Three Strategic Mindsets To Crafting a Successful Product Technique | by Product Dave 💡 | Apr, 2023

After I first began as a Product Supervisor, I used to be overwhelmed by the multitude of Product Technique frameworks and instruments accessible. Each time I must create a Product Technique, I’d query myself:

• Ought to I take advantage of the Alternative Canvas, Lean Canvas, or Enterprise Mannequin Canvas?
• What in regards to 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 am 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 technique!)

Then I got here throughout these sensible 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 just nearly 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:

1. Income mindset: “Purpose to make long-term, above-industry earnings”
2. Powers mindset: “Create a number of defensible powers to your product”
3. Optimistic-Sum mindset: “Increase the market by means of 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 traders.

The times of progress in any respect price is gone. An unprofitable product with out a view to profitability is a cash furnace.

As a PM, you will need to perceive the revenue margins of the {industry} you need to play in. Some industries have high-profit margins, akin to Finance, Railroads or utilities, and others with low-profit margins, akin to Airways, Actual-estate, and Shopper Electronics.

Whenever you’ve discovered a horny market, you have to concentrate on a selected set of consumers that gives you above-industry revenue margins. These clients will offer you the money stream to out-invest your opponents.

Do not be afraid to let your opponents take much less worthwhile clients; marketshare doesn’t at all times imply good returns. This is the reason Apple has a 14% cellular marketshare however makes $96bn web earnings a 12 months. In comparison with Samsung, it has a 20% cellular marketshare however solely makes $29B a 12 months.

The second key phrase is Lengthy-Time period. You will must assume long-term and take into account how one can earn above {industry} earnings in 3–5 years. Then work backwards to plan while you need to drive progress, engagement and monetisation.

Income, Bills, ARPU, Revenue Margin, and different product metrics are all levers you possibly can pull to attain long-term, above-industry earnings.

For instance, You would possibly need to develop your customers within the first 2 years, optimise your conversion in 12 months 3, and enhance the worth to create above-industry earnings in years 4 to five. Or you possibly can flip the plan round and make earnings first, then increase progress. It’s as much as you to determine.

“Product Powers” are defensive moats that make it tougher for purchasers to change to opponents. The extra energy you will have, the extra defensible your product might be.

Within the e-book 7 Powers: The Foundations of Enterprise Technique — the writer Hamilton Helmer states there are 7 completely different moats you possibly can create in a enterprise. These are:

1. Community Results: Community results consult with the place the worth of a services or products will increase as extra individuals use it. A basic instance of a enterprise with sturdy community results is TikTok, which turned extra helpful to customers as extra individuals joined the platform. Different examples embrace on-line marketplaces like Fb, eBay and Uber.
2. Scale Economies: Scale economies consult with the associated fee benefits a enterprise positive aspects because it will increase manufacturing or output. Costco is a superb 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 way of their massive membership base, they can negotiate decrease costs for his or her clients and win over their opponents.
3. Switching Prices: Switching prices consult with the prices {that a} buyer incurs once they change from one product to a different. Microsoft, for instance, has made it tough for enterprise corporations to change to Google Docs by making a defensible place with its Microsoft Workplace merchandise.
4. Branding: Branding refers to creating a robust identification or repute for a product. Apple is an organization that has demonstrated sturdy branding energy with its concentrate on high-quality merchandise with a easy person expertise. This has allowed Apple to cost premium costs and preserve a loyal buyer base.
5. Cornered Sources: Cornered sources consult with the possession or management of a important useful resource that’s tough for opponents to copy. Google is an organization that has leveraged its energy of search algorithms to create a defensible enterprise mannequin. Despite the fact that ChatGPT is an rising risk, Google nonetheless owns 95% of the Search market.
6. Course of Energy: Course of energy refers back to the potential of an organization to create environment friendly and efficient processes which can be tough for opponents to copy. An excellent instance of course of energy is Tesla’s Gigafactories. These elements have allowed the corporate to supply inexpensive, high-quality electrical autos quicker than its opponents.
7. Tradition: Tradition refers back to the norms, values, and beliefs that form the behaviour of people inside an organisation. Firms 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 a neighborhood. This technique has allowed Airbnb to distinguish itself from opponents within the crowded on-line journey area and construct a loyal buyer base.

As a Product Supervisor, you have 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 need to launch with?
• What powers do you need to create as you develop?
• What powers do you need to create as you hit maturity?
• And what moats do you need to create as you hit the decline section?

The extra powers you will have, the extra defensible your product might be.

After we create merchandise, our groups are sometimes requested to outrival comparable merchandise available in the market. “The following product have to be higher and cheaper than our opponents!”

Nevertheless, “higher, cheaper and shinier” shouldn’t be a technique 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 at all times discovered, and people have at all times discovered methods to innovate. In actual fact, 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 sport. (By increasing the GDP of the world)

It is like musicians in a band. Every artist brings in their very own model 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 client wants for simplicity and reliability of communication in rising markets.
• Fb Messenger solves the issue of chatting with common associates or acquaintances.
• Telegram solves the issue of chatting in safe public discussion groups
• Snap is all about sharing moments along with your shut associates

All of those apps have a selected use case and don’t compete immediately with one another.

See your opponents as inspiration and potential collaborators. Chorus from competing on options or value, as that is a downward spiral.

Elevate your considering to resolve buyer wants that may broaden the market. In the event you 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:

1. Income mindset: Make long-term, above-industry earnings
2. Powers mindset: Create a number of defensible powers to your product
3. Optimistic-Sum mindset: Increase the market by means of positive-sum competitors

When you prepare your thoughts to assume from first rules, you’ll change into a real Product Master very quickly.