How to set product strategy + examples and templates
Last updated: March 2024
The best products start with a clear strategy that is customer and market driven. And the technology builders know how to make each unique stakeholder feel a sense of higher purpose.
Brian de HaaffAha! co-founder and CEO
Who are your customers? What problems will your product solve? What opportunities and threats do you face? What will you do differently? How will you stand out in a crowded market?
Product strategy defines what you want to achieve and how you plan to get there. It defines the "why" behind the product. Strategy happens before you dive into the detailed work of building your product roadmap and developing new features — what we call the "what," "when," and "how."
A goal-first approach is a product manager's best path towards innovation. Strategy aligns the organization around a shared vision and keeps everyone focused on the work that matters most. It should connect every piece of work the team completes — guiding both the large themes of work and the smaller details.
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You might think you know what goes into a product strategy. You might even think you know how to set a winning product strategy. But strategy is the thorniest and most misunderstood aspect of product development. If you have been a product manager for some time then you know how many teams are busily working and building against flimsy product strategy. (If there is one at all.)
We all know how important product strategy is to delivering successful products. Yet perfecting a product strategy in practice is really challenging. There is no magic wand or secret sauce, but there are best practices that you can follow to make it easier. This guide gives you an overview of the basic concepts, tips and how-to advice on setting product strategy, along with a bevy of templates for moving forward with purpose:
What is product strategy?
Product strategy outlines how a product will support company strategy and business goals. Product strategy serves as a guide for the team planning, developing, and taking a product from concept through to market release. Product strategy is made visual through a product roadmap.
In the graphic below, you can see the artifacts that product development teams rely on to deliver against the product strategy and ultimately to support the higher-level business strategy.
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Why is product strategy important?
Product development is an adventure. And like most adventures, it is full of risk. Timing and ambiguity are two of the greatest threats — neither of which can be fully controlled. Unforeseen circumstances (everything from external factors like economic conditions to internal challenges such as team changes) can directly impact your product’s success. Lack of depth in understanding customers needs, the competitive landscape, and technical feasibility can stunt progress and in some cases lead to failure.
This is why product strategy is so important. Doom and gloom aside, product strategy gives people clarity about what they are working towards and why. Product strategy can be a rallying cry that bonds and motivates the team. It enables folks to make better decisions faster and prioritize features that will deliver the most value.
Product strategy is the foundation of product development. Setting product strategy enables you to:
Align around goals
Chart the way forward
Prioritize the right work
Stay focused and agile
Deliver what users need
Create value for customers and the business
Strategy is an adaptation to achieve success. It explains why a company will compete in a certain market and how what it delivers will be better than any other company in that market at serving customers. In today’s fast-changing markets, a strong product strategy allows you to stay nimble and responsive to change without veering off course.
Related:
What are the challenges of product strategy?
Many teams conflate a product plan with a product strategy. Because product development is dynamic and unpredictable, folks tend to jump straight to pulling together a list of ideas or activities that seem to align with a loose set of goals. You believe you can implement that list with the resources you have available and are then lulled into a false sense of strategy.
What product strategy is not:
Vision and mission: The company (or product) vision and mission are foundational components of a strategy
Metrics: KPIs give a sense of how you are tracking against product goals, which in turn are a component of your product strategy
Budget: Financial resources enable (or constrain) your ability to deliver against the product strategy
Ideas: Creative concepts and requests for enhancements can support innovation if they align with the product strategy
Features: Individual features (or even a collection of functionality) are one way that you might achieve the product strategy
Roadmaps: Roadmaps visualize the product strategy and offer a timeline for implementation and delivery
Launch plans: A list of activities that a cross-functional team will complete as part of releasing new functionality to market
People fall into the trap of thinking that the plan for how they will build something new is itself a product strategy. This is especially common in early-stage companies or on teams lacking in strong product leadership. Product plans are certainly critical to product development. Vision, goals, ideas, and tactics are necessary too — but none are actually a product strategy.
Related: Why strategic thinking is so hard for product managers
What goes into a product strategy?
Executives and product leaders typically collaborate to define the product vision and determine how your product will serve a specific customer segment. The exploration phase of setting a product strategy often involves competitive analysis, vetting different business models, and creating product positioning. This needs to happen before any detailed product roadmap work begins. (For a more in-depth look at what happens in each stage of product development, check out our approach in this guide to the activities in The Aha! Framework).
The team at Aha! are all product development experts. Collectively we have hundreds of years experience planning, building, and launching new offerings. We put all of that knowledge into our own software suite. Those learnings informed how we structure product strategy in Aha! Roadmaps.
Our major areas of focus for product strategy are organized into three categories — foundation, market, and imperatives. The sections below reveal the mindset that a product manager should be in when developing a product strategy, along with best practices, tools, and tactics you can use during the process.
Foundation: What you want to achieve
You seek to understand the market context you operate in, are able to define why your offering is superior, and can identify growth opportunities.
Vision: Represents the core essence of your product and what makes it unique. It should be something that everyone in the company deeply understands — the "why" behind the product you are all responsible for.
Business models: Models are useful when you launch a new product or want to evolve your strategy as the market changes. There are many types of business models — including lean canvas, Porter's 5 forces, and the 10Ps marketing matrix.
Positioning: Define where your product fits in the marketplace and the unique benefits you provide. Strong positioning supports your marketing strategy, brand storytelling, and all content developed for customers.
Market: Who you will serve
You are curious about who your customers are, can empathize with the problems they have, and are familiar with any alternatives to your offering.
Personas: Fictional characters bring your customers to life. Creating user personas is one way to develop empathy for your customers — you document their likes and dislikes, professional aspirations, challenges, and more.
