Product Focus PMJ12 Strategy

The Leading Reference for technology-based products
Product
M
anagement Journal Volume 12 £10 / €10
Contents
Product strategy
What is product strategy and why is it important? p04
10 excuses
Why not to do a product strategy p09
Tools for strategy development

Playing to win, Blue Ocean strategy and other tools p10
Portfolio analysis
Visualise and plan the whole product set p16
Insight: Strategic failure

More than a vision - it has to deliver p22
Strategy product
Setting the foundation for
effective product plans
Training
Product Management and
Product Marketing
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Focus on Telecoms, IT and Software
Tools, templates and checklists
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INTRODUCTION
W
elcome Leading the way for product managers
Do you ever feel like the ball in a pinball
machine? Bounced randomly from issue to
issue without any sense of control? Who’s who?
The Product
Constantly responding to stuff and never Management Journal
being able to get ahead of the game? Yes? … is published by
Product Focus as an
well then you need a product strategy and independent publication
you need a plan. for product managers
Every product manager should have a with technology-based
products. Product
product plan. It gives you control. It gives you Focus was founded and
power. It makes it clear you know what you’re is run by Ian Lunn (top)
and Andrew Dickenson
doing. And it gives you the credibility to ask (below).
for support from the rest of the business.
The founders continue to
But the foundation for an effective deliver many of Product
product plan is a product strategy. That’s Focus’s training courses
working out where you want to take your and workshops.
product and why.
Get clear on your strategy and you can start To get all our previous journals and receive
the latest copy sign-up at
leading within your business. You can be proactive www.productfocus.com
rather than reactive.
This Journal has the background, tools and insights to get you
started. Good luck!
The Leading Reference for technology-based products The Leading Reference for technology-based products The Leading Reference for technology-based products The Leading Reference for technology-based products The Leading Reference for technology-based products The Leading Reference for technology-based products The Leading Reference for technology-based products The Leading Reference for technology-based products
Product Product Product Product Product Product Product Product

Management Journal volume 1 £10 / €10
Contents Contents Contents Contents Contents Contents Contents Contents

Go-to-market checklist Developing a proposition Succeeding in a downturn How to build a business case How to price The role Agile Market analysis
How to make your launch successful p04 The importance of unearthing what customers value p04 How to stay ahead when the market is going down p04 Step-by-step guide plus Top 10 Excel tips p04 The key to effective pricing p04 What does a product manager do anyway? p04 Agile explained and agile vs waterfall p04 How to research and analyse your market p04
Good timing Persona profiling Tools for managing requirements 7 common mistakes The psychology of pricing Leadership tools Scrum Talking to customers
Dates to chooce and avoid for launch p07 Getting into your customers shoes p08 Cut time to market, reduce errors andimprove communications p09 How to spot the warning signs p06 How to get inside your customer’s mind p07 Product manager personas and 20 things to make you great p08 The rules and what it means to be the product woner p09 What are they really thinking? p06
Relaunching Thinking big Outsourcing Scenario planning and sensitivty analysis Pricing structures Starting up Product manager checklist Research
A golden opportunitiy for you p11 Propositions for big software products p12 The pros and cons for product management p10 Separating fact from fiction p10 What are they and which ones work best? p11 How to introduce product management for the first time p10 Survive and prosper in the world of agile p10 A how-to guide p10
Taking the lead Listen and learn Job searching An idiot’s guide to finance Software pricing How are we doing? Tools Understanding competitors
Getting the most from lead customers p14 Customer feedback need not cost the earth p14 What to do if the worst happens p16 Key financial jargon and terminology explained p18 Options and terminology p14 Measuring product management p15 Software to help yo umanage requirements and projects p16 Who are they and how to compete p16
Insight: Post launch Insight: The power Insight: Voice of the market Insight: Lies, damn lies and business cases Insight: Take control of pricing Carve-up Scrum This! Insight: The analyst racket
The hidden challenge of maintaining momentum p22 Why product managers need propositions p22 Do you have your finger on the pulse? p22 Is being objective really rewarded? p22 Why it’s vital to get involved p22 Splitting responsibilitiies across multi-nationals p18 Thoughts from the Cranky Product Manager p18 Conflicts of interest - a risky game p22
Business Market
Insight: Motivation Insight: Agile hype
How happy is your donkey? p22 Hype, dogma, religious-like zeolatory - is there a bandwagon? p22
Launching Propositions Recession Cases Pricing Leading Agile Analysis

product product product product product product product product
Hit the ground running How to build sharper propositions Staying ahead in a downturn How to create outstanding business cases Setting the optimum price Product management and And its impact on product managers Understanding markets, customers
and what not to do that really work The product managers guide that deliver results Tips, tactics and theory product marketing teams and the competition
The Leading Reference for technology-based products The Leading Reference for technology-based products The Leading Reference for technology-based products The Leading Reference for technology-based products The Leading Reference for technology-based products The Leading Reference for technology-based products The Leading Reference for technology-based products
Product Product Product Product Product Product Product

