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- [00:00]
A
Welcome back to Product Therapy, the show where we go behind the craft of great product work. I am thrilled to welcome back SVPG founder Marty Kagan. Today's conversation is one of the most talked about and yet misunderstood concepts in product. We're talking about product strategy. Many companies may claim they have one, but more often than not, what they think is product strategy is really just a roadmap, a list of futures, or a recycled slide of last year's okrs. We in this episode, we aim to provide clarity of what product strategy really is, how it differs from things like a vision or roadmaps, how to align it across disciplines, and how companies use it to drive, focus, and build products that customers love. Let's dive in. Mari welcome back to Product Therapy.
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B
Thanks very much, Christian.
- [00:55]
A
Mari, let's start at the root, and I have to start with a confession around this one. This is probably the single hardest thing I had to learn as a product leader. And I think as we have this conversation, people understand why I I kind of think I'm a nice guy. I want to make all my stakeholders happy. I want to make them feel heard and also to the extent that they feel like they have a voice and they are contributing to the things we decide to do. And I struggled with this a whole lot very early in my career until I actually got to understand that I was actually doing the organization a disservice by not doing this work. But let's really start by defining what product strategy is, and maybe in some ways in defining that, differentiate it from things like a company strategy or a roadmap or a vision.
- [01:48]
B
I'm only thinking of how to do that in a few minutes and not a few hours. Well, maybe start at the highest level. The thing about strategy is it's one of those words that everybody. It's kind of like the word prototype. As soon as I say prototype. Most people gravitate to a specific kind of prototype, and they think that's the only kind of prototype there is because it's the one they're familiar with. Same happens with strategy. If I talk to a McKinsey friend on strategy or a CEO, they immediately gravitate to business strategy, which is super important and interesting, but it's not product strategy. Or if I'm talking to a marketing friend, they immediately gravitate to go to market. Strategy. It's one of those words that there are many kinds of strategies, of course, and what we care about here is product strategy. The most common situation I see is they don't have a product Strategy, they just don't have one. It's not like good or bad, they just don't have one. So one of the most obvious signs is that they talk about the desperate need for prioritization and they complain that product managers aren't prioritizing or something. And of course all that's just a sign that they don't have that product strategy. Because fundamentally the product strategy is about making those choices. So it's not something you push down in the product model, of course. And this is not what every company does, right? And some, in a lot of companies, most companies, there is no product strategy. There is a business strategy pretty much always. And then there are lots of roadmaps. And those roadmaps are basically prioritized lists of features and projects. And then those are handed down to the product teams to try to knock out as many of those as they can. And of course that's why they're always complaining about lack of prioritization. Because well, ultimately we're trying, we're committed to all these things on a roadmap and we're trying to do too many things at once and there is no real strategy. So in a product model company, it works different. A product model company, the product teams are set up to actually solve hard problems in ways the customers love, but work for the business. So then the role of product strategy is to choose which hard problems, hard problems for the customers or hard problems for their, for your company. So it does, it can be either or both. But the job of the product strategy is to make those choices in the product model. It is very clear that it is the product leaders responsibility to make those prioritization choices. Of course, hopefully they're doing that in real collaboration with the stakeholders because they're the ones running each business. But that's the job. And then in the product strategy we identify the most critical problems to solve this quarter. And of course, just for those that don't know, in a product strategy you're, you're trying to identify the critical problems that will do two things, will take you towards your vision, number one. And number two, pay the bills along the way, right? That's what product strategy is, is identifying those critical problems to solve. A lot of people like to frame it this way, and I like this too because I think it captures an important truth. They like to frame it as bets. You're making bets. And that's because another one of those truths about product is that just because you decide this is an important problem to solve doesn't mean it's going to be solved this quarter. And it doesn't mean that, you know, the solution's going to do everything you need it to do. What we're doing is placing bets.
- [05:34]
A
I'm not gonna let you tease us with business strategy, go to market strategy, all of this without maybe clarifying the difference. All right, so let's put product strategy aside. What is business strategy? And to the extent that you're describing these things, differentiating it from product strategy. Because if I'm a CEO, I mean, strategy is strategy. It's kind of how I win, you know, I have placed my bet. What is this product strategy thing? So, so maybe help me with the, the difference between a business strategy and a product strategy.
