After I first began as a Product Supervisor, I used to be overwhelmed by the multitude of Product Technique frameworks and instruments obtainable. Each time I must create a Product Technique, I’d query myself:
- Ought to I exploit the Alternative Canvas, Lean Canvas, or Enterprise Mannequin Canvas?
- What concerning the Product Imaginative and prescient Board or the Product Technique Canvas that everybody talks about?
- How do all these match into the GLEE framework from Gibson Biddle?
- Or ought to I’m going extra conventional and go together with the three Horizons framework?
I bear in mind feeling so anxious that I’d usually skip making a product technique and simply let my stakeholders name the pictures. (Spoiler alert: that’s not the way you create a superb technique!)
Then I got here throughout these smart phrases of Richard Rumelt, the writer of Good Technique/Unhealthy Technique:
“Good technique…doesn’t come out of some ‘strategic administration’ instrument, matrix, chart, triangle, or fill-in-the-blanks scheme.”
I realised that I have to study the mindset behind the instruments. In different phrases, the hammer is barely pretty much as good because the craftsman wielding it.
So listed below are 3 strategic mindsets that I’ve learnt over time. These mindsets have allowed me to change into much less reliant on frameworks and return to first-principles considering.
I name these the 3Ps of Strategic Mindset:
- Earnings mindset: “Goal to make long-term, above-industry income”
- Powers mindset: “Create a number of defensible powers to your product”
- Optimistic-Sum mindset: “Develop the market by positive-sum competitors”
Now let’s dive into these mindsets in additional element…
A product wants to supply long-term, above-industry revenue for the corporate and its buyers.
The times of progress in any respect value is gone. An unprofitable product with no view to profitability is a cash furnace.
As a PM, you could perceive the revenue margins of the {industry} you wish to play in. Some industries have high-profit margins, reminiscent of Finance, Railroads or utilities, and others with low-profit margins, reminiscent of Airways, Actual-estate, and Client Electronics.
While you’ve discovered a gorgeous market, it’s worthwhile to concentrate on a selected set of consumers that gives you above-industry revenue margins. These clients will give you the money circulate to out-invest your rivals.
Do not be afraid to let your rivals take much less worthwhile clients; marketshare doesn’t all the time imply good returns. Because of this Apple has a 14% cell marketshare however makes $96bn internet revenue a yr. In comparison with Samsung, it has a 20% cell marketshare however solely makes $29B a yr.
The second key phrase is Lengthy-Time period. You will must suppose long-term and contemplate how one can earn above {industry} income in 3–5 years. Then work backwards to plan whenever you wish to drive progress, engagement and monetisation.
Income, Bills, ARPU, Revenue Margin, and different product metrics are all levers you may pull to attain long-term, above-industry income.
For instance, You would possibly wish to develop your customers within the first 2 years, optimise your conversion in yr 3, and enhance the value to create above-industry income in years 4 to five. Or you may flip the plan round and make income first, then enhance progress. It’s as much as you to determine.
“Product Powers” are defensive moats that make it more durable for patrons to change to rivals. The extra energy you may have, the extra defensible your product shall be.
Within the e book 7 Powers: The Foundations of Enterprise Technique — the writer Hamilton Helmer states there are 7 completely different moats you may create in a enterprise. These are:
- Community Results: Community results discuss with the place the worth of a services or products will increase as extra folks use it. A basic instance of a enterprise with sturdy community results is TikTok, which grew to become extra priceless to customers as extra folks joined the platform. Different examples embody on-line marketplaces like Fb, eBay and Uber.
- Scale Economies: Scale economies discuss with the associated fee benefits a enterprise beneficial properties because it will increase manufacturing or output. Costco is a good instance of an organization that has leveraged scale economies to create a defensible enterprise mannequin. Costco’s moat comes from its direct-to-consumer wholesale mannequin. By their massive membership base, they’re able to negotiate decrease costs for his or her clients and win over their rivals.