Contents Contents Contents Contents Contents Contents Contents

Roadmaps Requirements Training Product strategy Product Marketing What is in-life?
Product management
How to build the perfect roadmap P04 The big picture p04 The options p04 What is product strategy and why is it important p04 What is it? p04 An explanation p04
Explained in a nutshell p04
Masterclass Marketing Requirements Document (MRD) Review 10 excuses The basics Measure what matters
The big issues
Advanced ideas and strategy p06 Setting the scene p07 Pre-trianing assessment and analysis p08 Why not do a product strategy p9 Right message, right people, right place, right time p08 In-life metrics and reporting p08
What are the big issues that come up time and time again? p06
Ideas User stories Product management tube-map Tools for strategy development Planning Documentation
Smart businesses
Sounrces and how to prioritise p10 How to write user-centred requirements p11 The things product managers should know about p12 Playing to win, Blue Ocean strategy and other tools p10 The delivery of marketing materials p14 Top tips and what you should have in place p12
The 7 things smart product managers and teams do p10
Tools Demanding? Performance! Portfolio analysis Personas Time well spent

Insight: But I’m only a product manager
To help you roadmap p18 Tools to help you prioritise p15 Making training stick p14 Managing the whole product set p16 Gettinng ‘under the skin’ of our customers p16 Focus on what's important p14
Take a lead to improve performance p22
Insight: Roadkill Be prepared Justificaiton Insight: Strategic failure Inbound marketing End-of-life
Do agile and roadmaps conflicr? p22 6 things to sort out before you start p18 ROI and other models p17 More than a vision - it has to deliver p22 Going digital to attract and convert leads p18 How to successfully withdraw a product p18
Insight: Go deeper Insight: Professional Insight: Artist and expert Insight: Where the rubber hits the road
Never underestimate the value of product marketing p22
Product
The problem is the problem p22 Are you a well-intenionted amateur? p22 The importance of in-life vs new product development p22
Roadmaps Requirements Training Strategy Take control Marketing In-Life

product product product product product product
product
Compelling roadmaps that align How to make sure they deliver ...why it’s needed and Settin g the foundation for Putting product management Getting products in front of customers Making sure your product delivers
everyone to your vision how to make sure it delivers effective product plans in the driving seat and making sure they sell when it matters
All the trademarks and tradenames referenced in the Journal are the property of their respective companies
Product Management Journal Volume 12 3
FUNDAMENTALS
Product strategy
What is it?
Everyone talks about strategy. But what does it really mean to us as

product managers?
Very simply, a strategy – any strategy – means deciding what we
want to do and how best to do it. It typically includes an analysis of the
current situation, a hypothesis of what we think will happen, some
goals, an investigation of options, deciding what we’re going to do and
documenting it all in a plan.
But the word ‘strategy’ is overused, confused and misused all the
time.
Confusion
For example, we’ve heard people say, ‘our strategy is to move into
the cloud’. This may be a great objective but it doesn’t say how they’re
going to do it!
Some product managers say that their roadmap is their product
strategy. Well, there are many documents that could be produced out of
product strategy work covering a range of subjects. A roadmap is just
one of them. It covers product development but doesn’t, for example,
cover financial or marketing plans.
Wise Words Some use the words strategy and tactics interchangeably. However,
“The best way to
predict your future is most people consider strategy as answering the high-level question
to create it.” ‘where do we want to go?’ and tactics as the action plans to get there. In
Abraham Lincoln,
16th US President crude terms, strategy is using your head to think about things and
tactics, your hands to do them.
Others confuse a company strategy and product strategy. That’s
fine in the world of start-ups as there is only one product so the
company strategy is the product strategy. However, once you have
multiple products in a business then there should be a strategy for each
product, as well as for the company. The company strategy sets overall
4 Product Management Journal Volume 12

EXPLAINED
direction, and allocates resources and budgets for the different

products. The product strategy explains how you’re going to bring the
company strategy to life.
A missing company strategy

Sometimes there is no obvious company strategy. Or sometimes it’s
so high-level it’s difficult to know how it impacts on each product. One
response is to prioritise things by whichever customer shouts loudest
or what appears to bring in the most money. However, a better approach
is to force the issue and develop a product strategy for review by senior
management. The assumptions you will need to make
about the company strategy should force a
discussion and decisions on company
Product Competitor
priorities. performance analysis
Internal
ideas
What is the process? Inputs
Fig. 1 shows our view.