- [06:07]
B
In good companies, you absolutely have both. So it's not a one or the other. Let's say your business strategy. Here's a very obvious choice. Is your company trying to sell outside of the U.S. or just in the U.S. do you have a global business or you have a, you know, three domestic business? That's a pretty basic business strategy decision. Another big business strategy decision which actually ties to go to market, which I'll talk about in a bit, is how do we want to get our products to customers? How do we want to sell? Do we have a business strategy that's predicated on a direct sales organization, nothing wrong with that by the way. Or do we have a product, sorry, a business strategy that's predicated on what's called product led growth plg. Or do we have one that's just talked with a great company that's made a beautiful business out of channel sales? Channel sales. They don't have direct salespeople and they also don't have a product led growth. They have channel sales and they have a model where they win when the channel sale people win. And it's, it's, that's a business strategy. Or I mean, let's go a little further. I think one of the most brilliant examples or most impressive examples of a business strategy change is when Netflix decided to move from a content distributor to also a content creator. That was a massive change. Now every one of those examples I gave, like selling internationally or selling through a channel or deciding to major new value like creating content, every one of those had big implications on the product. And so every one of those caused a product vision and product strategy to change. If the business strategy changes, let's just say from domestic to global, you will probably have to make product changes to make that work. Especially if you're going to countries that are fundamentally different like China, you are going to have to in the product side, go figure out, well, what's different about China? How are we going to have to change what are the things you and I have both been spending some time, you a lot more than me in Africa, Scott. You know, you can talk about all these cool product things in the US and then you go to Africa and he's like a completely different context. And you have to make sure that the solution works in that context. And obviously Africa has different infrastructure. Sometimes it's still nascent, other times it's just different. So we need to make sure our solutions work in that context. That drives the product strategy. And go to market strategy, to answer that question is really about how are our products going to get into the hands of customers? So that these sort of big three things. Business strategy drives product go to market strategy and it drives product strategy. Product strategy also drives go to market strategy. So there those three big things are very related and really critically important. You know, we talk about getting to product market fit is sort of the whole goal of a startup. If you get to product market fit, you've figured out those three things.
- [09:32]
A
I'm getting a definition of product strategy in my head as product strategy is how we decide which problems to solve right now or the critical problems to solve.
- [09:43]
B
It's which problem. Right, which ones?
- [09:45]
A
Yes, which problems to solve. And you are calling out something too that is maybe specifically unique in product strategy. You kind of call that product vision. And I think other strategies are not asking themselves, how do I help the product vision? They are mostly, you know, how do we get the product in the hands of a customer? How do we win, which markets we go? But the product vision is already articulating. This is the mountaintop we're getting to. This is these are all the problems we want to solve in this timeframe. Put up strategy saying how we get there, but also how do we pay the bills? How do we address the current, most important objectives of the company. Now, the two inputs you're suggesting here for strategy are the vision and the company's objectives.
- [10:36]
B
Company's business strategy, which will show in the objectives for the company.
- [10:41]
A
Oh, I love that. Very important point. No. So in some ways, the product strategy already reflects an understanding of the business strategy.
- [10:52]
B
It's there to make it true, make it happen. I mean, let's say I, I'll. This is a very real one I've seen at several companies, I advise, not a surprise to any listener, that a lot of the companies that start up in the US and in Silicon Valley. Start in the US and then they eventually decide to go bigger and try to go to other markets in the world. It's not unusual. So the business strategy makes an intentional change and say, we're going to start selling in Europe. Okay, what does that mean? It shows up in the company objective, usually within some sort of OKR or objective KPI that says @ the end of next year, we'd like at least a third of our revenue coming from Europe. Okay, That's a reasonable goal, right? It's. It'd be a lot harder to do that for China than it would be for Europe, just because it's so different compared to the U.S. but still, it's a goal. Let's say that that is the business goal of the company's objective for the year. So now the product organization has to figure out, maybe that'll be easy because the product hardly has to change. Maybe it'll be very, very difficult because the product needs a lot of change. So the first thing the product organization has to do is go figure out, like, what's different. That's called discovery. And we figure out what's different. Now, we can hope that it's not that different, but usually we find that some things are not different and other things are different. And sometimes it's very surprising, too.
- [12:21]
A
I even like that definition in my head when you said make it true, the product strategies, how we make the product vision true and how we make the business strategy true. You know, it's kind of. It's solving for those things in an organization. How do we make it true?
- [12:37]
B
I always hesitate to explain this because it's a layer of nuance that can confuse. There is no question about the business strategy. Right? I mean, obviously, if your board doesn't want to sell internationally, what is the product team doing? You know, so that's. That's clear. Product vision is trickier. Well, first of all, I know you know this, Christian, but not all the listeners do. I love the power of a good product vision. I think it's amazing. Truth is, a lot of smaller companies don't even need it. They don't really need it. They do need a product strategy because there's always more problems to solve than they can solve. So they need to have some way to decide the most important problems to solve as a company gets bigger. Especially when you have a lot of product teams, like more than about 10 product teams, it's really hard to keep everybody focused on going in the same direction. A product strategy doesn't really do that. Right. Product strategy says, look, Christian, your team, you need to solve this problem. We're depending on you, another team, you got to solve this problem. Doesn't mean we're going in the same direction. Just means that we're all working hard on important problems. How do you make sure everybody's rowing in the same direction? That's product vision. So the product vision is tackling an adjacent goal to the business strategy. It's really about inspiring our customers, inspiring our teams. It's got all this value, but it is a little different. And so I don't want to say unequivocally, you do a business strategy, you do a product vision, you do a product strategy, you don't have to have that product vision. But I do argue you will probably need it. But it's for a somewhat different purpose.
