From vision to reality: How to create a strong product strategy

A good product strategy is the heart that circulates blood and gives life to any successful product development process.

Where the product vision describes the long-term goal, the strategy is the tool that shows us how we get there. Without a clear product strategy, teams risk working in different directions, making inconsistent decisions and wasting resources on initiatives that do not contribute to the overarching vision.

The product strategy’s primary function is to create a cohesive plan, that connects the vision to concrete initiatives and measurable results. It guides the team in prioritizing and allocating resources, so they can focus on the most valuable activities.

The Product Leader plays a central part in developing and executing the product strategy. By Product Leader, I mean the one in charge of the product, whether the title is Product Owner, Product Manager, Head of Product etc.

As a Product Leader, you are responsible for:

• Analyzing the market and identifying user needs, competition and trends.
• Securing alignment between the company’s overarching goal and the specific goals of the product.
• Prioritizing areas of effort and making sure that the right initiatives are completed at the right times.
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A strong product strategy is important, because it:

• Creates focus: It helps sorting through the numerous possibilities and focuses efforts on the initiatives of the greatest value.
• Supports decision-making: When the team is faced with difficult decisions, the strategy serves as a guiding star.
• Handles insecurity: The market is constantly changing, and the strategy has to be flexible enough to adapt to new contexts and insights.
• Connects teams and stakeholders: A clear strategy makes sure that everyone is working towards the same goal and understands how their efforts are contributing towards the whole.

In a world where change is a constant, a product strategy isn’t luxury – it’s a necessity. It makes sure that the team has a clear direction and a plan for navigating complexity and challenges, while creating value for the users and the company.

The product strategy’s primary function is to create acohesive plan, that connects the vision to concrete initiatives and measurableresults. It guides the team in prioritizing and allocating resources, so theycan focus on the most valuable activities.

Product vision vs. Product strategy

To understand product strategy, it is essential to differentiate between product vision and product strategy.

The two terms exists as two parts of the same whole, and it is often difficult to talk of one without the other.

A product vision is the long-term goal that paints a picture of what the world looks like when the product has reached its desired effect. The product vision inspires and creates direction by making sure the whole team is working towards a shared goal. The product vision can also be described as the ’destination’ – where we are going.

The product strategy on the other hand, is the bridge between the vision and the actual actions bringing the vision into fruition. Where the vision answers why and what, the strategy deals with the how. It translates the big ambitions into priorities, initiatives and measurables results. Therefore, the product strategy can be described as the ’road towards the goal’ – that is, a description of how to reach the destination.
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Developing a product strategy takes a clear understanding of both the market, and the internal resources.
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The strategy has to answer:

• Which target groups do we need to focus on, and what needs do we need to meet?
• How do we differentiate ourselves from the competition?
• Which strategic initiatives will bring us closer to our vision?
• How do we measure success as we go?

The strategy is dynamic – it needs to be adjustable when market conditions change and as new learnings emerge. A strong product strategy not only provides direction but also establishes a framework for prioritization and resource allocation.

Context matters

Before delving into to the development of a product strategy per se, it is critical to understand the context, ‘the product’ of the strategy operates in. Is our product an app or other digital product, that delivers value straight to the user (either internally or externally), then the product strategy is more or less the same as the business strategy.

That is, if your product, for instance, is recommendations or search functionality on Mofibo, then your product strategy will be pretty similar to the business strategy, since your product is the business. It is what the business is capitalizing on. Here, you ’own’ the user experience and the value that is created. It includes understanding market needs and how the product is creating value, and how it should be scaled.

On the other, if the product is a digital solution supporting an existing business – e.g. a logistics system, a B2B platform or self-service to insurance – the focus is altered.

Here, your product is more of an enabler of, or cooperating with, another product and your product strategy is more about supporting and facilitating the business strategy for this product area. This understanding of context is crucial, because it shapes how we define success and the initiatives needed to achieve it.

The three strategic gaps

So what is good strategy? And what should we pay attention to in order to secure successful execution of that strategy?

In the book, ’The Art of Action’, Steven Bungay describes three key gaps that highlight where strategy often fails, and how we can circumnavigate these traps.
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The three gaps are:

• Knowledge Gap
  This gap arises when there is a difference between what we think we know and what we actually know about our market and customers. Many strategies suffer from assumptions that are never validated. It is therefore crucial to use data and customer feedback to continuously test and verify our hypotheses.
• Alignment Gap
  This gap arises when there is a lack of cohesion between the strategic goals and the actions that are executed on an operational level. Employees can lose their sense of direction, if they don’t understand how their daily work contributes to the overarching goal. This gap demands clear communication and cohesion between strategy and execution.
• Effects Gap
  This is about the difference between expected and actual results. Even if the strategy is solid, market reactions or internal challenges can cause outcomes to deviate from expectations. Therefore, continuous measurement and evaluation are essential to adjust the strategy when necessary.

By consciously addressing these gaps, you can create a more robust strategy that not only plans for success but also ensures the ability to learn and adapt along the way.  

As a product leader, it is essential to work iteratively and systematically with the validation of the assumptions and initiatives that will inevitably be part of the strategy.  