Market Customer &
When working on a product Analysis Sales Input
strategy you should consider input from

several sources including: customers, sales
teams, competitive analysis and market
Company
analysis. They can all provide facts Resources
available strategy
and insights to develop your Capability
Product
Strategy Strategic
& capacity constraints
ideas. Constraints Creation
Time Marketing
Your product strategy will be available strategy
constrained by other factors. Most

importantly, it needs to align with Product
Strategy
teds
the overall company strategy. It Outputs
j e c n
Re pRtieojec
o op ted
tion
also needs to fit with any other Rejected
optionss
strategies and plans that exist. For

example, how the business markets to a
particular region or how it works with a
particular sales channel.
Finally, it needs to work within the capacity and capability
constraints within a business, i.e. how much resource or money is Fig. 1 The product
available. And don’t forget, it takes time and effort to do this work. strategy process

STRATEGY
Most importantly the strategy work needs to result in an output. A

presentation or document that can be shared, reviewed
Typical product plan content
and challenged. And if it’s not to be wasted, it needs to
The 4Ps of the marketing mix result in some plans. These need to cover all the different
Product development (e.g. a roadmap)
Promotion aspects of a product – the marketing mix, financial
Pricing forecast and for a new product, the launch plans.
Place (e.g. distribution & sales)
Financial (Business Case)
Launch (for new products) It’s not just a one-off thing
We live in a world that is constantly changing. We
may have developed a product strategy and started to implement our
plans, but before long the market has moved, a competitor has
responded or we’ve learned something new about what our customers
want. If the changes are significant then we need to
check them against our strategy. Did we take
Insight Market analysis
them into account or is it something
unexpected? Do we need to evolve our strategy
and plans?
As product managers and product
marketers we’re at the heart of a continuous cycle
Strategy of getting new insights about our market, analysing
development
what they mean and adapting our proposition so we can
compete. Whilst you shouldn’t be changing strategy too
frequently, having the discipline to do a quarterly or 6 monthly
review makes sense.
Is a product strategy the same as a product plan?

Product strategy work should result in some decisions, priority calls
and actions. These become the product plan – so product strategy
Fig. 2 The continuous
drives the product plan.
cycle of insight, The product plan touches the activities of many areas of a business.
analysis and strategy
development
Some may be in the remit of you as the product manager whilst others
may be the responsibility of other areas such as Marketing and Sales.
However, all need to be addressed.

PLANS
What format?
There are lots of free templates to help you document your product plans but few for
the creation of a product strategy. The one below should give you a good start.
Product Strategy Template

1. Executive summary A concise summary of the whole plan on one page/slide.
2. Product description A short description of your product that explains what it is,
what’s different about it and why customers will buy.
3. Market insight & analysis A high level summary of facts and trends about the
competition, customers, product performance (for strategy
updates on existing products) and other market-impacting
factors.
4. Strategic alignment A summary of the implications of company strategy and

the strategies of other parts of the business on the product
strategy.
5. Product goals Identify the objectives you aim to achieve with the product
– this is what your strategy is aiming to deliver for the
business.
6. Product strategy The heart of your document, detailing the strategy for
the product over an agreed time horizon (typically 2 to 5
years). It should include a vision for the product; the market
segments, geographies and technology areas in which you’ll
compete; the role of partners and suppliers; differentiation
and positioning; timing and the financial rationale for the
proposed strategy.
7. Impact analysis A description of the resources required to support the

strategy and a statement on the implications for the rest of
the business.
8. Planning A summary of the action plans for all departments impacted

by the proposed strategy and the Key Performance
Indicators (KPIs) to be used to measure performance.
9. Risks & contingency plans Summarises the most significant risks and your plans for
getting things back on track if they happen.

TEMPLATE
When using the high-level Product Strategy Template on the

previous page, pick and choose the sections you need and the level of
“The biggest risk
for a PM is to spend detail it makes sense to go into. We prefer to use slides as it keeps
all your time on things concise and ready to present.
the operational
aspects and fire-
fighting. If you don’t How is it typically done?
set time apart to Product strategy work is often kicked off by the company’s yearly
define the strategy
then you will end planning process. Product Management and other departments are
up being very busy asked to submit their plans a month or so in advance of the final target
and and still go
nowhere...” date. Discussion and negotiations typically ensue.
Christian Wollner, Senior Management set ambitious goals. Development push for
Head of Product,
Deutsche Telekom more resource. Sales try to get targets lowered and Marketing ask for
more money. Product Management is squeezed between these
powerful vested interests and eventually a compromise is reached.
A bid for resource

However, let’s face it, most product strategy work is done as a way
of asking for more resources and a bigger focus on the product from
the business. It’s an internal sales pitch.
If the pitch is successful it then becomes the plan of record for
what’s intended for the product – a yardstick against which to measure
progress.
Conclusion
We believe that in many businesses there is often
very little product strategy work done. No one’s quite
sure whose job it is. Or there is no joined-up approach
with various departments taking on different aspects.
It’s a big gap. It means that product managers spend
lots of their time running around dealing with tactical
problems – many of which could be avoided if there
were clear and agreed product objectives, priorities
and strategies.
A product strategy sets the direction for the business, aligns
everyone around common goals and reduces waste. Without one,
you’re relying on luck.

