Last month, I told you that Your Project Plan Should Be Wrong. Now I’m telling you that your product strategy should be wrong. Why am I telling you that all these things that you hold near and dear to your heart are wrong? Because I’m a jerk. No, not really, I’m actually quite nice, but here’s why: because once you face that reality, you can use your plans for what they are meant to be used for, learning. Whether you are creating an internal product strategy (for your IT systems) or an external product strategy (for products you sell to customers), your strategy is just a guess as to what your customer or users will want. It may be an educated guess based on research, experience, and intuition, but it is a mere guess nonetheless. Once you make your initial guess, the real insight begins with what you learn from your customers/users reaction to that guess.
But wait, you say, we have spent thousands on focus groups and market research, certainly we learned something from those. You certainly did, these insights will position your strategy for a greater likelihood for success. But there is one thing working against you: sensitivity to initial conditions. This means that your results can change drastically based on a small change in the conditions that your customer/user approaches your product. Just because someone says that they’ll buy your product when they are getting paid $50 in a focus group to sound cool in front of the other focus group participants, it doesn’t mean that they will actually put their credit card down at Best Buy when they pass your product in the aisle. Those are two completely different things, even if the product look, cost, and packaging are exactly the same in both circumstances.
Even if you could theoretically match the exact same conditions and prove success, something could change tomorrow. If your company has been profitably selling a product for 20 years and a competitor launches a better or cheaper product tomorrow, your future results will definitely differ from your past results. Since the future is unpredictable, your product strategy will never be more than a good guess. This doesn’t mean you shouldn’t work hard to make it a good guess, but don’t fool yourself into thinking you’ve discovered a magical formula for success. And don’t spend so much time designing your strategy if you could be testing your strategy in the real world instead.
Once your strategy fails, you can begin learning things about your market. You can then use those learnings to improve the next iteration of your strategy and increase the probability of success even higher. But how do you know quickly whether your strategy is succeeding or failing? For that, you need business objectives and Key Performance Indicators(KPIs). These should be determined before you launch your strategy, so that you have something to measure your strategy against. If you begin to see that your strategy is not meeting your business objectives and KPIs, it’s time to start changing the strategy. Watch what works and what doesn’t work, what brings you closer to your objectives and what brings you farther. These are not theoretical projections at this point, you are basing your decisions on actual market data, the most valuable information about your product strategy that you can receive.
What if you don’t have business objectives and KPIs? You’ll have no way of knowing if your product strategy is successful until it’s too late. You will not be able to make use of the market data that you see, because you have no benchmarks to compare it to. You won’t know if your results are good or bad, because you didn’t put the necessary thought into what you’d like to see, what your objectives really are. Certainly the end goal of almost all products is to make or save money, but you also need more intermediate KPIs than that. You don’t want to have to wait for your first year’s sales numbers before you make a change in strategy. Think about the objectives and measurements you can make and don’t let a week go by when you aren’t looking at those numbers.
It is wrong to think that your product strategy is right. That will stop you from learning whether it is right. It will cause you to make assumptions about what will work rather than looking at the facts. The three most powerful words in the creation of your product strategy are “I don’t know” and a burning desire to find out.