefits major releases should provide.

Note that the relationship between the levels in Figure 14 is bidirectional, as the feedback or data generated in a sprint can change the product roadmap. This may in turn have an impact on the product strategy. To build on the cycling example, if my training progress indicates that I cannot win the race, I have to revise my overall goal, select a different race, or be content with a less ambitious result.

Stakeholder Analysis and Engagement Once you have identified the stakeholders, you need to determine how to best engage the individuals. A tool that helps you with this challenge is the Power-Interest Grid, described in Eden and Ackermann (2011). As its name suggests, the grid analyzes the stakeholders by taking into account their power and their interest; it assumes that stakeholders take a low or high interest in your product and have low or high power. This results in four stakeholder groups: players, subjects, context setters, and the crowd, as Figure 15 shows. To find out if a stakeholder is likely to be interested in your product, consider if the person will be affected by it; and to understand if a stakeholder has high power, ask yourself if the individual can influence, or even veto, product decisions. FIGURE 15: The Power-Interest Grid

Stakeholders with high interest and high power are called players. These individuals are important partners for you; they help you create, validate, and review the product strategy and ideally continue to work with you on the product roadmap. Aim to secure their buy-in, leverage their ideas and knowledge, and establish a close and trustful relationship with them. You should also ensure that these individuals are involved with the product continuously to avoid loss of knowledge and handoffs.

Be aware that collaboration requires leadership. As the person in charge of the product, you should be open and collaborative but decisive at the same time. Aim to build consensus with the players, but don’t shy away from difficult conversations. Don’t settle for the smallest common denominator. Have the courage to make a decision if no agreement can be achieved. Great products are not built on weak compromises. As the saying goes, “A camel is a horse designed by committee.”

Subjects are individuals with high interest but low power—for example, product managers and development teams who work on related products. These individuals feel affected by the product and are keen to influence it, but they can’t veto or change decisions. Subjects can make great allies who can help you secure understanding and buy-in for your product across the business. Keep them involved by inviting them to bigger strategy-review meetings, for instance, or by sharing ideas with them and asking for their feedback.

People with low interest but high power are called context setters. They affect the product’s context, but they take little interest in the product itself. Context setters are often powerful senior and executive managers who can make your life difficult if they are not on your side. Regularly consult them to...

Everyone else is part of the crowd. As these individuals are not particularly interested in your product and don’t have the power to influence the product strategy or other product decisions, it’s usually sufficient to keep them informed; give them access to the product’s wiki website, for instance, or update them on significant strategy changes.

As your product develops and grows, and as the market and the technologies evolve, the product strategy has to change, too. You should therefore regularly review and adjust it. As Winston Churchill put it: “However beautiful the strategy, you should occasionally look at the results.”

FIGURE 16: Factors Affecting the Strategy Reflecting on the product’s performance using KPIs should help you understand how successful the product is and if the product is meeting its business goals.

Segment the Market Segmenting the market means dividing the potential customers and users into distinct groups. It’s like eating cake. Instead of trying to eat the whole cake at once and possibly creating a mess or choking on it, we cut out a neat slice. This allows you to create a focused product with a compelling value proposition and a great user experience. Your segments should be clear-cut so they do not overlap. To put it differently, you should be able to tell who belongs to a segment and who does not. What’s more, each segment should be homogenous, and the people within it should respond to your product in the same way.

Choosing the Right Segmentation Approach But how can you tell which segmentation approach is preferable? Should you segment primarily by customer or by benefit? My answer is simple: look at the innovation type your product represents. Whenever you create an adjacent or disruptive product, segment first by benefit. Once you have created your initial benefit-based segments, you can refine them by using appropriate customer properties. In contrast, when your product is a core innovation, divide the market by customer properties, as Figure 17 illustrates. FIGURE 17: Innovation Strategy and Segmentation Approach21 The great thing about benefit-based segmentation is that it reduces the risk of overlooking people who are likely to take advantage of your product; it also offers you the opportunity to reconstruct the market boundaries.