EXCUSES, EXCUSES...
10 excuses
Why not to do a product strategy
1. Isn’t it just the roadmap? That’s not a bad start but it doesn’t give the rationale for your roadmap.
And it doesn’t cover important elements of the marketing mix such
as pricing, the details on target markets nor why your proposition is
different.
2. Isn’t it the same as a Well it might be. There are many different product plan formats and they
product plan? usually extend to cover product strategy and the tactics used to bring
your strategy to life. If your product plan covers all these sections, then
great!
3. Isn’t it covered in the It may be, especially if your company has just one product. But usually the
company strategy? company strategy is at a higher level than what’s needed for each product.
4. I don’t have the customer Well you should have it! If you’re setting the direction for your product you
insight. need to get out of the office and go and find out about your customers
and the market. If it’s not your job to do this make sure you know whose
job it is and that they feed this insight through to you.
5. We’ve got a strategy/ Well, if you’re sure. But do they get input from you? And why wouldn’t you
marketing team – it’s their want to take it on? The most important work a product manager can do is
job. to create a winning product strategy (and you increase your value to the
business if you do).
6. My job is to focus on the Is it? Is someone else providing the product strategy or is it a gap that’s
tactical work. just not getting filled?
7. It’s not a priority right now It shapes everything you do and so it should be a priority – make time to
and I don’t have the time. do it.
8. We did the strategy work Great, but is it up to date? Does it reflect any changes in the market,
in the Business Case 2 years competition and your company strategy?
ago.
9. Our company strategy is so You can start by creating a product strategy and providing some
vague – where do I start? leadership to the business.
10. Who cares? I’m leaving Fair enough, but it’s a great hand-over document for whoever takes over
soon. from you. Wouldn’t you want to be remembered as a professional product
manager?

ANALYSIS
Tools for strategy development
Most strategy tools have been developed to examine things at a

company level. They answer the question ‘Where do we want to go as
a business? ‘ However, many of them can be easily adapted to look at
product strategy.
The ones we describe in this article are easy to understand and
straightforward to use.
SWOT analysis
You’ve probably come across this one before.
Just in case it’s not obvious, the name comes from the first
letters of Strengths, Weaknesses, Opportunities and Threats. It’s a
simple tool you can use to brainstorm the
Help Harm strengths and weaknesses of your product
and think about the opportunities and
External Internal
Strengths Weaknesses threats outside the business. It’s best used

with other people to get a good range of
ideas and perspectives.
Opportunities Threats And when you’re brainstorming as
a team, remember there are no wrong
answers. Someone’s mad idea may spark a
Fig. 3 The classic
SWOT matrix
really great insight from someone else.
A logical flow
The framework in Fig. 4 shows a logical progression for
developing a strategy.
It recommends you spend time understanding the facts and
trends about your market place. Only then can you think about the
implications for your product and define a set of objectives. The next

TOOLS
step is to develop a strategy that can deliver on these objectives.

Finally this needs to be converted into a plan with a set of actions
that will bring the strategy to life. Typically you would produce a set
of slides with some kind of summary as shown in Fig. 4.
Summary of product strategy for product ‘Z’

Gather data, Decide on Set product Decide on Implement
facts / trends implications objectives strategy what’s needed
Western Europe Competitor Product ‘Z’ to Enter Chinese Additional
market growing shakeout in be used to gain market with low development
at 25% annually Europe. entry to Chinese functionality resources will
but slowing Recommend market with 5% Product ‘Z’ with be needed to...
acquisition market share support from
China growing targets... and break even local... Process for
at 150% and after 18 months contracts needs
accelerating but China will be Create variant to be updated...
is currently 10% largest market Win reference to address the
of European within 5 years case studies in sub-segments Additional
revenues by revenue USA by ... growing in... distributor for
but profits will segment ‘X’ to
Competitor ‘Y’ drop 30 points... Grow market Focused launch be trained by...
entered USA share by 15% to western USA
through deal with ... in southern using... Bundled pricing
leading Europe... needed to raise
distributor... barrier to entry...
Fig. 4 The flow used

There are usually many ways in which we could deliver on our in development of
product objectives – the question is, which is the best approach? Two strategy and plans
frameworks that can help answer this question are ‘Playing to win’ and
‘Blue Ocean strategy’.
Playing to win “Product strategy...

Playing to win provides a practical approach to developing a strategy. is the flickering
light in the
Its framework covers 5 important steps from defining a winning darkness that both
aspiration, deciding where to play, how to win, the set of capabilities the company and
customer follow
you’ll need and the systems that will track progress. with the hope
Sorting out your winning aspiration (the purpose of your product and of arriving in a
brighter place.”
what you want to achieve with it) might sound grandiose but it serves Terry Haines,
a practical purpose. Your aspiration acts like a beacon to others in Product Manager,
Ordnance Survey
the organisation – giving them something to buy into, something that

WINNING
motivates and something to guide decision making.

