The 3 Essential Elements of a Streamlined Product Strategy

Product strategy development doesn’t need to be complex to be effective. And yet, in two decades as a product manager, I have continually encountered businesses that overcomplicate it and wind up navigating a maze of competing objectives and unnecessary requirements. These experiences led me to develop a framework, comprising three driving forces, that will help steer any product strategy.

I recently applied these three strategic elements of product development to great success when working with a client in the automotive industry. The results led us to create a completely new product line and a $2 million increase in revenue in the first year.

The beauty of this framework lies in its simplicity and adaptability: It can be implemented by product managers in any industry to streamline their product process and achieve the same success for their clients or companies.

The Driving Forces of a Product Strategy

My framework is loosely based on a corporate strategy theory developed by Tregoe and Zimmerman called “the driving forces,” which asserts that the driving force is the main reason for a company’s existence, setting the direction of all efforts and influencing all decisions in the organization. The nine potential driving forces that can guide a business are:

According to Tregoe and Zimmerman, the driving force of any organization can be determined by answering a simple question: When decisions are made about the direction of a company, which one of the nine areas is most heavily weighted? After studying this corporate strategy framework, I realized it can also be applied to products.

There may be many complex theories out there, but there should only be three components of a product strategy. Unlike Tregoe and Zimmerman’s theory, it’s not a matter of choosing one—rather, they work together, and a product strategy needs to address all three of these forces to be successful: market need, capabilities, and reputation.

1. Market Need

The first of the three drivers is market need. This includes better serving an existing need, uncovering an unknown need, or creating a new need.

• Better serving an existing need. Uber and Lyft are perfect examples of this. They took the taxi-service industry and found a new, more efficient way to meet both driver and customer requirements.
• Uncovering an unknown need. A firm I worked with developed a security camera that could view an entire room in great detail and provide instant notification of unauthorized activity. This was not something the industry had been asking for, since no one had conceived a product like this was possible to create.
• Creating a new need. The iPhone created a platform for applications that make our lives easier, and in doing so, created a consumer need for these applications. Entire businesses are now launched to serve these new demands.

Business schools teach several methods that aim to uncover and define the needs of your market, such as the jobs-to-be-done method. While these can be helpful, ask yourself the following questions to develop and guide your new product ideas:

If you decided to eliminate your current product line in six months, what impact would that have on your customers?

Answer this question honestly, even if it forces you to accept a reality you don’t want to confront. If there would be little impact, then you shouldn’t consider expanding this product line, as it appears to offer no unique value to the market and would be easily replaced by competitors’ products. On the other hand, if you think eliminating it could cause a surge in orders as customers snap up the remaining stock, then your product line is valuable and you could consider expanding it.

Is your new product going to disrupt the market or only create a ripple on the surface?

If your product is only going to cause a ripple, offering no significant improvement to what customers can already buy (and probably already have), then you need to consider whether you should pursue it at all. Low-revenue product lines can rapidly become a drain on profits.

If you envision that your product will disrupt the market, does your firm have the financial and skill resources to sustain this impact? If not, then you will create a market that your competitors could exploit. I recently worked with a client who put a large portion of its R&D resources into developing a cutting-edge video and optic product. The problem was that the company did not have enough resources to continue this development and improve older products that were performing poorly in the market. While the new product breathed life into a faltering company, allowing it to remain viable for three or four more years, several competitors launched more advanced solutions within a year, and the firm could not improve its product to keep up with them.

What would happen if you were to delay the release of a new product by a few months in order to make it more advanced?

Balancing timing and opportunity is at the heart of a good product roadmap. If your roadmap is effective, you can eliminate the cost of future product development cycles. Previously, by spending slightly more time and resources designing a product, I enabled it to stay in the market for an additional 12 to 18 months, eliminating the need for an entire product development cycle and giving us a head start on the competition, while increasing the per-unit cost by less than 10%.

2. Capabilities

The second driving force is capabilities. You need to be aware of both the capabilities that are available to you now and those that could be acquired. The minimum capabilities to consider are: technical, manufacturing, and distribution.

Analyzing these three aspects of your business, and making sufficient investments in any areas where you are currently lacking, will help sustain your product strategy. This is how you can ensure you achieve critical mass in each of the following key areas:

Technical

Without this capability, your development team will not be able to create the product. This may seem obvious, but in my experience it is often overlooked. You should identify the exact skills needed for your project, and ensure each team member has relevant, demonstrable expertise and success. This assurance could come from positive testimonials from previous managers or colleagues, or records of projects and products. If your company lacks resources, these roles are easy to outsource.

Manufacturing

If your product involves hardware and the factory you’ve selected is not capable of building it in sufficient quantities or with the necessary quality, you are jeopardizing your success in the market. Again, this may seem obvious to an experienced leader, but is worth reiterating.

The criteria you should pay attention to when evaluating potential manufacturers and suppliers are: experience building similar products in the appropriate volumes, a robust quality control and product audit function, and financial and inventory terms and conditions that are suitable for your line of business.

Distribution

Without a solid distribution system or network, you will not be able to support the demands of your customers. This is an area you must be aware of, but depending on the company, there may be little that a single product line can do to effect significant change because distribution agreements are often made at higher and broader levels.

What you can do is create a holistic sales, customer service, and technical support program that ensures these teams are fully versed in the product, so that they can support customers where possible. I have partnered with clients many times to develop such programs.

Is it possible for your product to be successful if your business is not strong in all three areas I’ve presented? Yes—the goal here is to be aware of any weaknesses and competent enough in each area to achieve your objectives.

3. Reputation

The final driving force of a successful product strategy is the company’s reputation. Reputation impacts the success of your product in two ways: the ethical and moral behavior of the company, and the company’s expertise in a particular area. Whereas the former is addressed at the executive level, your company’s area of expertise guides the direction of your product strategy.

If your company has a great reputation for developing outstanding steel components for the aircraft industry, for example, then moving into titanium parts is a turn that your customers will understand. If, however, your company decided to start offering electronic components for domestic motorcycle manufacturers, its reputation in the aircraft industry may not follow it into this area or bear any weight there. The success of the sales, marketing, and distribution channels is based on their repute with customers. Adding a new market in which they are unknown to customers is a large hurdle to overcome.

As the product manager, one step you can take to improve your chances of success is to analyze your company’s reputation from an outsider’s point of view. You can do this in a number of ways, but start by reading press releases, listening to investors’ feedback, collaborating with your marketing or customer teams to gather data on complaints and requests, researching online reviews, and even inviting customer responses to your new product idea.

Kick-start Your Product Journey

You can deploy this framework today to gain—or regain—momentum in a product line’s revenue and profitability. Used at the beginning of your client engagements, these product strategy elements will guide both your discussions with leaders and your own decision-making as you start putting together a cohesive and actionable product plan.

When developing your product strategy, take into account the wider goals and vision of the company itself. Any product plan must fully support the corporate strategy and be aligned with its ambition—the synergy of the two will further the success of the product line.

Using the strategic elements of product development—market need, capabilities, and reputation—you can begin shaping a powerful and effective strategy, generating the ideas needed to strengthen your product offering and, subsequently, the business as a whole.