Playing to Win by A.G. Lafley and Roger L. Martin
Good Strategy, Bad Strategy by Richard Rumels

Product strategy is a set of choices informed by product vision and company objectives. A good strategy consists of a diagnosis, guiding policy, and coherent actions. Strategy development requires imagination and creativity; a good strategy is not the result of detailed analysis.

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Why is product strategy so hard?

“What is product strategy?” is rivaled only by “What is a roadmap?” for top spot on the product management post leaderboard. Product strategy tends to be mysterious because it is typically associated with executive leadership, large-scale bets, and major inititiaves. We all aspire to be “strategic” without always having clarity on the destination. As a result, there is much prestige in strategy but little practical understanding.

Most writing about product strategy focuses on what it’s not. Only a few posts and books present actual real-world strategies that were used in companies. Most examples are simplified and extrapolated hypothetical examples. Consequently, strategy is hard to visualize and practice.

Common themes in product strategy

Product strategy writing illustrates that strategy is the link between vision and roadmaps / plans. This perspective shows that a guiding vision must be present to inform strategy. Similarly, strategy guides planning and roadmaps. Because it lives in this middle, space strategy is often confused with objectives, goals, and plans.

Product strategy is commonly portrayed as a package: company vision/mission, company business strategy/objectives, ideal customer profile (where to play), unique value proposition (how to win), and roadmap/initiatives. Company vision, business strategy, and business objectives are key inputs to product strategy. A product strategy supports and helps achieve the broader company vision and business objectives.

There’s no formula for product strategy that applies to every scenario; however, there are some common approaches.

Good Strategy, Bad Strategy and Playing to Win both provide key definitions and concepts for product strategy development. Rumelt approaches strategy as a general concept while Lafley and Martin write specifically about business strategy (in the CPG industry).

Strategy is a response to a problem or opportunity

A strategy is not built in a vacuum–context is a key element of its definition. Rumelt stresses that you can’t have a strategy without a problem. Saying that you will build a mobile app without any context on why and what is necessitating this choice leads to no strategy. Martin writes that a strategy is set against an aspirational future state.

Strategy is a set of choices and actions

The hard part of product strategy is linking decisions to opportunities and challenges rather than picking solutions. Strategic thinking hones in on the few actions that are chosen as a response to internal or external factors. Deciding what the relevant elements in your environment are and which of the many challenges you face is most important is one of the keys to good strategy development.

Strategy leads to a future state

Strategy consists of a set of choices in response to an evaluation of the current environment or to an imagined future. Honing in on the problem to be solved or the aspirational vision is key for development of a winning strategy.

The kernel of strategy: diagnosis, guiding principles, coherent actions

A strategy is a design to solve a high stakes challenge

Rumelt’s book provides the clearest definition of a strategy available. He defines strategy as consisting of a kernel: diagnosis, guiding policy, and coherent actions. He is mostly concerned with strategy as a concept (apart from which domain it is applied in).

The diagnosis is the key. Rumelt says the #1 problem with what people think are strategies is that they don’t include any type of problem. He says that goals, objectives, and vision which masquerade as strategy are just “fluff”.

Diagnosis

The diagnosis is the identification of a key problem in the current environment. There will be many problems to consider, but selecting the most important one(s) is the key to product strategy development. A diagnosis may consist of insight about business objectives, market conditions, competitive dynamics, or customer needs.

Guiding Policy

Based on the diagnosis, the guiding policies are the directional choices that will underpin future actions. These serve to align the plans and activities defined by the coherent actions.

Coherent Actions

Coherent Actions are the actions that will be taken in alignment with the guiding principles to achieve the product objectives. This is the plan.

Market Power / Strength

Rumelt focuses on the application of a strength against a weakness. This requires identifying a power you possess that can be exerted against a competitor or opportunity. Sources of power are unique value propositions, moats, and product capabilities and attributes. Lafley and Martin write that you must answer “how will we win?”