The decision on ‘Where will we play?’ guides the efforts
The guiding purpose
of our product
of the product team, closing off options
What’s our
winning aspiration? so people can focus on what’s been
The locations, segments
& sales channels where
decided as best for the product and
Where will we play?
we’ll compete business.
Our value proposition
and competitive
advantage
How will we win?
The technologies,
activities, plans &
What capabilities processes to compete
are needed?
The systems to
let us track how
What management we’re doing
systems are needed?
Fig. 5 The 5 stages
in ‘Playing to win’
You’ll only be able to work on ‘How we will win’ if you have a good
understanding of your customers, competition and market trends.
Working out your winning proposition is tough and Blue Ocean strategy
(described later in this article) provides a good approach to help out.
The final two blocks – putting in place the necessary capabilities
and management systems are fundamental. They’re easy to forget but
without them you can’t put your strategy into action.
You need to make sure each step in the cascade is consistent with
the others and often the development of a product strategy will require
multiple iterations. You’ll move up and down the cascade to ensure it all
fits together.
As an example let’s look at a large telecoms company re-selling a
device management service to corporate customers.
What is our winning aspiration? In this example it might be to
partner with the leading independent provider of device management
Playing to Win services and support a wider company proposition of a one-stop-shop
by Alan G. Lafley for corporate customers.
and Roger Martin
(Harvard Business Where will we play? Target markets may be the major European
Review Press), 2013 countries using the existing direct sales force. To begin with it may only
be corporates with over £1bn turnover.

STRATEGY
How will we win? The proposition focus might be on the security

and confidence customers get through working with a major industry
supplier, combined with a single bill and single support process for all
products.
What capabilities must be in place? For example, integrated billing
feeds, network interfaces, support processes with suitable hand-offs.
What management systems must be in place? Sales pipeline
tracking, product usage reporting, support call metrics etc.
Blue Ocean strategy

Many high-tech companies feel they are in a race. Their products
must have every feature that competitive products have, and then Blue Ocean
Strategy
some more on top to give customers a reason to buy. It’s the natural by Renée
response to the competitive tender process where to get through to Mauborgne and
W. Chan Kim
the shortlist you need to tick ‘yes’ to all the features requested by the (Harvard Business
customer. Review, 2004)
After a time, this results in bloated products with massive feature
lists. Many of the features don’t deliver any value to customers, and
they struggle to see any meaningful difference between competing
products. Ultimately, vendors find they get smaller and smaller returns
from their investment in product development.
Blue Ocean strategy argues that this rush to add
features is not only undesirable, but also that it isn’t Raise Create
sustainable. It recommends a different approach
that creates a distinct and unique proposition for
your product.
It requires that you consider all aspects of Reduce Eliminate
your proposition, not just the features but also
the service wrap, terms and conditions, price,
deployment and other processes. Fig .6 A key idea
Your strategy (see Fig. 6) is to decide what things you raise (do in Blue Ocean –
don’t just focus on
better), what brand new areas you create, what things you reduce (to building new stuff
save cost and effort), and what things you eliminate (stop doing).
Blue Ocean argues that there will be areas on your list that customers
don’t care about at all. Others where they’re over-served at the moment
and something less capable will be fine. There will also be areas where

BLUE OCEAN
“Product strategy they’re dissatisfied with current solutions and still others where they’d
isn’t just about be excited by something new.
incrementing
and exceeding You’ll need to do some detailed market research to get insights into
competitors on the performance of your competitors in these areas. Talk to current
every feature. I
see this a lot – it’s
customers, prospective customers and competitors’ customers. How
about focusing important is each area to your customers’ buying decision?
on the most This can be represented on a simple graph called a value curve.
important/least
satisfying areas It shows the different areas you’ve identified and the relative
and sometimes performance you’d like to achieve in each area compared to your
reducing or
eliminating competition.
feature/functions In the example shown in Fig. 7, Cirque du Soleil decided they couldn’t
– this needs to
be part of every
compete head on with the existing established circuses. They decided
product strategy.” not to bother with the costs and effort of looking after animals and
Gary Jarvis, running multiple show areas. They did want to keep the fun and humour,
Director of Product
Management, thrills and danger, because customers loved them. However, they also
CDK Global created some brand-new aspects such as a theme to the show, a more
refined environment and artistic music and dance.
High
Barnum & Bailey, Ringling Bros...
Regional circuses
Cirque du Soleil
Low
Price Arrival Multiple Thrills and Theme Multiple
shows show arenas danger productions
Star Animals Fun and Unique Artistic music
performers humour venue environment and dance
Fig. 7 Use value

curves to visualise In the old world you’d be aiming to be the best at everything. Blue
how you compete Ocean argues this isn’t sustainable and you need to have a distinct value
curve. This means you’re swimming in a clear blue ocean rather than a
red ocean with lots of blood in the water from fighting competitors.

DIAMOND
Are you sure you have a strategy?