- [14:32]
A
I love, and maybe in some ways, is it fair to assume that the size of a company, where the company vision is the product vision, it's like we're, you know, where we maybe. I always tell startups, you only have one area of focus, one problem to solve, which is product market fit. You know, everything else is just like noise in the whole world. You know, it's like, is that kind of the fair assumption that there's some alignment? But as you start to get bigger at scale, the product vision serves many proposals. So you have to take that into.
- [15:04]
B
Account as you get bigger. You really do need that vision. And it's an artifact that. That is a thing. When you're small, there's sort of two other realities. Number one, you're just trying to figure out something that works. So the truth is, even if you took the time to do a good vision, you'd probably change it. So because until you actually get some traction, everything's up in the air. And the other thing that's a reality in most pro startups is the founders are constantly sharing their vision. Now, usually sometimes that's a product vision, usually it is, but sometimes it's just a sort of more of a mission statement for the company. But it's not. There's usually something. People join the startup usually because of the charisma of the founder. That is like saying, here's how they want to make a dent in the world.
- [15:59]
A
So let's. Let's roll up our sleeves and get into strategy. First of all, what makes a good strategy? What makes a strong product strategy? What are the key elements or key characteristics of a good strategy?
- [16:11]
B
Well, the big thing is, like we said, you know, if People are complaining about prioritization. This is not, this is where it needs to be happening and it's probably not happening. And what does that really mean? Choices. So your focus, your decisions on what is truly important of the 50 things you could do, what is the one or two, maybe three that you're really going to nail? That's focus. If the product strategy doesn't make some hard choices about what you will, and especially what you won't do, that's not very helpful. So the first real benefit of a good product strategy is the are those choices. But then it's not enough just to declare something as I believe this to be true or I want this to be true. Because a lot of product strategies are just wishful thinking. They're just wishful thinking. There is no real analysis about how and why that's going to happen. You know, a lot of people talk about Amazon's writing culture and in particular, you know, their six page written narratives. And those narratives are really about any sort of decision. But many if not most of them are product strategy decisions. It's about like, why. So why is this the most important thing of all the things we could do? Why is this the most important problem to solve right now? Those narratives lay out the data, they lay out the reasoning. Now there's several benefits to that. And I have to say I explain this all the time, but not enough. Not that many companies listen to me because it's hard work and most people want to avoid that hard work unfortunately. But it is so valuable to do. But one thing it does is it, you know, it's, it's very data informed. I mean it has got all the evidence. It could be qualitative evidence, quantitative evidence, but it lays out the evidence, it lays out the logic. And anybody can read that and decide if they agree or not. So that's important. But another big benefit that I think applies even if you don't do written narratives is think about the politics here for a moment. Every leader in the company thinks they know what's important and none of them are wrong. They're all important. But that's not the real question. The question is the, the most important things for us to do. And that's a harder question. You have to be careful politically that it doesn't come across as, oh, it's just Marty's choice instead of Joe's choice. And instead what we love about something like a written narrative is it's transparent. It is transparent. It's saying, look, we willing to do whatever the company most needs. This is our reasoning, this is the evidence, this is the logic, this is the hypothesis, this is what we're doing. If you don't agree with any of this, let us know. Maybe we're missing something. But otherwise, that's why we're proposing this course of action. That's why we're proposing these choices. And then of course, the other dimension to this is the reality that you're not. Just because you have this logic and argument doesn't mean it will actually come true in this timeframe. Like with this result. It depends on a lot of good work, like discovering a good solution and being able to deliver that good solution and having the customers respond the way we hope they'll respond. That's why it's important to not oversell a strategy and to point out that what this really is is the argument for making a series of bets. These are the bets, these are the reasons, these are the evidence, and this is what we plan to do.
- [20:23]
A
I was talking about why this was some of the hardest things for me to learn. And the most common thing I see in many companies I coach is everybody complains we have a prioritization problem. Too many parities, changing parities, too many things on the list. Oh, but we only have 10 things. But they're all number one and they're all important right now. And there are variations of this. And leaders gets distressed and they say to themselves, well, let's have a leadership offside. We are going to go out and they find some nice result to prioritize. Our list of 70 things. And you know, maybe on the list before, they will have like, you know, make the platform stable, improve platform stability, drive platform growth. You know, when they come back from the offside, what I often see is they have a nice name. They say, we've cut down our list of 70 things to our seven smart bets, our seven key pillars, our seven big rocks. There's a nice name for this. But now you look at the list and you say, okay, parity, number one, make the platform stable, more secure, easier to use, more revenue. It's like this long, drawn out list of commerce, commerce, commerce, make everybody happy. And I remember early in my career I will have these meetings where I get all the stakeholders in a room, I want them to feel heard and they're all throwing out the list of items. And now I'm having to make very hard trade offs around this. And I'm realizing later, like, oh my goodness, we don't have a prioritization problem. We have a lack of Focus problem, you know, and when you start to connect this to the absence of strategy, that if you have a strategy, prioritization is implicit. You have already chosen the things and you called out. One of the big things that I think is super important in empower teams is. And here is why that transparency of, like, this is why we are choosing to focus on. On this. And, you know, sometimes I tell leaders, you know, in some ways, sometimes strategy could be as logical that it's easy to understand. You know, if you're building a house and you're working on the foundation and somebody comes to you and says, marty, let's build a roof, you'd be like, yeah, I kind of get A roof is important in a house, but we don't even have walls, you know, I mean, we are going to focus on building the foundation, you know, and you could almost see the idea of, like, work in progress. You know, even on a work site, you can't bring the roof materials, the wall. You can. You can't crowd the site with all of the things that are going to happen or may not happen. You are thinking logically, okay, I'm going to build a foundation, maybe some scaffolding, some walls before I get to the roof. And so in some ways, you know, this topic of focus, I think you said, starts with focus is often the hardest one, Marijuana. And I need you to kind of help me. You know, how do you explain it to an executive or to leaders, the importance of focus, how do you coach it? And, you know, in some ways, what are really the drivers that make this very difficult for a company to do?