Addressing all three segments at the same time would be overwhelming. It’s therefore a good idea to choose one of them. But which one should I pick? To select the right segment, evaluate the different groups and opt for the most promising one. A great tool to do this is the GE/McKinsey matrix (Coyne 2008). While the matrix was originally developed to assess a business portfolio, it can also be applied to market segments. It encourages you to assess your segments according to their attractiveness and the strength of your business, as Figure 18 shows. FIGURE 18: GE/McKinsey Matrix The GE/McKinsey matrix states the attractiveness of the market segment on the vertical axis, and the strength of the business on the horizontal one. It ranks five sample segments according to the two dimensions. The most promising one is S4: it is fairly attractive, and the business has the ability to serve it. S1 and S2 are more attractive than S4, but the business strength is significantly lower. The remaining two segments are less attractive. While the matrix offers a great way to evaluate the segments, the devil is in the details. The effectiveness of the matrix depends on your ability to define what attractiveness and business strength mean. Several criteria may be used to determine how attractive a segment is, including the following: •Need: How strong is the need, and how much does the group benefit from the product? •Segment size: How big is it? •Growth rate: Does it...

Use Personas to Describe the Customers and Users A helpful technique to describe the customers and the users of your product is the use of personas.23 Personas are fictional characters that usually consist of a name and a picture; relevant characteristics, behaviors, and attitudes; and a goal. The goal is the benefit the persona wants to achieve, or the problem the character wants to see solved. Different personas can have different goals.

Persona Tips Any persona description should be based on knowledge gained from direct interaction with the target customers and users. Before you create your personas, you should therefore get to know your audience, for example, by observing how they currently get a job done and by interviewing them. Otherwise, your characters may not accurately represent your target group.

A Persona Template To help you create your persona descriptions, I have developed a simple but powerful template that you can download from my website. The persona template consists of three sections: a picture and a name, the details, and the goal of the persona, as Figure 19 shows. Unlike traditional persona descriptions, which are fully fledged, detail-rich user models, my template encourages you to start with simple, provisional personas that capture the essence of the character. FIGURE 19: A Persona Template The section on the left of the template in Figure 19 captures the picture and the name of the persona. This makes it easier to develop empathy for the character and to refer to it. The latter comes in handy when you design the product and create scenarios, user stories, and other artifacts. I like to reuse the persona names in my user stories, for instance. The middle section lists the relevant characteristics, attitudes, and behaviors of the persona. This can include demographics, job-related information, and hobbies. Don’t make the mistake of listing everything that might be relevant, but focus on the details that are important in order to understand the persona. If a demographic attribute such as age or job role is not helpful, for example, then leave it out. Don’t clutter your persona descriptions, and make sure that they are easy to understand. As a rule of thumb, your persona description should fit onto an A4 sheet of paper. The section on the right states t...

But no matter if it’s a vitamin or a painkiller, your product must create a tangible benefit that is larger than the cost or hassle involved in obtaining and using the product. If the benefit is weak or the barrier to employing the product is high, then people are unlikely to buy and use your product.

Make Your Product Stand Out Few products are groundbreaking innovations with no competition. Chances are that alternatives for your product exist. You should therefore ensure that your product stands out from the crowd and that people choose your product over competing offerings. This requires you to understand who your competitors are, what factors they compete on, and how your product scores against them. The Strategy Canvas A great tool to help you with this challenge is the Strategy Canvas, described in Kim and Mauborgne (2004) and shown in Figure 20. FIGURE 20: The Strategy Canvas The horizontal axis of the Strategy Canvas captures the key factors your industry competes on. These factors include product, service, and delivery. The vertical axis describes the degree to which each competitor offers or invests in the factors. To apply the canvas, you first determine the key factors. These are the factors that products within the same category compete on, such as price, features, and design. Then evaluate to what degree your competitors fulfill these factors. This creates the industry value curve, represented by the dark line in Figure 20. You then assess your own product, which results in the white-dotted line in the diagram. The keys to applying the Strategy Canvas successfully are identifying the right factors and correctly evaluating the competition and your own product. Make sure you choose the factors that define the current standard in your market and are used to a...

A great tool for achieving this is the Eliminate-Reduce-Raise-Create grid (Kim and Mauborgne 2004). The grid encourages you to identify features that your product does not provide or that it offers to a lesser extent or in an inferior way compared with alternatives. It also helps you identify new and improved features. Let’s build on the example from the previous section and apply the grid to the first iPhone. FIGURE 23: The Eliminate-Reduce-Raise-Create Grid As Figure 23 shows, the first iPhone eliminated a number of smartphone features that were considered standards or must-haves when the product was launched in 2007. These included different models to choose from, a physical keyboard, and a stylus to write on the screen.26 It also reduced a number of features, such as the voice, the camera quality, and the e-mail integration (no POP and no Exchange support). The iPhone also provided enhanced and genuinely new features.