- Switching Prices: Switching prices discuss with the prices {that a} buyer incurs after they change from one product to a different. Microsoft, for instance, has made it troublesome for enterprise firms to change to Google Docs by making a defensible place with its Microsoft Workplace merchandise.
- Branding: Branding refers to creating a powerful identification or status for a product. Apple is an organization that has demonstrated sturdy branding energy with its concentrate on high-quality merchandise with a easy consumer expertise. This has allowed Apple to cost premium costs and keep a loyal buyer base.
- Cornered Sources: Cornered sources discuss with the possession or management of a essential useful resource that’s troublesome for rivals to duplicate. Google is an organization that has leveraged its energy of search algorithms to create a defensible enterprise mannequin. Though ChatGPT is an rising risk, Google nonetheless owns 95% of the Search market.
- Course of Energy: Course of energy refers back to the skill of an organization to create environment friendly and efficient processes which can be troublesome for rivals to duplicate. A great instance of course of energy is Tesla’s Gigafactories. These components have allowed the corporate to supply inexpensive, high-quality electrical autos quicker than its rivals.
- Tradition: Tradition refers back to the norms, values, and beliefs that form the behaviour of people inside an organisation. Corporations like Airbnb have fostered a tradition of neighborhood and belonging. They created a platform the place travellers can join with native hosts and expertise a vacation spot like an area. This technique has allowed Airbnb to distinguish itself from rivals within the crowded on-line journey house and construct a loyal buyer base.
As a Product Supervisor, it’s worthwhile to stack a number of moats over the lifecycle of your product. You possibly can combine and match these powers collectively to create an influence stack.
Take into consideration the next:
- What powers do you wish to launch with?
- What powers do you wish to create as you develop?
- What powers do you wish to create as you hit maturity?
- And what moats do you wish to create as you hit the decline section?
The extra powers you may have, the extra defensible your product shall be.
After we create merchandise, our groups are sometimes requested to outrival related merchandise out there. “The following product have to be higher and cheaper than our rivals!”
Nonetheless, “higher, cheaper and shinier” just isn’t a method however a Zero-sum mindset. The zero-sum mindset assumes markets are finite, sources are restricted, and it is a winner take all market. However that’s not true in any respect.
New markets are sometimes created, new sources are all the time discovered, and people have all the time discovered methods to innovate. The truth is, our GDP per capita has been rising exponentially over the previous 50 years.
A greater mindset to take is a Optimistic-sum competitors mindset. Optimistic-sum competitors means every rival that enters the market is increasing the addressable marketplace for you. You need not win by crushing your rivals. You win by creating your personal recreation. (By increasing the GDP of the world)
It is like musicians in a band. Every artist brings in their very own fashion and captivates a selected viewers. It is a win-win for everyone.
Chat Apps are nice examples of a positive-sum competitors:
- WhatsApp solves the shopper wants for simplicity and reliability of communication in rising markets.
- Fb Messenger solves the issue of chatting with normal associates or acquaintances.
- Telegram solves the issue of chatting in safe public discussion groups
- Snap is all about sharing moments together with your shut associates
All of those apps have a selected use case and don’t compete straight with one another.
See your rivals as inspiration and potential collaborators. Chorus from competing on options or worth, as that is a downward spiral.
Elevate your considering to resolve buyer wants that may increase the market. For those who assist everybody to develop the pie collectively, you will undoubtedly get a bigger share.
In order that’s it — these are the three strategic mindsets I’ve learnt to assist me develop a greater Product Technique.
Keep in mind, the important thing to mastering Product Handle is: Mindset -> Course of -> then the Instruments. So the following time you fill out a Product Technique template or check out a brand new instrument, bear in mind these 3Ps of Strategic Mindset:
- Earnings mindset: Make long-term, above-industry income
- Powers mindset: Create a number of defensible powers to your product
- Optimistic-Sum mindset: Develop the market by positive-sum competitors
When you prepare your thoughts to suppose from first rules, you’ll change into a real Product Master very quickly.