- [23:33]
B
Well, I mean, it's easy to understand, I think, why it's difficult for them. And I have a lot of empathy for these CEOs, and because from a CEO perspective, there are opportunities everywhere. There are threats everywhere. The one threat they might not pay attention to is the one that might kill them. It's not a job for the faint of heart, right? And so it's very understandable why they feel this need. And the natural answer is, well, how about I just hire more people, we get more of these things done. And I'm like, wish it worked that way, but it really doesn't. But then what I do is because the truth is, most of the leaders in companies have never experienced real focus before unless they've been lucky enough to work in one of those companies that really knows the power of focus. Probably the most famous one ever that really gets the power of focus is Apple. They. They don't really know it's just a concept in their mind, but they don't really know what that looks like. So I asked them, and of course, there has to be a certain amount of trust here. But I encourage them to do a test, to literally try what the industry, you know, the best companies mean by focus. And I also. Now, back to some politics. That's a big leap of faith to get a leadership team to agree to real focus. Another leap of faith is to get them to agree to let you choose what that focus area should be. We don't really need the second one. So what I like to do is say, look, let's show the organization the real power of focus. It's just a test. You can always go back to the way you're working today. You've worked that way for years. You can go back to it, but let's try what it really looks like. And you pick the focus area. I encourage the CEO or the general manager, whoever this, you know, group, the inner circle is, to do this. I'm like you. You discuss it. You're probably closest to these opportunities. You know, you discuss. But think of it this way. If you had to make one bet in order to, you know, deliver to your investors this year, you know, your big win this year, you had to pick one. And yes, I agree, all of these things are great opportunities or serious threats, but if you had to pick one, tell me which one that is, and that's the one we'll focus on. They're still uncomfortable, don't get me wrong, but it's a lot better to be uncomfortable on the thing that you believe is genuinely the most important. Now, the power of focus is so amazing that, that it usually does, really, because now we've got all these brains working on a problem and they're, they're empowered and they can do great things. So then the next discussions are usually about, okay, I'm sold, but we got a big organization. Can't I do 10 of these at once? And you know, or does something like that, which even 10 is better than the 70, you know, they were doing that kind of thing. But we talked then about the concepts of things like work in progress. And in most of those organizations, you can work on more than one. Focus doesn't have to be one. But I do explain to them the dynamics of how things change when it is multiple. But it's the same leaders and the same organizations, the same salespeople. And we start, they can start to see that just because you can do 1 in x amount of time doesn't mean you can do 2 in 2x or something like that. It's. It's very different.
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A
I mean, focus doesn't have to be one, but should not be more than.
- [27:20]
B
One, honestly, like two or three. Yeah. Now, of course, the company is doing lots of other things. That's why back to politics here. And I know you and I like to talk about politics. It's just so underlying, so much of what goes on in a company. But you really have to remind the leaders constantly that focus does not mean you don't keep the lights on. Keep the lights on is a separate thing. Just like tech debt is its own animal, it's a separate thing. You don't. Just because you're focusing doesn't mean you stop your tech debt work. Right. That would be suicide. Right. And similarly, it would be suicide, even faster suicide if you decided focus meant no more keep the lights on work, then the lights go off. The business unit leaders say, we literally can't run this business, so you have to make sure you are keeping the lights on. And the teams need to understand the importance of that. It's. And we of course track the percentage. It's not, you know, it's significant, but it's not the majority of what teams do.
