A strategy defines what is going to be done and how it’s going to be done.
The product managers of these high fliers are always aware of the dynamism of market or business events. They are constantly alert for and responsive to the continuous change in the oncoming, constantly morphing stream of actions, reactions, opportunities, and capabilities. Such dynamic strategic thinking helps product managers to process and accommodate higher levels of risk and uncertainty.
Taking this perspective will allow you to produce a meaningful analysis of data so that you can build a solid fact base on which to consider future options. The model should evoke five questions that should be asked and answered:
- Where have we been?
- Where are we now?
- Where should we go?
- How will we get there?
- How will we know?
The product strategy formulation process is broken down into three main areas:
Evaluating the past and present and baselining the business of the product. This allows you and your team to consider past and present data to help you form your current baseline view. Setting the baseline demands that you have the most relevant market, financial, and business data available. Be mindful of the fact that the baseline can shift right before your eyes, causing you to take another snapshot. For example, in fast-moving businesses, daily or hourly data can indicate the need for a quick adjustment. Regardless of the speed of your market, it’s vital to figure out how often you take that snapshot or that baseline view. All of these factors will help you figure out what your next move could be.
Synthesizing the data and uncovering opportunities. Once all your baseline data is collected, you have to make sense of it all. In business, we examine our key strengths based on what works well, what helps us produce great results, and why. We also have to look at our weaknesses and what doesn’t work well for us and detracts from the ability of our product to contribute favorably to the business. We also have to look at our vulnerabilities: what’s threatening our survival and how might that throw off any of the good or bad of our product’s business. Putting this all together gives you and your team the wherewithal to consider future options. These opportunities set the stage for potential future initiatives.
Shaping a vision and pathway to your product’s future. As the old adage goes, past performance isn’t always a predictor of a rosy future. Product managers and their teams must always envision what’s on the horizon: a desirable market position, an extraordinary user experience, or a brand image you want to convey to your customers. However, that vision blurs if it’s not connected to the explicit goals that you want to attain and some pathway to achieve those goals. Even if you think you have a vision, once you start plotting your goals and laying out your pathway, you may find that you’ll have to return to your data, insights, and synthesis so that you can get more clarity about what you want to do.
Collecting data about the business of the product is organized into the following broad categories:
- Acquiring external data about the industry and competitors
- Obtaining customer activity data (validating segmentation models)
- Capturing data about how the organization evolved in terms of capabilities and resources as well as its underlying financial health
- Securing data about the product’s market, financial, and operational results
Customer Activity
As your product is marketed and sold, you will want to learn more about the customers who purchase and use your product. All customers go through a selection process when deciding to buy any product. Some make impulse decisions, and some go through complex buying decision processes with many influencers and users. Your job in this phase of the strategy formulation process is to highlight and characterize your key market segments and customer types, and to understand how their needs and characteristics may have evolved to the current point and why that evolution took place
Capturing Product Performance Data
The activity of forming the baseline for the product as a business is ultimately built on the basis of how the product is currently performing in the market and contributing to the company. These performance indicators are made up of both financial and nonfinancial measurements.
You may find that you do not have all of the data needed or prescribed here. You may find that other data may be important too. At this point, you have to take over and determine what’s right to do for the problems you uncover or the challenges you face—and ultimately, the decisions you will need to make. In order to secure this kind of product-specific performance data, you need to know which data to gather. When you have the data, it can be assembled to portray the path it’s traveled through the market up to the present and its contributions to the business. Some of the data elements are posed as questions you can probably answer, while others require research or data collection:
- When was the product introduced to the market?
- What updates have been released and when?
- How has it evolved functionally?
- How has the user experience evolved?
- What technologies, architectures, or platforms have been deployed?
- How much revenue and gross margin has the product contributed?
- What market share has the product achieved?
Life Cycle State
It is essential you know where the product is situated in its life cycle. In the product strategy formulation process, your job is to build a bridge from the products’ current state to the future. When you have this perspective, you can more effectively shape future product investment options and avoid wasting scarce human and financial resources. To review: the main phases are growth, maturity, and decline. Growth is characterized by sales that increase rapidly with growing market share and growing profits. Maturity is characterized by revenue that grows more slowly or where product revenue may modulate slightly. Mature product profits may follow a similar pattern or shift with increasing or decreasing costs. Decline-phase products exhibit sales or profits that decrease at an increasing rate. In addition, the product’s historical and current market share should be tracked against originally established forecasts.
The Marketing Mix
The other three marketing mix elements—price, promotion, and place (or channel)—provide important input to the baseline analysis. The goal in this part of your retrospective analysis is to understand how pricing adjustments, promotional investments, or channel shifts contributed to or influenced changes in unit volumes, revenue, cash flow, and product profitability.