Competitive analysis: Understand where your offering excels and falls short compared to other solutions in the marketplace. Doing this type of research provides insights into where you fit within the broader market and what opportunities might prove most valuable for your customers and the business.
Imperatives: What you will accomplish
You set time-bound and specific goals and identify initiatives that will help you achieve your strategy.
Goals: These are benchmarks that you want to achieve in the next quarter, year, or 18 months. A useful exercise to identify the most impactful goals is to plot out potentials on a chart based on the investment needed (from your team) and the impact (to your customers).
Initiatives: High-level efforts or big themes of work that need to be implemented to achieve your goals. These strategic initiatives link your goals to everything planned on your product roadmap.
A note about goals...
Defining goals and initiatives is typically done towards the end of setting product strategy. With all of the information that you have gathered and reviewed during that process, it can be tempting to choose many goals and many initiatives. You want to make everyone happy, right?
A product that serves everyone actually serves no one. Too many strategic imperatives will confuse the team and lead to muddy decision-making. So you want to be shrewd when selecting goals and initiatives — fewer, specific objectives will make it easier to select features that will make a real impact. If you use Aha! software, this record map template can help you visualize how these strategy pieces fit together.
What are examples of successful product strategies?
When we think of successful product strategies the same examples pop up over and over. In the software space, these are the household name brands and challenger startups that most of us are familiar with: Apple, Airbnb, Google, Microsoft, Netflix, Spotify, Uber. Let’s add a few newcomers to the whack-a-mole software pile — put ChatGPT, Tiktok, and even Meta's latest launch, Threads, on the list too.
We could approach each of these example technology companies as having special stories and explore the product strategies that helped them ascend. But that would make this a very, very long article. And you would quickly realize that the individual companies are not doing anything unique. Instead they are employing a proven product strategy in an effective way.
There are a few core categories when it comes to product strategy — cost, quality, technology, service, and speed to market. You may choose one or several for your own product, but typically not all. When reading through the table below, consider what you are working on now. Which strategy makes the most sense for your product?
Challenger strategy | Positioning your product as more exciting than others available in the market based on features, design, or efficiency
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Cost strategy | Positioning your product as the most affordable among competitors to build your customer base
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Intellectual property strategy | Highlighting proprietary technology (features and functionality) that sets your product apart in the competitive landscape
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Focus strategy | Developing products for a specific and well-defined customer segment
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Niche strategy | Focusing on the needs of a specific (even narrow) group of users
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Quality strategy | Delivering the highest quality product in terms of design, functionality, data, and reliability
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Service strategy | Providing exceptional service and support to customers as an extension of your offering
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Speed strategy | Prioritizing production efficiency so you can shorten the time from concept to delivery
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Upselling strategy | Looking at ways to solve adjacent problems for existing customers in an effort to encourage upgrades or new purchases
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What about differentiation?
If you have worked in product development for a while you might be wondering if we missed the “differentiation strategy.” Keen eye, but no — this is an intentional omission. The strategies above are all ways that you show why your product is different and worthy of a customer’s purchase. You cannot have a differentiation strategy, when the goal of any product strategy is to differentiate in a meaningful way.
What are some tips for setting strategy?
The following 10 tips can serve as a touchstone for any product manager when setting strategy:
Do your research: Take the time to do the analysis needed to inform your product strategy, from persona work to SWOT to evaluating the market landscape.
Know your target audience: Never underestimate the power of knowing and empathizing with your customers and embrace every opportunity to deepen that knowledge.
Avoid comparisons: Do your competitive research but fend off temptations to directly compare your product one-to-one or vet opportunities against what others offer (do not let another company’s product strategy rule yours).
Be aware of weaknesses: Understand the areas where you, your team, and your product could improve.
Limit goals and initiatives: Select only three to five product goals for a given time period to prevent dilution of your efforts.
Communicate effectively with stakeholders: Make sure you can succinctly articulate the value of what you want to achieve and can translate it for different audiences.
Foster a culture of innovation: Encourage the broader product development team to use the product strategy as inspiration for their own creativity.
Embrace an agile mindset: Allow your product strategy to say “yes” or “no” to prospective features, sidestep pet projects or one-off requests that do not align, and move quickly to pursue work that does.
Keep the roadmap updated: Ensure that your roadmap shows the most recent work and reflects how that work supports the product strategy.
Continuously monitor and evaluate: Be diligent about reviewing what you have identified as supporting your product strategy, from the moment you prioritize a feature to how it performs once you release it to market.
Setting your product strategy is just the beginning. Product development is most effective when product strategy is an integral and dynamic part of the process — the lens through which all decisions are viewed.
Related:
Product strategy templates
Product development teams vary in terms of sophistication, maturity, and needs. (So do products for that matter.) In extremely early-stage companies where there might not be a product yet, you might be able to make do with researching, defining, and documenting your product strategy in Excel or PowerPoint. These tools were not built for strategy or product work though — over time you will begin to get frustrated with the limitation of using spreadsheets and presentations.
As you and your team grow in experience (or if you are already working on a complex product), you will want to choose a purpose-built tool. Integrated product development software offers all of the functionality you need to not only set strategy, but link it to active work in a dynamic way. You can prioritize features, build beautiful product roadmaps, and report on the value you delivered all in one place.
Integrated tools for product strategy
Aha! software includes everything you need to imagine, plan, build, and deliver lovable software.
Aha! templates
Guided templates in Aha! software help you capture your thoughts and collaborate with the team. Some of the most popular that product managers use to set strategy are:
Free Excel and PowerPoint downloads
Product strategy is ongoing. Budgets, tools, and the market will change. Each shift can prompt changes in your overall strategy — adjusting plans, removing fruitless efforts, and exploring new opportunities.
