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How to Define a Product Strategy: The Value-Based Approach

How to Define a Product Strategy: The Value-Based Approach

In my article on why Product Management is so misunderstood, I described how the discipline is structured around two core tenets:

  1. Define a clear, value-based product strategy
  2. Create and manage a healthy roadmap

In this post, I’m going to go into depth on the first — why I believe a ‘value-based’ approach to defining a product strategy is most effective and what that actually looks like.

Why value-based?

How do you know if you’re a good person? Most people think about the answer to that question in terms of their values. Values are themes which describe the kind of thing you tend to do over time — how you behave. Values are also used as north stars, which help you guide your actions to be better. They are an ideal that you strive for.

What is the difference between a value and a goal and how do the two relate? Here are some rough-and-ready definitions to start with:

  • Value: An ongoing and lifelong process that defies completion, but provides direction on how you act and behave e.g. be brave
  • Goal: A finite, short term object of satisfaction which is helpful for gaining quick benefits e.g. go to the dentist and get a check-up

I’m really scared of the dentist. So when I arrive at the dreaded surgery, I am guided by my value — be brave. Therefore I know what my goal ought to be; sit down and have a check-up. Don’t run away. Again.

Through practising brave acts (completing goals) over time, I will become brave.

 

ValueVsGoal - How to Define a Product Strategy: The Value-Based Approach
  1. In this example, my goal is driven by my value. However, the goal doesn’t explain the big picture. In order to understand a goal (and if it’s actually worthwhile or not), it needs to be rooted in a worthwhile value.

    If your values are worthwhile, then it follows that your goals will be too.

    Good values = good goals = good person

    So, how do you know if a product is good? Do you see where I’m going with this?

    A lot of people think about the answer to that question in terms of goals. However, as guides for a product’s ongoing purpose, goals are not enough. Therefore, a product strategy needs to be value-based so that it roots the roadmap, which is goal-based, in a clear context.

    Sidenote: The danger of a goal-based product strategy

    Our brains have a tendency to nudge us towards instant gratification when it comes to decision making because goals are more tangible and immediate than values. Watching one more episode on Netflix offers a more easily attainable reward than practising the piano. Arguably the latter is the more valuable pursuit. However, I think most of us mere mortals would let the countdown fall to zero on episode six.

    Similarly, making product decisions based solely on short term goals can sacrifice their long-term health. We need to be aware of when instant gratification is pulling us towards a decision that doesn’t fit with what we want a product to be. Building an awesome product requires saying ‘no’ much more often than saying ‘yes’.

    What is a product strategy used for?

    The purpose of any product strategy is to prevent fragmentation and bad ideas (wastage) from making it into any release. Product strategies must align with the organisation’s broader mission without treading on any toes. They support three core Product Managers responsibilities:

    1. Prioritise what the right thing to do is
    2. Map decisions to a broader context
    3. Keep the team motivated and on task

    To be clear, a product strategy is not a list of features, bugs or ideas. This is where the roadmap and backlog come in. More on the roadmap later.

    As product strategies are resources which require input and use from across the business, there are at least three key areas which it must address to justify the existence of the product:

    • User: how will we make it valuable to the user? Will they be able to use it?
    • Business: how will we make sure that product decisions are aligned with the commercial strategy?
    • Technology: how will we prevent technical debt and create an excellent architecture?
ThreeCores - How to Define a Product Strategy: The Value-Based Approach

What does a value-based product strategy look like?

There are four components of a value-based product strategy:

  1. The overarching vision for the product
  2. Supporting product values
  3. Guiding rules
  4. KPIs & measures

I’ll describe these in turn, including what the purpose and key considerations when creating each is.

Product Vision - How to Define a Product Strategy: The Value-Based Approach

The product vision

At the top is the product vision. This should tell us what the purpose of the product is by answering two questions:

  • What kind of world are we trying to create?
  • How will this product deliver on the business’s vision?

For very large businesses and products, this should be focussed on a product whilst supporting the overarching business strategy. Typically there are a small number of key customer touchpoints which the product strategy will focus on. For a small, product-centric start-up, there will be so much overlap between the business and the product, that the product vision may encapsulate both.

Most product visions fall somewhere in between, supporting commercial objectives whilst retaining a degree of independence from the businesses vision.

In any case, when defining your vision, you need to think long term, specifically in terms of growth. Keep it qualitative and phrased positively. Talk competitively, including how customers will perceive you and what the unique value proposition for them is.

Product values

Directly below the product vision sit the product values. We know that values are themes for how the product should behave, but that defy completion. Values support the vision. Individually, the values are necessary to achieve the vision and they should be jointly sufficient. If you’re nailing all of your product values, then you’re nailing your product vision.