- [28:30]
A
I love that a lot. You know, I was just telling a leader the other day, I was like, look, you're not going to compete between paying your power bill or your water bill and whether you watch Netflix or go out to eat today is like, we don't do that in a house. Like, we are not, like, we are always going to keep the lights on. We're always going to, you know, pay our utility bills. But we have choices that we need to make on how we use our resources and leverage our discretionary spend on what we use it for. So, you know, one of the ways, you know, you talked about focus, you talked about this insight driven, this idea of, and why are we choosing this? Because. Which is often a test I do with strategy, where I go to somebody and I say, what are you working on? And I'll tell them, well, I have something else you should work on. And if they say to me, like, yeah, we need to prioritize, I need to escalate that to your manager, then I'm like, well, strategy hasn't really made its way down to you because you don't understand why this is important and you don't have the argument whether it's right or wrong about, you know, where this is. But you also talked about being able to place A bet to be able to maybe even double down on. Like we are going to put some resources on this. And what we see many leaders do is they spread their bet. You know, they try to do all the things. What you want to call that a peanut butter strategy? Let me ask a question because you kind of called out the role of leadership. Why don't MERS leaders know how to do this?
- [30:00]
B
Honestly, the same reason they don't know most things. They, they haven't worked in organizations that work this way. They haven't learned, they haven't been taught. And that's why I, that's my explanation for most things. That is also why certain leaders that come from certain companies are so in demand in the marketplace.
- [30:21]
A
Yeah. And I've even found that, you know, they actually get good at outsourcing strategy than creating one. Because when they've never done it, who, you know, do you want this to be your first time to do one? And you know, if you, if you outsource, it is easy. You know, if it works well, I'm the hero. If it fails, you can blame the company that created it. So, all right, so now most leaders haven't seen it. So let's talk about how to create a strategy. All right. Maybe start by whose job is it? Whose, who should be involved? You know, where do we start? The building blocks of we need to work on a strategy. Let's get going.
- [31:00]
B
The answer about who should do it is the product leader. That is really the product leader's job. However, politically, the product leader first has to earn the right to do that. The main way that happens, because think about it, in companies that don't have a product strategy, somebody is deciding what's going to be worked on. It's usually the stakeholders. And what we're talking about is moving that control, that power, if you will, from the stakeholders to the product leader in particular, product leader working with the senior leadership team. But again, that product leader. And in order to do that, you have to win the trust of those stakeholders. They have to believe that you can deliver real business results at least as well as they did. It's not that high a bar. Normally that's why companies are looking to improve. But they need to believe that. So normally what I recommend now again, I'm talking politics. This is not like a framework or a playbook. This is politics. What I like to do is say, look, right now your biggest problem is each of these stakeholders is bringing you a roadmap of features to build. And the, the first order of business is to change that roadmap of features to build to what's called an outcome based roadmap. Or just basically each request, let's figure out, is it a keep the lights on thing? Which case doesn't need to be on a roadmap anyway. It's keep the lights on. But if it's not, what's the problem to be solved? What's the outcome to achieve? That's an easy conversation that needs to happen and most stakeholders have no problem with that conversation. As long as it's solving their problem, it's fine. They're like, yeah, of course, and that should have been obvious or whatever. We at least agree this is the problem to solve and this is the solution. And sometimes we have to point out and if that first approach doesn't work, we'll still solve. We're not giving up, we'll find a way that does work. And they'll say, of course, right, but that's what we're trying to do. Now, once you have done that a few times and delivered the results, that's different. Now these stakeholders are not viewing you as the IT team or group, they're viewing you as a partner. And so now you can start talking about, we've got some problems to solve that might actually make an even bigger impact to the business. And this actually gives me probably a good place, Christian, to talk about something we haven't talked about yet. An empowered team is team that is absolutely capable of identifying good problems to solve and solving them. However, just because they're capable of identifying good problems to solve, doesn't mean you want them to. Because politically, the stakeholders, each, you know, business unit stakeholder, they've been dealing with these issues for quarters or probably years, and they feel very strongly these are the problems and they're almost always right. One way or another. They're going to view as them paying for us. So for them to think, oh, we're going away for two months to decide that that's really a problem, that does not. That's not a good look. That is never a good look. So what we want to do, and we encourage our product teams, we tell them, look, you're skilled at doing both problem discovery and solution discovery, right? Problem discovery is identifying a good problem to solve and solution discovery is solving it. But we need you to focus on solution discovery and that builds this trust. However, we tell these teams, when you're doing solution discovery, you're putting prototypes in front of users and looking at the data, you will run up against other problems to Solve. It happens all the time. Some of them will be minor problems, and some of them could be really important problems to solve. And what you're coaching those teams to do is bring the problem they're identifying to the product leader. Bring it to the product leader. And the reason for that is because that is one of the best inputs to next quarter's product strategy. Look, the product strategy is deciding the most important problems to solve. This is a great source of very real problems to solve. There's other sources too, including our executives, but this is a great source. We, we don't want to tell the teams that we have no interest in them identifying problems. We do. It's just that there's a time and place for everything. They have to realize their primary job is to solve problems, and the product leader's primary job is to identify those problems to solve.
