It seems, many companies, individual business units and managers have trouble differentiating between their business strategy and product strategy. Why is this? Don't products provide the company their business? Could business strategy and product strategy be one in the same? I don't think so. Perhaps we need to clarify what these strategies are, the "101" of strategy.
Strategy is simply a plan of action to achieve a vision. So to create a strategy, you, the business owner or your senior management team, should have a clear vision of where they wish to take the company. Now this sounds easy, but it is often difficult. Senior executives will often want to focus on the business strategy, but often get sucked into product and project nits, and the next thing you know, they are selecting the color scheme for your next marketing email campaign. On the flip side, product managers often want to be more involved in the business strategy, so they can better understand where the company is going, and perhaps leverage that information to acquire resources or add functionality to their product.
A good business strategy first needs to include research. Identify what your company does, and if possible identify what else it realistically could do. Identify what your business will look like in 3, 4 and 5 years. What goals for the business are you wanting to achieve, and what customer needs are you going to address. Once research is complete, one should identify the business objectives, and subsequently decide where to invest to best meet those objectives. Also, keep in mind a good business strategy needs to include how and where you can provide a competitive advantage to your organization.
Your vision could entail becoming a leader or trendsetter in your market through innovation, breaking into new markets, creating new market or perhaps developing new technology to differentiate yourself in the marketplace. It could mean building new technology yourself to differentiate, or obtaining technology through partnership or perhaps even acquisition. One strategy may even include getting acquired.
A business strategy will also include how and or where you sell your product, whether it be selling direct, through reseller or online, or determine whether or not there are international, education or government opportunities. A business strategy may include getting into these new markets, or getting out of old, non-productive ones. It may be making the decision to charge for customization, client service requests or personalization, or simply throwing it in.
The business strategy is important for your senior management and investors to know where the business is heading, and for the employees to know there is clear direction to become a stronger company, and keep their valued employment. Create both a Vision and Mission statement, and refer to it often. Are your business decisions backing up these statements? Create a SWOT Analysis, and track Key Performance Indicators (KPI's) either monthly or quarterly, so you know how you are doing.
Product strategy, is probably equally important to business strategy, but it is slightly different. Like business strategy, the product strategist must have a vision of where they want the product be in 2 or 3 years, and by setting the strategy, you can plot your direction and your progress.
This strategy, once established, creates a product roadmap that will outline subsequent releases. Using the roadmap, the company can focus in increments, developing subsets of feature sets or targeting a specific group of clients, rather than trying to be all things to all clients.
The product strategy needs to define several important factors. First, you should define what you have and thus determine what you are selling. Is there a true need in the marketplace, and are there available customers? Do you have competitors? What is their market share? What is yours? How does your product rate against theirs? Do you offer features theirs does not? Do they offer features you do not?
Next, who are you selling to? Is the market big or large? Does selling to these clients require a long sales cycle? Who are the decision makers? Does your product appeal to the decision makers? If not, why?
What value does your product provide? Does it increase their revenue, increase utilization, generate customers, and promote services? Create a value proposition to position the value your product provides as well as the benefits customers will provide with your solution.
You should also ask the following...What is your product price point? Is it inline with your competitors? Can you charge a premium for your additional features? Andl astly, how will you deliver and distribute your product?
To create a strategy, start with outlining the marketing problems you wish to solve. Interview your target market, understand your competitors, and identify how you will differentiate yourself in the market. Keep in mind your strategy will probably change over time, as it should. The more you learn, the more you can and should adjust, and properly prioritize development of new important features and functionality.
If you have pulled it off, drop us a line.