Blue Ocean is a great approach to thinking about where you can
be different in a way that’s valued by your customers. Playing to Win
provides a broader
framework to think Northern Europe has long-term reliable End-to-end risk management systems.
Focus on large nationals and MNCs
growth opportunities. Eastern Europe is
about strategy more risky but has explosive growth based in Northern Europe expanding to
Eastern Europe and Middle East
potential. Core product IP will be licensed
development. Are to Middle Eastern companies to reduce
risk whilst benefiting from regional growth
these all that’s Arenas In-house development of core
product. Partner for Business
needed to have a Intelligence and visualisation
strategy?
We think there’s a
Staging
little more to think Economic
& Vehicles
logic
about and there’s a pacing
great article called
‘Are you sure you
have a strategy?’ Staging & pacing
Q1: Marketing education programme Differentiators
using UK references. Mentor sales
written by Donald leads in key territories First to gain ISO22301 accreditation
Q2: Integrate solution from BI partner
Hambrick & James Q3: Invest in hosting solution centre
Local professional services teams in
10 countries. End-to-end solution
Frederickson delivery. Unmatched references
and pre-sales expertise
(The Academy
of Management Fig 8 The Strategy
Diamond ensures
Executive; Nov 2001) in 2001 that talks about all the elements needed you don’t miss out
to ensure you’ve thought enough about your strategy. They proposed a important aspects
of strategy
‘Strategy Diamond’.
We recommend using it as a checklist. Only when you’ve thought
through all the diamonds can you consider that you have a strategy.
“Successful
Conclusion Product Strategies
In our careers we’ve seen many different approaches to developing are based on
superior insights
product strategy. From product managers who flip their strategy based and choices, what
on whatever latest article they’ve read ... to those who spend months to do and what not
to do.”
working in the background to carefully craft something that fails to Ragnar Erkander,
inspire. Business
Operations,
There are good frameworks and tools you can use. However, one Ericsson
of the big challenges in strategy is about making good choices. In our
experience it’s as much about choosing what not to do as it is about
choosing what to do.

ANALYSIS
Portfolio analysis
Managing the whole product set
Most companies have more than one product. That means there is always
a question of how to divide resources between the different products in
the portfolio. And if the products are sold to the same customers, there
Wise Words is the additional challenge of how to position them against one another
“Without strategy,
execution is aimless. – so customers know which one to choose. These are key strategic
Without execution, issues.
strategy is useless.”
Morris Chang, CEO of As a product manager, you’re being measured on the performance of
TSMC your product – why would you care what’s happening elsewhere in the
business?
Sometimes you have to care: perhaps because your business has
acquired new products that compete with yours or there’s a positioning
issue where multiple products
satisfy similar customer needs.
Market Certainly, someone in the business
New
Development Diversification
will be worrying if there’s a good
Markets
balance between products that

generate profits today, and those
that will do so in the future. Or,
Existing
Market Product
Penetration Development whether there’s a good mix of
low-risk investments versus more
speculative bets that might
Existing New
generate big returns.
Products Even if this isn’t your area, it’s
Fig. 9 The Ansoff interesting to understand some of
matrix the tools that are used.
Ansoff matrix
The Ansoff matrix has stood the test of time as a way of thinking
about the riskiness of product investments.

CASH COWS
All companies will be involved with market penetration – selling

more of their existing products to current customers. This is low risk “When considering
because we understand our products and know our customers. The short, medium and
investment decision is easy to approve but the returns might not be long-term product
strategy, people
great. For that reason we often look outside this safe haven. forget to stand
The introduction of new products (Product Development) or back and consider
what market(s)
entering new markets (Market Development) can be a more risky they are in and what
investment as we have less experience and are less certain of success. market(s) they
want to be in.”
Diversification into new markets with new products is the riskiest Jo Strain, Global IT
strategy of all. A lot of larger companies de-risk this by entering these Product Portfolio
Executive
areas through acquisition rather than organic growth, i.e. by just buying
a company that’s already successful with products in the market you
want to enter.
There are other tools to show the performance of products in a
portfolio. The Boston Consulting Group (BCG) matrix is the most
famous and some of its terminology, e.g. Cash Cows, has entered into
product management folklore.
BCG matrix Improving economies of scale

The BCG matrix maps relative
market share against market
growth rate for a product portfolio.
30%
New products are Question Stars Question Marks
Marks and over their lifetime,

Market growth rate
successful Question Marks will

20%
Product E
Product C Product D
become Stars and then Cash Cows. Product G
Products that are in the Question
Cash Cows Dogs
Marks and Stars category typically
10%
consume lots of investment as the Product A
company tries to build or hold onto Product B

Product F
market share. The aim is to ride the
0%
x10 x5 same x0.5 x0.1

market growth wave to establish
Star products. Relative market share
As the market growth rate Circle size represents current revenues
declines, Stars change into Cash Fig.10 The BCG Matrix
Cows. The company is able to extract

CROWN JEWELS
profits to invest in the next Question Mark products. This is called