At the same time, making others aware of these assumptions and the need for validation ensures that these insights and learnings flow from the execution team to the leadership level, minimizing both the ‘Knowledge Gap’ and the ‘Effects Gap.’  

The structure of the strategy, the inclusion of the team and stakeholders, and continuous communication help minimize the ‘Alignment Gap,’ ensuring cohesion and a strong sense of connection within the team and across stakeholders.

As a product leader, it is essential to work iteratively and systematically with the validation of the assumptions and initiatives that will inevitably be part of the strategy.  

Lifecycle: Pivotal for tactics and goals

Just as the 'character' of our product is crucial for shaping the product strategy, it is equally essential to consider where the product is in its product lifecycle.

This has a fundamental impact on which ’tactic’ we should adhere to, and which goals we are chasing.

The product lifecycle typically consists of four phases:

Introduction

In this phase, the product is launched, and the focus is on generating awareness and acquiring the first users. It is crucial to gather feedback and validate the product's core features. The goal is to achieve product-market fit, ensuring that the product delivers real value to users.  
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The primary objective is validation, with a strategy often centered around iteration and pivoting to refine the product and maximize value. Key metrics are typically more qualitative, focusing on aspects such as customer satisfaction and adoption.

Growth

The product is starting to gain momentum, and focus is shifting towards scaling and market expansion. Here, it is important to optimize the user experience and handle rising demands for the infrastructure. Tactics can be far more marketing-focused, and the goals are oriented more towards growth and users.

Maturity

The product has achieved a stable user base and generates solid profit. Focus is on optimization and retention of customers. Competitive pressure may increase, making it essential to further differentiate and eliminate pain points in the product.  

The key tactics in this phase are optimization, with goals typically focused on incremental improvements across workflows and user experiences.

Decline

The market may be saturated, or the technology outdated. At this stage, decisions must be made on whether to renew the product, find new markets, or phase it out.  

Each phase requires different strategic priorities. By identifying where the product is in its lifecycle, the strategy can be adjusted to maximize value in the current phase.  

Equally important is ensuring that stakeholders and the team share this understanding. The role of a product leader varies significantly depending on whether you are introducing a new product or developing a strategy to ‘sunset’ and replace a product due to declining growth or the need for a technological shift.

Competetive analysis

Understanding the competitive landscape is a key part of product strategy. A competitive analysis not only helps identify where the product stands in relation to competitors but also uncovers new opportunities for differentiation.  
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An effective tool for this is the Strategy Canvas, which is part of the Blue Ocean Strategy. This tool enables you to map and compare key market factors such as price, functionality, customer service, and brand strength. By analyzing where competitors place their focus, you can identify areas where your product can deliver unique value.

E.g. If competitors primarily compete on price, your strategy can focus on delivering a superior user experience or innovative features that justify a higher price.  
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Competitive analysis should be an ongoing process. The market is constantly evolving, and so are competitors' strengths and weaknesses. By staying informed, you can continuously adjust your strategy and ensure that you maintain a competitive advantage.

Hardest Problems

Your product strategy has to reflect the ’hardest’ or most difficult problems faced in your product area. It could be about how your product area supports one or more of the company's biggest challenges or outlining which problems need to be solved before the product vision can be realized.  
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Solving the hardest problems is often the difference between success and failure. These challenges may vary from product to product, but some common themes include:
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• User engagement: How do we make sure that the users don’t just try the product, but keep on using it?
• Technological barriers: How do we handle scaling challenges or complex integration demands?
• Market differentiation: How can we clearly distinguish ourselves from competitors?
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The ‘coaching’ question to identify the toughest problems could be:

• What is the company most focused on solving just now?
• What is most critical for the company to solve in the near-future?
• What is keeping us from bringing the product vision to fruition right now?
• What is the biggest challenge we foresee in the short and medium term in delivering the value to the customer/user that we aim for?

By identifying and focusing on the most pressing problems, the organization can allocate resources where they make the greatest impact.

Target audience

The target audience is the core of any product strategy. A deep understanding of who the product is for and what their needs are is essential for success.

‍The primary target audience consists of the product’s direct users. These users drive the highest engagement and often define the product’s core functionalities. For example, small business owners might be the primary audience for an accounting app, while marketing professionals could be the key users of a campaign management platform.

The secondary target audience includes other users who are important to support but are not the main focus. In some cases, there may even be two primary audiences. For example, in marketplace models, both buyers and sellers are crucial users. However, it is essential to distinguish what is being built for whom and, most importantly, to think in sequence—who should be prioritized first, and what can wait until later.

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Through methods such as personas, customer journeys, and interviews, we can develop a deep understanding of the target audiences and design solutions that precisely address their needs and frustrations.  

If you want to learn more about working with user personas, consider reading this article: You’re using personas/user types, right?

Strategic initiatives

Strategic initiatives are the fundamental efforts that drive the strategy forward. These initiatives can range from the development of specific product features to larger organizational transformations.  

Typically, strategic initiatives take the form of‘large epics’ or ‘clusters’ of features that require effort over one to two quarters. This means we are not working at the user story level but taking a high-level perspective to map out the stepping stones needed to reach our product vision—our destination.  

