The Bedrock of Product Strategy – The Strategic Plan

There’s no getting around it. If you don’t have a well thought out, well defined company strategy then your product strategy will ultimately suffer. Much like how a weak house cannot be strengthened with beautiful siding and paint, the best product strategy won’t strengthen a company with a weak underlying corporate strategy.

The strategic plan codifies the focus and strategy of the company, and serves as the foundation for all other departmental strategies in the organization, including product strategy. It provides the north star that everyone can navigate towards. It’s not only the compass for big decisions (e.g., guiding strategies), but it’s also the compass for all the small decisions that individual contributors are making on a day-to-day basis. The more alignment across the company, the better the chance of reaching the north star.

We’ve worked with many SaaS companies (early stage and mature) that had the initial intent of developing a strong product strategy, but needed to back up and set their strategic plan first. It’s actually a fairly large and intensive effort, involving not just the leadership team but most (if not all) of the company along the way. The first time through can take a month or more, depending on the motivation to get it complete. But, the good news is that future iterations get easier and easier once the foundation is in place, and the ultimate payoff is priceless. 

As a starting point, here’s a rundown of what we think are the critical components of a sound strategic plan, broken into 2 high level areas; Focus and Strategy. For reference, you’ll find a template here. It may be helpful to use the template as visual guidance for the descriptions below.

Establishing Focus

Core Values

The core values reflect the 3-5 values that are held most important by the company and provide high level guidance on decision making and operations. We recommend no more than 5 to force critical thinking about the most essential values, and to maximize the ability for people to remember them off-hand 🙂  If you don’t have your core values established yet, this is an area where it’s especially important to involve the broader company in providing input into the process. Here’s a good list of core value examples from notable brands.

Mission

Your company mission is your core purpose or reason for existing. It should set the trajectory of the company’s value proposition but framed in a way that implies it’s an ongoing effort that will likely never be fully completed. It should also be as simply stated as possible. This is different from vision (described below), which paints a picture of what success looks like in the future and, for which, achievement can reasonably be assessed. A few mission statement examples from well known brands include:

• To spread the power of optimism
• To create and promote great-tasting, healthy, organic beverages
• To give customers the most compelling shopping experience possible
• To inspire humanity – both in the air and on the ground
• To accelerate the world’s transition to sustainable energy

Target Market

Who exactly is your target customer? This is a qualitative and quantitative profile of your target customer that feeds into every area of the company. It’s also a vital component to your subsequent product strategy. The description should be as focused as possible while still rendering an attractive enough market opportunity. If you’re a B2B SaaS company, some example descriptors could be; company size, company stage, company revenues, geography, industry(s), customer type, etc.

Unique Differentiators

These are the top 3 differentiators, when combined together, give your company a distinct value proposition amongst your competitors. Any individual item on its own may not be distinctive, but the package together is special. These could be a combination of existing differentiators and target (not yet established) differentiators. From a product strategy standpoint, these will set the stage for where you’ll go deep and differentiate within the product.

Setting Your Strategy

3 Year Vision

The vision serves as the ultimate goal to be achieved. Without this, you’ll have different people with different definitions of the finish line. As mentioned up above, the vision shouldn’t be confused with mission. The vision should paint a picture of success in the future that the entire company can understand and latch on to. It should be aspirational, but also realistic. As noted above, it should also offer enough concreteness that it’s possible to measure success by the end of the timeframe. The best visions are a mix of quantitative (KPI goals) and qualitative definitions (market opinion / standing, internal vibe, NPS). Also, the timeframe can be set to whatever makes sense for your company. It should be long enough to inspire a bold vision of success but not so long that it loses its urgency.

12 Month Plan

This is your plan of attack for propelling the company on your mission and achieving the vision. At this level, it’s good to set a 12 month strategy that gets revisited every 3 months to assess progress and potential tweaks. This plan has 3 subcomponents; Top Obstacles, Guiding Strategy, and Success Measures.

Top Obstacles

The most important part of the plan is to first define the biggest obstacles currently in the way of achieving success. In other words, “what are the top problem(s) we need to solve?”. This point can’t be over emphasized enough. Your guiding strategy over the next year will only be as good as your ability to identify the biggest hurdles between you and achieving success. Try to keep this to a list of 3 to force yourself to come up with the most important obstacles which, in turn, produces a much more focused strategy. You may find that your #1 obstacle is big enough that it needs to be the only focus for the foreseeable future.

Guiding Strategy

The guiding strategy is essentially your company-level approach for overcoming the obstacles defined above. In a perfect world, you’ll have a “strategic action” or pillar for each top obstacle defined. But, it’s very likely that for larger obstacles, you may need multiple, cross-discipline corresponding strategic actions to properly address the obstacle. For instance, if one of the top obstacles is “We have a lack of focus on our target customer segment which causes high churn rates and an inefficient sales process”, you may have a few supporting strategic actions such as, “Create an optimized product for ” and “Maximize sales to ”. 

Also, keep in mind that each department within the organization should create a corresponding departmental action plan (with KPIs) that will define how they’ll contribute to the company strategy within their own domain (e.g., product strategy). So, try to provide the appropriate, directional guidance here that each department can use to set their more specific action plans.

Success Measures

Finally, we have the quantitative success measures that you’ll use to periodically monitor success of the guiding strategy that’s been put in place (and tie back to overcoming top obstacles).

As a starting point, try to define at least one KPI for each strategic action in the guiding strategy. It’s best to define both the KPI and the measurement goal if you can (e.g., NPS=60). But, for newer KPIs where you don’t have a good sense for the current benchmark reading, it’s ok to simply define the KPI (e.g., NPS) that you’ll monitor until you have enough data to set a reasonable goal. 

Operationalizing Your Plan

Now that you have your company-level strategic plan, you’ll need to operationalize the plan across the organization to work towards the goals. There are two important pieces to this.

Cascade Down Through The Organization

The company-level strategic plan defines the guiding light for “what” needs to be accomplished over the 1 – 3 years. Putting this plan into action requires an ongoing definition of “how” the goals will be accomplished, or the “action plan”.

Referring back to the visual framework mentioned at the top of this post, you’ll see that the action plan starts with the 1-year company action plan and cascades down to quarterly action plans across the company, departments and individuals.

At each level, the goals of the previous level drive the action plan. For instance, the 1-year company-level action plan should be driven off of the  strategic plan’s goals and approach. The company’s quarter-level action plan should be driven off of the company’s 1-year action plan, and the quarterly-level departmental action plans should be driven off the company’s quarterly action plan. This extends down to individuals within the company so that each and every person is ultimately setting their goals and priorities based on the company’s strategic plan. 

Ongoing Assessment and Optimization

Any plan or strategy put in place is essentially an informed hypothesis, and as such, needs to be constantly monitored and re-assessed for both progress and potential optimizations. In my experience, this ongoing process is also best done in a cascading approach, from the leadership level all the way down to the individual level. Here is a high level example of such an approach:

• Strategic plan iteration – Performed once per quarter with the leadership team; goal is to assess progress towards the previous quarterly and 1-year action plans, re-evaluate the strategy and make appropriate updates to the strategic plan and new quarterly / 1-year company action plans.
• Company level assessment – Performed weekly with the leadership team; goal is to assess progress across the current quarter’s company-level goals, and identify issues / mitigation actions.
• Departmental assessment – Performed weekly with each department leader and his / her team; goal is to assess progress across the department’s current quarterly goals, and identify issues / mitigation actions.
• Individual assessment – Performed weekly with each individual and his / her manager; goal is to assess progress towards the individual’s quarterly goals, and identify issues / mitigation actions.