You can combine the Eliminate-Reduce-Raise-Create grid with the Strategy Canvas discussed in the last section and create a new, enhanced canvas, as Figure 24 shows. FIGURE 24: Strategy Canvas with Eliminate-Reduce-Raise-Create Grid Eliminating the right features requires a solid understanding of your target group and the problem your product solves—as well as a good portion of courage.

Summary Table 5 summarizes the benefits and drawbacks of the two techniques. TABLE 5: Benefits and Drawbacks of Unbundling vs. Creating Variants Benefits Drawbacks •Makes it easier to grow the product and add new features; improves the user experience by simplifying the product. •Enables you to take the product to a new market or segment or to address the needs of a specific group. •Helps you generate more business benefits;creates an opportunity to evolve the business model and open up new revenue streams. •Can increase the product’s competitiveness and help you respond to market changes. •Customers and users may be given too much choice, leaving them feeling confused or overwhelmed. •Existing products may be cannibalized. •Portfolio management is required to coordinate the members of the product family. •Shared assets, and possibly a platform, have to be developed.

Iteratively Test and Correct Your Strategy A great way to validate the product strategy is to follow an iterative approach along the lines suggested in the book The Lean Startup (Ries 2011). Start by selecting the biggest risk: the uncertainty that must be addressed now so that you don’t take the product in the wrong direction and experience late failure—that is, figuring out at a late stage that you are building a product that nobody really wants or needs. Next, determine how you can best address the risk—for instance, by observing target users, interviewing customers, or employing a minimum viable product (MVP). Carry out the necessary work and collect the relevant feedback or data. Then analyze the results and use the newly gained insights to decide if you should pivot, persevere, or stop—if you should stick with your strategy, change it, or no longer pursue your vision—and take the appropriate actions accordingly. Follow this process until no crucial risks are left, you are confident that your strategy is correct, and you have enough evidence to support it—or until you have run out of time and money. Figure 27 illustrates this process. FIGURE 27: Testing the Product Strategy Iteratively reworking the product strategy encourages you to carry out just enough market research just in time to avoid too much or too little research.

How closely you should collaborate with the stakeholders, and how much they should participate in the validation work depends on the amount of uncertainty present. If you work on a disruptive product or on a new adjacent one, then I recommend that you opt for close collaboration and form a team similar to the one shown in Figure 30. This team is also called the product discovery team.34 Otherwise, a looser, on-demand collaboration may be sufficient. FIGURE 30: The Product Discovery Team In order to have an effective product discovery team in place, ensure that the necessary skills are present, that the team is stable, that its members can dedicate enough time to the validation work, and that they are collocated.

TABLE 6: Risks and Sample Questions Risks Sample Questions Market and Needs Will removing the problem you want to solve make a real difference to the customers and users? Is the benefit the product creates something people would not want to miss once they have experienced it? Are you confident that you have selected the right market segment, and that you are addressing the right people? Is the target group clear-cut? Are you able to tell who is in your target group and who is not? Do you have a rough idea of how big the market is? Are there any major market entry barriers? Features and Technologies Will the product be able to do a great job for the users and customers? Can you list the top three features that will make people want to use or buy the product? Does the product offer a clear and compelling advantage over the competitors’ products? Are you clear on the branding strategy? What are the key characteristics of the desired user experience? Is it feasible to develop the product? Are the technologies required available? Are they mature enough? Does your organization have the necessary skills to use them effectively? Are enough people with the right skills available, and if not, can you recruit them? Business Goals Are you confident that it’s worthwhile to develop, market, sell, and support the product? Are you clear on the business goals the product should deliver? Can you quantify and measure the desired business benefits? Do you know which one is your number one goa...