Bad Strategy

Rumelt provides many examples of what makes bad strategy. Primary among these is the absence of a problem. Strategy must be formulated in the context of some problem or insight about the market and the customer need(s) you are serving.

Good strategy provides focus and says “no”. If there are no choices, there is no strategy. Steve Jobs is attributed with saying that strategy is not about saying to “no” to bad ideas, but about saying “no” to great ideas.

Where to play and how to win

Where to play

Roger Martin emphasizes the selection of where to play as one of the two keys to strategy. This choice of customer type and industry definition is typically made by the executive team.

How to win

Your unique value proposition or moat is commonly used in strategy to focus product efforts.

Imagining the future

If you’re taking a sample from the past, it is not representative of what you’re trying to understand, which is the future…What Aristotle said [is that]…you must imagine possibilities and choose the one for which the most compelling argument can be made.

Envisioning a future state of your product and market is key to developing your strategy. In product development this the product vision. Martin stresses that creating this vivid and compelling aspirational vision is key to winning.

[strategy is about] what might be; and figuring out how to produce what might be even though you cannot prove in advance with analysis that it’s a good idea. [If you are competing against] somebody else who thinks of strategy as involving a lot of…imagination (imagine what might be and then figuring out how to produce what might be..even though you cannot prove in advance with analysis that it’s a good idea) They will beat you…they will outflank you.

Great analysis does not produce great strategy

This is Martinx says “do not think of strategy as an analytical exercise.” By using analysis to formulate a strategy, Martin says will result in a strategy that will produce the status quo “or something very close to it.”

The opposite approach is to use imagination to imagine what might be and then use strategy to produce what might be. Martin says that even though a strategy cannot be proven correct through analysis, anyone using their imagination to create a compelling future vision will beat you.

The output of a strategy is not a plan

Martin says that the output of strategy is not a plan; rather, it’s a set of choices. It is tempting to dive right into planning because that activity results in tangible activities. Everyone is comfortable with planning; creating a strategy is not comfortable because it involves finding key insights, making hard choices, and conflict as decisions are made.

Strategies are choices (to do some things but not others)

A strategy is a choice a company makes to do something that compels customers to select that company’s product or service over others.

A strategy should be “the few key choices that are going to be different tomorrow than they are today”

“Strategy is an attempt to influence the variable you don’t control”. For Martin, the variable you don’t control is what the customer does.

Testing your strategy

Saying “no”

To which opportunities are you “no”? Since strategy is set of choices, there must be something that is not being done or chosen currently. If all options are a “yes” then there is no strategy in play.

What are your choices? What are you doing differently than before?

Martin says: “I don’t care about any planning document…I just want the few key choices that are going to be different tomorrow than they are today”. The gap between the current and future state will indicate what must be done differently to achieve the desired long term objective.

What’s happening in your organization today is the product of a whole series of choices that you’ve made in the past…that produces a set of outcomes…Any gap between that set of outcomes and what you wish they were..is a result of a set of choices that you’ve made and acted on…You should think about strategy as a tool for making a set of choices that are that are different than the current choices that are aimed at closing whatever gap you experience

Don’t aim for alignment

If a strategy isn’t controversial or uncomfortable, it likely is not a winning move. Martin emphasizes the competitive nature of strategy and the need to find an energetic direction rather than more of the same. The discomfort with a lack of complete alignment indicates a higher risk (and ideally higher reward).

The opposite of a good strategy is an equally valid strategy

Rumelt and Martin both agree that the test of a strategy is whether the opposite of that strategy is an equally valid choice. For example, great customer service or profitability is not a strategy because poor customer service and losing money will result in business failure. The crux of a good strategy is a clear choice that addresses a current state problem or future state opportunity.

Strategy is focused on outputs and planning is focused on inputs. People love planning because it tends to be about the things that you control. Strategy…focuses on outputs: here’s the position that we are striving to achieve in the marketplace.