- [36:03]
A
Oh, Mari, I love the, this renewal of trust or earning of trust aspect of it because I think many leaders start doing themselves a disservice in how they start their journey on strategy. And you're kind of calling out, probably today, you have lots of roadmaps with futures to build and projects to deliver. You know, your first job is not to kind of deny the importance of those to those stakeholders, but maybe start by by aligning them to an outcome or to a problem to solve. And maybe there is the political exercise of like, well, there are lots of problems to solve here. Let's do a test of what are we going to focus on? And maybe you're creating that alignment, but you called out something. The job of that team, of our teams now is not to quibble on those problems, but to nail those solutions. And as we're nailing those solutions, we are probably getting insights on better problems to solve. That kind of go back up now to the product leader in terms of what they are bringing to the stakeholders. You know, with some evidence, as they were doing discovery, maybe this is kind of this idea of continuous strategy. In that idea, the insights are foiling this, that you're shifting from this subservient dynamic to a collaborative dynamic with your stakeholders. One of the things we haven't talked about, and maybe tell me where this fits in, because many companies, in terms of how they decide what to do, they do something called annual planning. You know, aop, some companies, semester planning, they have nice names for it. I often tell people with strategy, kind of like with regulatory things, I say, why is it always stressful? I can tell you five years from now what you're going to do. Animal Planning like I'm going to give you as much of a heads up that next year there's going to be annual planning two years from now. But every time it is this big effort, minds the brain. Stressful presentations maybe differentiate what is annual planning as opposed to strategy? What happens when you have a strategy to things like annual planning? Is there a role for that in the product model?
- [38:11]
B
I've probably been to way more than my share of those annual retreats and I know how to play the game. First of all, the most common purpose of annual planning is dealing with the absence of the strategy we talked about. So somehow they do have to decide what are they going to fund, right? What are they going to work on? And the most common activity in annual planning is a dog and pony show. You're basically everybody's bringing their proposals which basically say I think we're going to make this much money and it's going to be really easy to build and then they're trying to get funding. It's a lot like when people go and pitch a venture capitalist to fund their startup. The difference is VCs are much smarter about how to do this. VCs will give you enough money to do product discovery. That's seed funding. And only if you actually show results will they do. But unfortunately in corporate annual planning most of them are not that sophisticated. What they're doing is not funding discovery, they are funding projects. So literally hundred times the price. And you've told the story. I know I have many times of basically SpaceX versus Boeing and Starliner and one is annual planning and the other one is we're going to do discovery. You'd think by now the world would know there are in fairness there are other benefits to annual planning. Of course then, then the we have to prioritize what we're going to spend money on. Even if you're more sophisticated about that and you've got a product vision and the product strategy list, there's still value in having getting the executive team on the same page and talking about business strategy and talking about go to market and talking about the learnings. There's benefits. Unfortunately that's the minor part of annual planning for the most part in most companies it's deciding what they're going to fund and that's it's just sort of the beginning of the process they use called the project model.
- [40:24]
A
So it's very interesting because you know, you kind of call that you don't have a prioritization problem, you have a lack of focus or absence of strategy in some ways, yeah. You know, when you are dealing with things like animal planning, deciding what to fund, it's kind of a reflection is how you're dealing with. Also the absence of a strategy is you need to kind of get people together in a room and decide which stakeholder projects or priorities you're going to do. I want to make sure, before I kind of talk about generally good strategy, bad strategy, I now understand the input to get a strategy. I need to know my business strategy. I need to know what's important for our business. If you're a big company, I need to get a sense of where we're going with a vision. You said the output is. These are the choices, the critical problems we are working on right now. What does that look like?
- [41:17]
B
Well, my favorite way is, is in a six pager, in a written narrative. My favorite way, that's my favorite artifact. But just to be very clear, the output of a product strategy is two things really. It's the problems to solve this year, this quarter at a minimum. I believe the product strategy should be updated every quarter. Some people do it yearly, but there is the problems to solve problems. But the other part is just as important, which is why, because that's the strategic context, right, that the teams need. You could just tell a team, you know, you don't need to know why, just go solve this problem. They actually will do a much better job if they understand why. And I'm not even just talking motivation. There's a lot of implied context that comes with the why. So the why is really important. The data, the argument. A lot of times one problem depends on another problem and you have to understand these relationships.
- [42:14]
A
I remember my strategy narratives with probably the most talked about or sought after document every quarter in a company. Because, you know, stakeholders were so excited because of the insights and data. It's like, you know, after all of the insights, they like to kind of get to the last section, which is like, we are choosing to continue our focus on these things or we have now made the choice to change our focus on these things. And it's very empowering because it created the narrative or explanation to people about why we were choosing or not choosing to do something. And I think what people enjoy when you see a good strategy is if they actually see their insights reflected in, you know, kind of transparently ways. Like, and yeah, all the marketing issues and all the operations issues and all those. As I was like, yes, I feel heard. And then they still see the conclusion of like, regardless of all of this we are choosing to do this.