TABLE 7: The Stakeholders and Their Expectations of the Product Roadmap Stakeholder Expectations Product manager • Communicate how the product strategy is implemented and how the product is likely to grow. • Provide direction and guidance to the stakeholders; get the stakeholders to agree on the plan and to contribute to the individual releases. • Obtain management approval and acquire a budget; set and manage management expectations. • Track the success of the individual releases to proactively manage the product. Management sponsor • Ensure that the product implements the right strategic goals and that the product roadmap and the company strategy are aligned. • Measure and track the product performance to understand if the product delivers, i.e., if the money spent on it is a worthwhile investment. • Agree on an appropriate budget. Development team • Understand what’s ahead; influence the roadmap to take into account, for instance, technology changes, user experience concerns, and technical debt. • Make sure the roadmap is feasible and that the team can design and build the product; allocate the right people. Marketing and sales • Anticipate the necessary work to market and sell the product; create the right marketing campaign, train the sales staff, and develop the necessary marketing and sales collateral. • Ensure that the work can be done and allocate the right people. • Influence the roadmap so that marketing and sales concerns are taken into account. Product and por...

Make Your Product Roadmap SMART Regardless of the roadmapping approach you choose, you will benefit from a SMART product roadmap: a roadmap whose releases are specific, measurable, agreed, realistic, and time-bound.47 This will ensure that the roadmap is an actionable plan that guides the work of the development team and the other stakeholders.

Capture Your Roadmap with the GO Template Getting the roadmap format right and expressing goals and benefits effectively can be tricky. To help you develop your product roadmap, I have created a goal-oriented roadmap template called the GO Product Roadmap. It is built on the idea that goals are more important than features, and it consists of five elements: date, name, goal, features, and metrics, as Figure 40 shows. FIGURE 40: The GO Product Roadmap Template Let’s take a look at the rows of the GO roadmap in Figure 40 from top to bottom. The first row captures the date or the time frame when a new product release should be available—for example, 1 March 2015, or first quarter 2015. The second row states the name of the release. Think of release names such as iOS9 or Windows 10, for instance. The third row is the most important part of the GO roadmap. As its name suggests, it states the goal of a release, the benefit it should provide, and the reason for creating it. Sample goals include acquiring users, improving the user experience, and removing technical debt. The fourth row lists the product’s features that are necessary to meet the goal. Derive the features from the goals and ensure that they help create the desired benefits. Focus on what really counts; limit yourself to five features per release, and keep the features coarse-grained. More details, including epics and user stories, are provided in your product backlog. Remember, the purpose of a release is to meet th...

Get the Features on Your Roadmap Right Most product roadmaps come with features—with good reason: goals alone are usually not enough to understand what needs to be done to successfully deliver a release. To get the features on your roadmap right, start by making them high level. Ensure that they are product capabilities or deliverables; examples include “track what I eat” or “evaluate the food consumed” for my healthy-eating app. Don’t make the features on your product roadmap too detailed. Otherwise it will become difficult to see how your product should evolve, and your roadmap will overlap too much with the product backlog. Don’t mistake epics or user stories for “features.” A feature is a product capability. You can think of it as a group of epics. Goal-Oriented vs. Feature-Based Roadmaps On a goal-oriented roadmap, features exist to meet a goal and generate a benefit. You should therefore state the goals first and then derive the features from the goals. To put it differently, goals come first, features second. As mentioned before, I recommend that you don’t use more than five features per goal, and avoid adding features altogether when your planning accuracy is low. When you work with a feature-based roadmap, however, features are first-class citizens that you directly add to the appropriate releases. They may originate from customer requests, user forum messages, or solution interviews, for example.

As Murphy’s Law states: “Anything that can go wrong, will go wrong.”48 The development progress may not be as fast as anticipated, for instance, or one of the technologies may not be usable. It is therefore important that you understand which aspect has the biggest impact on the success of your product so that you can protect it. Is it delivering the release contents, releasing on time, or adhering to the budget? This factor is also called the primary success factor (Kerzner 2013).

The development progress may not be as fast as anticipated, for instance, or one of the technologies may not be usable. It is therefore important that you understand which aspect has the biggest impact on the success of your product so that you can protect it. Is it delivering the release contents, releasing on time, or adhering to the budget? This factor is also called the primary success factor (Kerzner 2013).

Protecting the Primacy Success Factor Once you have found the primary success factor, you must protect it. If it’s on-time delivery, for example, then do everything in your power to ensure that your product is shipped on schedule. Consider the first iPhone. In order to ensure that the product would be released on time, Apple was prepared to partially implement some features and to increase cost by adding more people to the development effort. The very first release shipped without the ability to send text messages to multiple recipients, for instance, which is something every ordinary mobile phone at the time could do. As this example shows, protecting the primary success factor requires you to relax at least one other factor.