Examples include:

• Development of AI driven functionality to improve the user experience.
• Implementation of a new technological foundation for better scalability.
• Integration of a third-party system.
• Developing front-end /user interface for persona 1
• Developing functionality X, Y, Z

Each initiative should be connected directly to the overarching goals and carefully evaluated for its effect on both short and long term.

Roadmap and plan

A strong product strategy requires a clear visualization of how strategic initiatives unfold over time. This is achieved through roadmaps and plans, which serve as communication tools and guiding stars for the team.  
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Roadmaps can take various forms, and we typically distinguish between roadmaps and plans, where roadmaps are more strategic and high-level, while plans are more tactical and detailed.  
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A common pitfall is mixing the two, making the strategic high-level plan overly detailed with specific dates for feature releases, etc.  
In most cases, it is necessary to use two distinct artifacts:
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1. A more strategic road map for communicating tostakeholders.
2. A plan for communicating with the team and other teams,or stakeholders, where details and dependencies are necessary to identify.

Roadmap

A roadmap is a high-level visualization that outlines the sequence of strategic initiatives. It helps set expectations and align different stakeholders.
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There are several roadmap formats, each with its own advantages:
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Gantt chart: A classic project management method that displays tasks and milestones on a timeline. Suitable for projects with many dependencies.

Outcome-based roadmap: Instead of focusing on features or deliverables, this format prioritizes results and the impact of the work. Examples include: “Improved user engagement” or “Reduced support demand.”

Story map: Displays product development through user journeys. This format helps in understanding how features support specific user needs and experiences.

Now, next, later (Radar/Wave chart): Used to illustrate focus areas and priorities over time, typically divided into different waves or phases.

Plan

While roadmaps provide the big picture, plans focus on the detailed steps that need to be taken in the short term. A plan may cover specific sprints or quarterly goals and includes clear deadlines, responsible teams, and expected outcomes.

By using both a roadmap and a plan, a balanced approach is ensured between long-term strategy and short-term execution.

A strong product strategy requires a clear visualization of how strategic initiatives unfold over time.

Setting goals: OKR as a framework

Goal setting is a key factor in staying on course with a product strategy. OKRs (Objectives and Key Results) are one of the most effective frameworks, ensuring that goals are both inspiring and measurable. Goals can be set for strategic initiatives as well as for the team’s work, for example, as quarterly objectives.

Objectives define the desired outcomes, often in the form of overarching goals that drive motivation and direction. An example of an objective could be: "Become the leading platform for small businesses in the Nordics."  
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Key Results specify how we measure progress toward the goal. These should be concrete and quantifiable, such as:

• “Increase number of active users from 10.000 to 15.000 within 6 months.”
• ”Reduce churn rate with 20 % in that same period.”
• ”Onboard the first user to the new solution”
• “Validate primary use cases for future functionality”

OKR creates transparency and alignment across the organization. It isn’t just a tool for setting goals, but also a way of ensuring that everyone knows how their work is contributing to the company’s success.

For more inspiration, you can read this article about OKR

Key Risks

Every strategy involves risks. Some of the greatest dangers arise when the strategy is based on unvalidated assumptions. This is precisely why Bunguy talks about the ‘Effect Gap’—our initiatives rarely achieve the exact impact we predict. Therefore, it is crucial to work proactively to identify and address key risks.
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Risks can range from market conditions to technological challenges. A useful tool to supplement this process is a Risk Matrix, which visualizes risks in a 2x2 matrix based on their potential impact and level of uncertainty.

Examples of key risks:

• Market: “Will the customers adopt the product fast enough?”
• Customers: ”Can we create a user experience that can actually compete with the users’ current alternative?”
• Technologi: “Can we scale the system, if growth exceeds our expectations?”
• Operational: “Do we have the right resources and teams to execute the strategy?”

By focusing on the most critical and uncertain risks first, you can take an exploratory approach and build evidence to ensure the strategy is on the right track.

Principles

Product principles are fundamental for maintaining consistency in the development process and ensuring that the product stays true to its vision. These principles serve as guiding rules for decision-making in product development.

Product principles

This defines what should be developed in-house and what can be outsourced or built on third-party software.
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For example:

• “Core functions that create unique value for our users, which needs to be developed internally.”
• “Standardized components as payment modules or login systems can be based on third-party software.”

One way to derive product principles is by setting up dilemmas and choosing what the product should be more or less of. This can be done collaboratively with the team and stakeholders to ensure alignment on how the product and its characteristics are envisioned.

Experience principles/ UX principles

These principles guide how the users experience the product:

• “The product has to be intuitive and easy to use, even for first-time users.”
• “We prioritize quick response and performance to ensure a smooth experience.”

By establishing clear principles, a strong foundation is created for the product’s further development, ensuring a focus on both quality and consistency.

Is that really it? 😊

We have now walked you through a range of elements that a product strategy can include and be built around.  
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However, this is by no means a definitive checklist—there may be even more perspectives to consider, such as go-to-market strategies, business models, investment cases, and more.  
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But remember, the best product strategy is not the most comprehensive one—it’s the one that is used, understood, and translated into action!

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