“A good product ‘milking the Cash Cow’.
strategy should You need to take a decision on Dogs. Do you invest to try and grab
be based on sound
insight from clients, market share or exit the product by closing it down, i.e. ‘shooting the
consumers and Dog’ ?
markets. A really
good situational A variation on the BCG matrix is the General Electric (GE) matrix. It
analysis will recognises that market share and market growth rate aren’t the most
determine what the
strategy needs to
important factors in some industries. Instead its axes are ‘business
be,as if done well strength’ and ‘market attractiveness’. Each business will decide on how
it will be obvious to measure these and it’s worth thinking through how you’d measure
the route to follow.
Best practice would these axes in your business and for your products.
use an 80:20 rule Both the BCG and GE matrix are useful to show how products are
with most of your
effort going into expected to change position over time if nothing is done, and to
the analysis.” facilitate a discussion on what could happen with proactive
Mary Burnett,
Head of Business management and investment. This then helps set product and
– Background performance objectives.
Checking, Experian
Crown Jewels
Another portfolio tool we often use on our private training courses
helps to identify the ‘Crown
High
Jewels’ in a portfolio.
The Crown Jewels are
Value to customers
Achilles Crown
Heels Jewels
those products or product
options that are highly
valued by customers and
Low High
where we have a
Strength vs the competition significant advantage
Black
Holes
Sleepers compared to the
competition.
When it comes to
developing strategy, the
matrix provides another
Low
useful perspective on our
Fig.11 Visualise the current portfolio and helps
competition and
customer value
facilitate the discussion on how we want things to change as a result of
our strategy and the resulting plan of action.

PORTFOLIOS
Can you map your products against these 4 categories? It’s common
Wise Words
to find that product managers think they have Sleepers. Either a “If you don’t know
mistake has been made in launching a product that delivers little value where you’re going,
any road will take you
or customers need to be educated to appreciate the real value of what’s there.”
being delivered. It’s also common to find that a company undervalues its Lewis Carroll, writer
Crown Jewels, for example, by not charging enough for them or not
positioning them appropriately in their outbound communications.
On first glance, Black Holes might seem ripe for removing from the
portfolio. But, some businesses find that their base platforms are Black
Holes which are technical necessities to be able to offer their Crown
Jewels.
And what will be done with your Achilles Heels? These are the
products where you’re at a significant disadvantage compared to the
competition but where your customers highly value what you deliver.
Will you invest in these products to make them competitive or do you
see a trend that says they’re of declining importance to your customers
and any investment would be wasted?
Conclusion
In many companies we find that product portfolio
analysis is missing. We see scattergun allocation of
resources with investments in white elephant * products
that shouldn’t happen and products with low risk and high
returns being ignored. If you think that might be
happening in your business you may need to add more * A white elephant is a possession
rigour to your product portfolio analysis. which the owner can’t get rid of
and where the cost of keeping it is
However, in reality you can’t do everything you want to. out of proportion to its value.
There are always more opportunities for a business than The Kings of Siam (Thailand)
gave a white elephant to any
resources available to address them. The challenge is courtier they disliked. The courtier
getting the balance right between those that require was unable to rid themselves of
the elephant as doing so would
investment versus those that are generating today’s be an insult to the King, but the
revenues and profits. cost of their upkeep frequently
bankrupted the courtier.
What risk is your company willing to take on new
products and markets versus rolling out the next release
of an existing product to a known market?

T he Review
Reviews of great books for product managers
Book Review There are hundreds of strategy books, blogs, e-books and forums you
can go to when you want to learn more about strategy.
We have a few favourites and the strength of the book we’ve chosen
to review is the simple, clear guidance it provides. It tells you what you
need to think about and how to go about developing your ideas.
Most strategy books focus on tools and approaches for corporate
strategy development. As product managers we have to make them
relevant to developing product strategies. Max’s book leads with
testimonials from the great and good of academia and industry. The
second testimonial reads “It’s unusual for a management book to
encourage readers to ask uncomfortable questions about their own
The Strategy Book products…”. This book lends itself to product managers and product
by Max McKeown leaders.
(Pearson, 2012)
The Strategy Book leads with help on changing your view of the
“Some people have world to start thinking like a strategist. It provides clear guidance on
become cynical what you should be aiming for, the challenges you’re likely to face,
about strategy.
They hear the word examples and a checklist.
and disengage. Other sections cover how to create a strategy and how to make it
They expect bad
or boring things
work.
to come from any One example from the book looks at the thought process in creating
strategic planning new markets. It asks you to consider: why non-customers don’t buy
process. They
predict job cuts or existing products; new ways of delivering value to non-customers and
mindless changes. how existing customers are being under-served. Even the most complex
Or just expect
meaningless strategic theories are explained with simple language.
waffle that is The back half of the book is a summary of the key tools for strategic
incomprehensible
in the real world.
thinkers. Each includes a brief summary of the tool and an explanation
And there is some of how you can use it as part of your strategic planning process.
truth to this view.” If you’re working on a strategy, this book will help you think and act
Max McKeown
like a strategist.