- [43:12]
B
So as you were saying that, I realized there's a terrific example from. From data site that would tie because earlier we talked about how the input for a product strategy is a business strategy, but we didn't say that the product strategy can't influence the business strategy going forward. I know that you've talked about this on a recent episode, but early on, DataSight was a company for those that don't know. Christian was the head of product there, and so he told the transformation story. That's a separate. Maybe you can link to that episode. But what was interesting is it was a very classic example where the company had done a bunch of acquisitions and a lot of those acquisitions were not great acquisitions. Which is normal, right? There's unfortunately very normal. And part of the business strategy, though, was to double down on this one product line, which Christian and they delivered on. But part of that work involved or led to revising the business strategy. Right. You actually divested some underperforming business units to help fund increases or better opportunities really in this other business unit. So that's a healthy example of both ways.
- [44:34]
A
I love that a lot. And you see good companies like Apple, you know, it's almost like if the product strategy is not winning, a company is tempted to do it many things. You know, it's kind of you almost a good product strategy kind of creates this boldness to kind of double down my efforts and place bets and have this core set of products that, you know, you're really focused on now. You know, maybe we should talk about strategy fail in some ways and fixes, you know, if I were trying, because on one end, just having focus and placing a bet doesn't mean that it's a good bet or that you do always win. Win. What are the most common reason product strategies fail?
- [45:18]
B
Well, the most common reason, I would say, is, okay, well, assuming you're doing a real product strategy, right, and not the problems we talked about before where you just lump many things into one and call it one, something like that. No, but is realizing their bets and then realizing that, you know, maybe not all these bets paid off and maybe not enough of them. That is a very real risk. Sometimes we know that very early. We just see the evidence. It's just so unlikely that that's going to happen. And sometimes, no, we feel good. Now, one of my favorite techniques, we're not. We're past product strategy, now we're talking about executing on that strategy. But if you're asking why do product strategies fail, you can have a beautiful, logical, well informed product strategy that you don't execute on. And it might be that, you know, you assigned a problem, a really critical problem to one team and because of the, maybe because of their skills, maybe more likely because of their data, they just weren't able to solve that in an effective way. One of the techniques I like to do on important problems like that is assign them to multiple teams so that they can use their sets of skills and hopefully one of them, at least one of them does actually achieve the outcome we need to achieve. There could be lots of reasons, but I would say that's probably the most common is the strategy was good, but the execution was very, very difficult and you weren't able to crack the code.
- [46:48]
A
And you know, to the extent that insights are important, the choice of what you focus on, your ability, even the you're calling out team dynamics, do I have the skills to go deliver or execute on that strategy? And one of the tactics you're saying is you're giving that focus to different teams to do so. Short term survival for many companies is often a big thing. We gotta pay the bills or we are bleeding cash or we gotta make payroll. And many companies make short term choices on the need to survive versus cash, kind of going after the long term bet or vision that they have and you know, those choices. How do you balance that in terms of strategy? And maybe I don't know if there are specific examples or strategies of, you know, company in pressure on survival versus I've got a big vision that is the right probably problem to solve, but I'm bleeding cash.
- [47:46]
B
Oh, that's, that's why we said right at the beginning really that there's these two goals, right? One of the product strategy one is to take us closer to achieving the vision. So in order to achieve a vision, you usually have to solve many hard problems. Think of autonomous driving. There are many hard problems that had to be solved to get there. However, if you have to make money along the way, which in many cases, or in this case like autonomous driving, prove that it's safe before you spend all this and deploy it to the world, you're going to choose certain problems first. And there's a logic there, that logic is what we spell out. So the question is what, what can we do now that will, you know, is something we can monetize so that we can pay the bills. That is a step that takes us closer to that vision.
- [48:42]
A
Let's talk about a little about AI and the rise of generative AI and Platform technologies in our world today, does it change how you think about strategy? Does it change how companies should view those trade offs that they have to make?
- [48:57]
B
The biggest way AI is like, should AI be part of that product strategy? In other words, should you be leveraging this technology in many, many cases, I think the answer is absolutely yes. Now the harder question is, is that particular problem ready for that or is that something that might need. Maybe the foundation models need another year of progress, who knows? But they, but should that be part of the strategy? Probably not for everything. I'm sure there's example exceptions out there, but. And I realize I'm biased because the companies I work with are good examples of where AI technology, that's sort of why they're in this. But, but I know there are cases which are less exciting. So that's the first question, and that's the most important question really for AI is like, okay, well how should we use AI? Now there's hard questions embedded in that question, like what is the role of probabilistic solutions in our solutions? And in some spaces it's pretty clear, in other spaces it's less clear, you need more guardrails. Lots of caveats, that's all a great example of what a good product strategy would talk about. The other side of the question is, can you use AI tools in crafting a product strategy? And the answer to that is of course. And we're all pretty much doing that with almost everything we're creating right now. Can you go and just say, give me a good product strategy? Not likely. Can you improve a product strategy? Yeah, almost always. I think product leaders are getting better at using the tools to get better results. You know, for something like product strategy, the primary tool is the brain. That's the primary tool. Because product strategy is all about thinking, thinking clearly. And that's what it is, is sharing your thinking. So can tools help bring clarity to thought? Yes. Yes. Can tools also be a substitute for thinking? Unfortunately, yes. So, you know, it's like any of these examples, there's good use and bad use.