For most products, three or four values is enough. This is because each value has a lot of work to do. Each needs to recognise the three aforementioned areas required to describe the purpose of the product. Therefore, any given value should speak to:

  • User: How the user defines value and how they want to engage with the product
  • Business: The objectives of the business and what the commercial purpose of the product is
  • Technology: The aspirations and constraints of technology and how that will facilitate user and commercial value

When defining the product’s values, think holistically in terms of how to bring the user, business and technology together. Values should align broadly with the organisation’s overall commercial objectives (over-and-above digital). Make sure that values are clearly distinct from one another whilst not being overly broad.

Rules

Each product value has a set of rules specific to that value, split into the three key areas of the user, business and technology. These rules act as guidance on how to bring that value to life in a practical way. They serve to shortcut to the right decision and keep debate healthy and productive.

Rules should describe, in practical terms, how the product values will manifest in the product. They should cover the following for each of the three key areas:

  • User: UX/UI practices to deliver value to the user e.g. visual design, information design, information architecture, usability factors
  • Business: commercial considerations to deliver value to the business e.g. channels, partners, costs, resources, governance
  • Technology: development practises to deliver excellent execution and architecture: e.g. systems, components, integrations, stack

When defining rules, think about how you are actually going to bring the product value to life. It’s useful to do this from other people’s points of view. If you’re a product designer, put yourself in your solution architect’s shoes. If you’re the CCO, think like a designer. You need to understand how the rules for different product values relate to one another to ensure you prevent inconsistencies arising.

Here are some types of rules you can use in the product strategy:

Categoric: Good for when there is a clear objective and are few impediments to accelerating progress

  • Categoric (negative): forbid something specific e.g. never do X
  • Categoric (positive): necessitate something specific e.g. we must/always do X

Normative: Good for when there are constraints and interdependencies which are in debate

  • Normative (negative): encouraging movement away from something e.g. Where possible, you should avoid X
  • Normative (positive): encouraging movement towards something e.g. Where possible, you should create X

Relational: Good for when things get complicated between disciplines to keep track of everything

  • Comparative: recommendation for two or more mutually inconsistent options e.g. Given options of X, Y and Z, choose Z
  • Dependent: show relationship/link between rules across disciplines e.g. if we do X (in UX), then do Y (in tech)’

Rules do not need to be exhaustive for each product value, but should provide sufficient guidance for the majority of likely scenarios or available directions.

KPIs and measures

What gets measured, gets managed. So it should be the factors that make the product a commercial and customer success that get measured. Therefore, choosing KPIs which reflect the overall product vision, and the supporting product values, is of paramount importance.

Each value should have one primary KPI which supports the aim of that value concretely. Other KPIs and measures can be added for depth or support, but this should not become too busy as many common KPIs will be covered as part of the overall analytics strategy. You don’t have to use product-specific measures either. Sometimes commercial, customer or technology measures are more suited to tracking fluctuations towards or away from a product value.

For the primary KPIs, try and choose simple measures which are specific to the value and do not cross over to any great extent with other values. For support KPIs, these can overlap, but the more overlap there is, the harder it will be to track the performance of any individual product value. The aim is to create a simple dashboard with three-to-five KPIs which tell you at a glance how you are tracking towards your product vision.

How does the value-based product strategy relate to my roadmap?

A roadmap is goal-based. Goals have to be rooted in worthwhile values for them to be worthwhile themselves. Product values are ready-made themes for your roadmap.

To get started, you can organise ideas around product values. Then by using the KPIs and the rules, you can objectively assess an idea’s value and decide if it makes it to the roadmap.

Relationship - How to Define a Product Strategy: The Value-Based Approach

For example if an idea ‘integrate a third party data source for product comparison’ is put forward for the roadmap, you can lead a healthy debate with your team and stakeholders on how well this goal fits with the kind of product you are aiming to be; does it align with its values? This discussion will proceed productively with explicit reference to the rules and KPIs for that value.

Your roadmap is a visual, practical guide of how you’re trying to achieve the product vision. So if you have a well constructed, balanced roadmap organised and structured in terms of product values, then you can be confident that what you are doing is the right thing.

Good values = good goals = good product

Takeaways

  • As guides for a product’s ongoing purpose, goals are not enough. A product strategy needs to be value-based.
  • There are four components of a value-based product strategy: The overarching vision for the product, the supporting values, the guiding rules and the KPIs & measures.
  • With a value-based product strategy, you can lead a healthy debate on how well goals fit with the kind of product you are aiming to be; does it align with its values?
  • A roadmap is goal-based. Goals have to be rooted in worthwhile values for them to be worthwhile themselves. Therefore, product values are ready-made themes for your roadmap.
  • Good values = good goals = good product

If you would like to know more about Product Management or talk about how Nodes can support your team, please get in touch.

 

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