SURVEY
Have your view

Thank you to everyone who submitted quotes for this
Journal. We’re sorry there is not room for them all but
some of the best are shown below.
“The status quo on Product Strategy seems to be that it
should always be derived from a highly respected Company
Strategy. Although clearly in some organisations this makes
complete sense, I believe that there is no reason why it can’t
be the other way round. A carefully constructed and strongly
evidence-based product strategy may offer options that cause
the business to question the direction they should follow thus
redefining the business strategy. ”
Jo Butler, Product Manager, Active Risk
Annual Survey
“As you change from a start-up to a more mature company product strategy should
evolve much like people do themselves. Think about it. As a child you do everything We use our survey
impulsively without really thinking about it. Later on you learn it’s a good idea to think to benchmark
about something before you do it – even if that turns out to be the thing you would have product
done instinctively. “ management
Michel Roth, Senior Product Director, RES Software each year. Let us
know if you’d like
to take part. You
“Not having a strategy equals having a reactive strategy, i.e. doing what customers can download the
request. It usually works great in the early phase of a market. If one is fast to change latest results from
and listens closely to existing customers it might also work in the long term especially our website.
if no one else has a better strategy. You don’t have to be good, just better than the
others.“
Jan Jonsson, VP Product Management

T he Insight
Strategic failure
A product strategy that doesn’t result in a plan is like a broken pencil...

...pointless. And having a product plan that everyone ignores is a waste
of time.
So, you’ve come up with a good product strategy, rooted in insights
from the market, aligned with the rest of the business and painting a
compelling vision of the future. Your work is done! Or is it?
For many, this is the point at which the ‘wheels fall off the wagon’. It’s
the point where reality diverges from our grand vision.
The failure is not an inability to envision a great future but rather our
inability to make it happen.
We often see a breakdown when it comes to translating a great
strategy into a set of actions that are implemented across a company.
People around the business happily buy into the vision without buying
into the effort and urgency needed to make it come true. It’s easy for
them to say yes to some pretty slides, but quite another thing for them
to actually do some work.
We might as well have saved our time – our great thinking goes to
“To make a strategy waste. We could have stayed focused on the mundane, on the tactical,
is easy. To make on the incremental small improvements.
the organisation
commit to it is hard.
That’s why every product manager should have a product plan. And
Involving people the foundation for an effective plan is a strong product strategy.
early is the biggest Once a plan is in place it takes leadership to make it happen. That’s
tip. I would not buy
into something where the hard work really starts. You have to persuade your company
I was not part of and your teams to put your plan into action.
creating. ”
How do you do it? Get senior-level support, actions lined up and
people accountable for delivery. You’ll have to project manage and
motivate people to deliver on their commitments. You’ll hit changing
priorities, delays and distractions but you need to drive the plan
forward.
Strategy has to be more than a vision – it has to deliver.
22 Product Management Journal Volume 12 PMJ 12.2

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The Leading Reference for technology-based products

Tools for strategy development

 Insight: Strategic failure

Industry-leading public and private courses

+44 (0) 207 099 5567

Product Product Product Product Product Product Product Product

Contents Contents Contents Contents Contents Contents Contents Contents

Launching Propositions Recession Cases Pricing Leading Agile Analysis

Product Product Product Product Product Product Product

Contents Contents Contents Contents Contents Contents Contents

Tools Demanding? Performance! Portfolio analysis Personas Time well spent

Roadmaps Requirements Training Strategy Take control Marketing In-Life

Everyone talks about strategy. But what does it really mean to us as

4 Product Management Journal Volume 12

direction, and allocates resources and budgets for the different

A missing company strategy

What is the process? Inputs

Fig. 1 shows our view.

strategy you should consider input from

constrained by other factors. Most

strategies and plans that exist. For

Product Management Journal Volume 12 5

Most importantly the strategy work needs to result in an output. A

Is a product strategy the same as a product plan?

6 Product Management Journal Volume 12

Product Strategy Template

4. Strategic alignment A summary of the implications of company strategy and

7. Impact analysis A description of the resources required to support the

8. Planning A summary of the action plans for all departments impacted

Product Management Journal Volume 12 7

When using the high-level Product Strategy Template on the

A bid for resource

8 Product Management Journal Volume 12

Product Management Journal Volume 12 9

Tools for strategy development

Most strategy tools have been developed to examine things at a

Strengths Weaknesses threats outside the business. It’s best used

10 Product Management Journal Volume 12

step is to develop a strategy that can deliver on these objectives.

Summary of product strategy for product ‘Z’

Fig. 4 The flow used

Playing to win “Product strategy...

Product Management Journal Volume 12 11

motivates and something to guide decision making.

12 Product Management Journal Volume 12

How will we win? The proposition focus might be on the security

Blue Ocean strategy

Product Management Journal Volume 12 13

Fig. 7 Use value

14 Product Management Journal Volume 12

Are you sure you have a strategy?

Product Management Journal Volume 12 15

balance between products that

16 Product Management Journal Volume 12

All companies will be involved with market penetration – selling

BCG matrix Improving economies of scale

New products are Question Stars Question Marks

Marks and over their lifetime,

successful Question Marks will

consume lots of investment as the Product A

company tries to build or hold onto Product B

x10 x5 same x0.5 x0.1

Product Management Journal Volume 12 17

Insight: Strategic failure