- [51:16]
A
How do I communicate the strategy now that I've created it?
- [51:19]
B
I like it because people who want to understand the why for real can do that. Now is there any reason you shouldn't also talk to the person? No. Maybe you should talk to them, talk to each stakeholder and sort of explain and answer their questions. But I think at the minimum, by doing that written narrative, you will do much better job. When you sit down with the head.
- [51:42]
A
Of sales, it kind of talks about Your thinking. You're also. It's improving your communication explanation around that. I want to do some quick things here as we wrap up. Are they pointed examples of like let me tell you a story of a good strategy and why that you can kind of point to maybe a strategy that you can articulate in some ways that people can actually see how it plays out and those elements you talked about?
- [52:09]
B
Well, first of all, on svpg.com examples we share some examples. I will tell you that product vision and well, product strategy is even less shared by companies than product vision. That is honestly as sensitive a stuff as you can find in a company. Even their code, I think is less valuable to them than their strategy. So it's not something a lot of companies publicize, but it is something that some have Also in the book Empowered, we shared a case study with a product strategy in there. So yeah, there's resources for sure.
- [52:44]
A
Strategic pivots, things that end up changing your mind around strategy. They look like what just to kind of give people a sense of like what that kind of thing could be. I mean I always be like Covid is an example. I mean nobody plans for Covid, but I think many leaders do this fire and forget type of mentality to a lot of these artifacts. But what are some things that could lead to a strategic pivot?
- [53:10]
B
Yeah, Covid did lead to a strategic pivot. I mean for a lot of companies there was no choice and their prior product strategy was basically a non starter because maybe it required in person stores or something like that. And now they had to do a new strategy and the ones that did great for the most part, visions don't change, but strategies change a lot. Remember, every one of those every quarter is you're placing bets. So based on the prior quarter's results will impact your next quarter's bets. You heard me say earlier that I believe that a product strategy is a living thing. At a minimum, it should be updated quarterly. In reality, I think it's living. It's just constantly updating as you learn.
- [54:01]
A
This has been fantastic. I think we even called out some of the political elements of strategy and relationships, the stakeholder management aspects. You know, for me, I love thinking about it from the lens of what so many people talk about in their company. Oh my goodness, we have a prioritization problem. You've kind of pointed out why that is a strategy opportunity, even like a lack of resources in many companies. You know, you see companies with four engineers running circles around companies with 200. I like that's a leverage Thing it's probably a lack of strategy. I was even just with a big company and they were talking about like, oh, we need like 50 million in incremental budget to hire people. And I'm like, how many employees do you have? They're like 300,000. And I'm like, wow, I don't know if you can lose any battle in the wall if you deploy 300,000 troops. I'm like, what if you focused? And that's kind of a lack of strategy in some ways. And you're calling out these elements that I think have plagued a lot of organizations because they are of how they have decided what to do. It's coming top down, it's coming outside in. It's reactive in a culture, you know, customer requests issues. And it's kind of the same thing with like regulatory requests. Well, like I'm like, so why is that stressful? You know, you're a bank. Like, why is a request from a regulator always a panic? Like, you haven't strategically understood that to be a bank you need to respond to regulatory requests and changes in compliance. And all of this is kind of pointing to this most important thing that I found to be the missing link for many leaders. And you've called out it's happening because many leaders have not seen good strategy, never done a good strategy, and so they must be coached. You've kind of broken out the elements of good strategy. It starts with focus and you know, the choices of not just what you're going to do, but, but what you are not going to do. And then this transparency of why we're doing it, the insights and the data that allow you to leverage or tackle those things. And then, you know, the ability to place a bet. You're not guaranteeing those results, but you're making those choices on what to do to get those outcomes. This for me, very important, I think probably the most important conversation for product leaders outside of coaching. So I have found it tremendously valuable to kind of break this down. Obviously, after you have a strategy, you need to communicate those problems to your teams, which is kind of an objective or problem to solve. Maybe that's kind of okrs, but I've enjoyed this conversation. Mari, thank you for the gift of the time, as always, the candor, the transparency, really fun dialogue. Thank you for being on product Therapy.
- [56:46]
B
Thanks for inviting me back, Kristen.
- [56:48]
A
Want to learn more? Until next time, Please check out svpg.com, sign up for our newsletter that Mary Kagan puts out. Join us for one of our workshops near you and get access to all of the articles and content we put out. And thank you to everyone for joining us. Until next time, have a good day.
- [57:10]
C
A quick disclaimer While this podcast is named Product Therapy, it is not hosted by licensed therapists or mental health professionals and it is in no way a substitute for professional mental health services. We recognize the importance of mental well being and encourage anyone facing personal difficulties to seek support from qualified professionals. See www.findahelpline.com.