Product development without strategy is like playing poker; you might know the game and have great player awareness, but you're still leaving success to chance.
“Strategy is a process, not an event. Organisations make their strategy 24/7”
Admiral Lord Nelson famously took on a fleet of Franco Spanish ships in 1805. He was under resourced and won the battle sinking 22 enemy ships without losing a single of his own. In fact, during the battle, Lord Nelson actually went against existing practiced war tactics and exploited the common accepted practice of lining up parallel to the opposing fleet by surprising the opposition and splitting his own ships into 2 lines and directing them perpendicularly towards the opposition.
The strategy we talk about in business, fortunately, does not usually see as much blood shed but we often come up against problems which can seem difficult or even impossible to overcome just as Lord Nelson experienced in the example above. It is also clear that the word ‘strategy’ we talk about in business, like so many other words have various synonyms and resulting approaches and can lead to confusion or a lack of clarity over what it means.
I accept that the word strategy can be appended to myriad business functions, but for the sake of simplicity, I have taken the liberty of identifying the main three.
Level 1 - Corporate strategy
Corporate strategy is not just in the domain of big business, it can also be a government strategy such as this one that launched on March 1.
Generally speaking, you see this type of strategic work being carried out by ‘Tier 1’ consultancies who spend time with people at the top of a corporation understanding the business environment and climate and help to evaluate and articulate specific challenges or problems and then go on to create guiding policy or approach for fixing these problems. Strategy should also have coherent, actionable tasks that help deliver on the guiding policy. These 3 core elements make up what renowned strategy expert Richard Rumelt calls the kernel of the strategy. Corporate strategy tends to have more of a focus on the wider situation and more likely impact competitors.
Level 2 - Brand Strategy
Brand strategy concerns itself with how a company represents itself outwardly (and inwardly). Brand strategy embraces and communicates a company's values, vision and purpose and helps identify what the current state of organisation is, where it wants to go and how to get there. Vision is the destination, purpose, is the vehicle to get there. As Jeremiah Gardner says, “branding is a relationship between an organisation and an audience.”
Level 3 - Product Strategy
Whereas corporate strategy concerns the macro, product strategy focuses more on individual products and services (or groups thereof). What exactly are the problems we are trying to solve and how do potential solutions address them? In order to build a successful product strategy you need to consider many critical factors including your customers, the business and technological opportunities available. A good product strategy will help you make carefully considered decisions about the direction of your product based on tested hypotheses about your product, service and/or customers.
Without good product strategy, it doesn’t matter if your high level corporate strategy or brand strategy are amazing, your product will still fail.
When there is lack of product strategy
An example of how a lack of product strategy can cause failure, despite strength in other areas, is the Amazon Fire Phone. According to this article the blooper has caused millions of dollars in losses. Very interesting to see that such a successful company can make such large mistakes, fortunately, it can afford it. When looking into more detail it is easy to see that if Amazon had invested just a matter of a few weeks into some product strategy then losses would have been minimised or better still, could have been successful. For example, what applications are important to the potential customer profiles of phone users?.. and how much are they willing to pay?
A second, well known, case of a product that flopped due to a lack of product strategy is Segway. Understanding how the product is going to be used and what problems it solves is critical for a success of a product. Segway famously over hyped the product before launch and ended up failing to live up to expectations. On top of this Segways were not allowed to be used on public roads and even some pavements and cycle routes were off limits.
“The largest source of waste[...] is building a product that no one will find useful”
Eric Ries, The Lean Startup
These cases could have been avoided had they spent some time to consider their core value proposition in relation to their customer segments and tested their ideas to validate any assumptions they made on the way to market. This is oversimplifying the issues somewhat, but the core message remains.
Even if you have a solid corporate strategy and an established brand, you still need great product strategy.
What products or services can you think of that have failed? And how would you do things differently next time?
If you'd like to chat about how we can help set your product up for success, get in touch.