# Strategize  ## Metadata - Author: [[Roman Pichler]] - Full Title: Strategize - Category: #books ## Highlights - The challenge for product managers, product owners, and other product people is that we are often so preoccupied with the tactics ([Location 130](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=130)) - developing a successful strategy for a product involves two steps: finding the right overall strategy and deciding how best to implement it. ([Location 138](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=138)) - The product strategy describes how the long-term goal is attained; it includes the product’s value proposition, market, key features, and business goals. ([Location 140](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=140)) - The product roadmap shows how the product strategy is put into action by stating specific releases with dates, goals, and features. ([Location 141](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=141)) - the vision describes the ultimate reason for creating the product, the product strategy states how the vision will be realized, and the product roadmap states how the strategy will be implemented. The product backlog contains the details necessary to develop the product as outlined in the roadmap, such as epics, user stories, and other requirements. ([Location 145](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=145)) - the product backlog can cause changes to the roadmap, for instance, which in turn may affect the strategy. For example, if the feedback from the customers and users indicates that the product does not adequately address their needs, or if the development progress is slow, then this may lead to product roadmap changes. Similarly, larger roadmap changes can cause product strategy adjustments. And if you cannot find a valid product strategy—a strategy that helps you realize the vision—then you may have to change the vision or look for a new one. ([Location 148](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=148)) - the person in charge of the product, ([Location 165](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=165)) ### STRATEGY FOUNDATIONS #### Understand What a Product Strategy Is - A product strategy is a high-level plan that helps you realize your vision or overarching goal. ([Location 186](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=186)) - The market describes the target customers and users of your product: the people who are likely to buy and use it. ([Location 192](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=192)) - The needs comprise the main problem your product solves or the primary benefit it provides. ([Location 193](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=193)) - The key features and differentiators are those aspects of your product that are crucial to creating value for the customers and users and that entice people to choose it over competing offerings. ([Location 195](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=195)) - the point is not to list all product features in your strategy—that’s done in the product backlog—but to focus on the three to five features that influence a person’s decision to buy and use the product. ([Location 198](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=198)) - The business goals capture how your product is going to benefit your company, and why it is worthwhile for the company to invest in the product. Is it going to generate revenue, help sell another product or service, reduce costs, or increase brand equity? ([Location 200](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=200)) - product strategy is not a fixed plan or something you only create for a new product: ([Location 206](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=206)) #### Think Big and Describe Your Vision - The vision is the ultimate reason for creating your product; ([Location 210](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=210)) ##### Why the Vision Matters - you have to be convinced that what you are doing is right: ([Location 213](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=213)) ##### Qualities of an Effective Vision - An effective vision has four qualities: it is big, shared, inspiring, and concise. ([Location 220](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=220)) - it makes it easier to change the strategy (if necessary) while keeping the vision stable. ([Location 221](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=221)) - Note: A big vision - it acts as the product’s true north, facilitates collaboration, and provides continuity in an ever-changing world. ([Location 225](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=225)) - Note: A shared vision - it provides motivation and guidance even if the going gets tough. ([Location 226](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=226)) - Note: An inspiring vision - is easy to communicate and understand. ([Location 227](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=227)) - Note: A concise vision - capture the vision as a slogan—a short, memorable phrase ([Location 228](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=228)) #### Find Out How Vision, Strategy, and Tactics Relate - Without a valid product strategy—a strategy that has been validated and does not contain any significant risks—you will struggle to discover the right product details; ([Location 235](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=235)) - Let the Business Strategy Guide the Product Strategy ([Location 247](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=247)) - A product is a means to an end. By benefiting its customers and users, it should create value for your company. ([Location 248](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=248)) - the business strategy has to direct the product strategy, ([Location 257](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=257)) - your overall company vision should influence the vision of your product. ([Location 257](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=257)) - work for a start-up, in which case your business and product strategy are likely to be identical. ([Location 262](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=262)) #### Be Clear on Your Innovation Strategy - In order to generate value, a product has to offer something new; it has to innovate to a greater or lesser extent. ([Location 264](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=264)) - It’s important to understand which innovation strategy your product executes and which innovation type it represents, as this will shape the product strategy. ([Location 266](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=266)) ##### Core Innovations - Core innovations optimize existing products for established markets; they draw on the skills and assets your company already has in place, and they make incremental changes to current products. ([Location 273](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=273)) - The longer-term growth potential of core products is low, and so is the amount of risk and uncertainty present. ([Location 277](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=277)) - Because core products leverage existing assets, a conservative attitude is appropriate. You should aim to protect the product, focus on operational excellence, avoid mistakes, optimize the existing business model, and use proven technologies ([Location 279](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=279)) ##### Adjacent Innovations - Adjacent innovations involve leveraging something your company does well into a new space—for example, taking an existing product to a market that’s new to the company or creating a new product for an existing market. ([Location 282](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=282)) - Tags: [[favorite]] - Adjacent innovations allow you to open up new revenue sources, but they require fresh insights into customer needs, demand trends, market structure, competitive dynamics, technologies, and other market variables. ([Location 286](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=286)) - To succeed with adjacent innovation, you should adopt an inquisitive attitude, be willing to take informed risks, and have the ability to make mistakes and fail. ([Location 290](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=290)) ##### Disruptive Innovations - a disruptive innovation typically solves a customer problem in a better, more convenient, or cheaper way than existing alternatives. ([Location 302](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=302)) - A disruptive product also creates a new market by addressing non-consumption: ([Location 303](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=303)) - Requiring a solid business case can prevent you from creating disruptive products. ([Location 319](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=319)) - to grow organically, companies have to continually look for new growth opportunities and invest in adjacent and disruptive products—the products that generate tomorrow’s cash. ([Location 326](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=326)) #### Take Advantage of the Product Life Cycle Model ##### Development - Before the launch your primary goal is to find a valid product strategy—a strategy that results in a product that is beneficial, feasible, and economically viable. ([Location 360](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=360)) - Don’t make the mistake of trying to launch the perfect product. No product is impeccable from day one. ([Location 364](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=364)) - How good your initial product has to be is closely linked with its innovation type. ([Location 367](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=367)) ##### Introduction - After the launch your objective is to achieve PMF and to experience growth as quickly as possible. How long this is likely to take you and how much effort it will require, depends on your product’s innovation type. ([Location 374](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=374)) - Building an initial customer base and finding out if and how people use the product is particularly important for disruptive innovations. ([Location 375](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=375)) - Adjacent products, however, tend to require a shorter introduction stage, as they address an existing market and compete with established products. You can therefore usually learn about the customer and user needs and how best to address them during the research and validation work you do in the development stage. ([Location 380](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=380)) - don’t make the mistake of overoptimizing your product for the early market. The initial customers and users of a new tech product are usually happy to put up with a few teething issues as long as they will gain an advantage from using it. ([Location 391](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=391)) - To get into the mainstream market, you have to satisfy much higher expectations; you have to provide a product that works flawlessly and is easy to obtain, install, and update. ([Location 393](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=393)) - To bridge the chasm, you have to adapt and improve your product. This may include enhancing the user experience, adding or improving features, or refactoring the architecture to increase performance and stability. ([Location 398](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=398)) - The size of the chasm is influenced by your product’s innovation type. ([Location 401](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=401)) ##### Growth - You should now have a product that fits the market and does a good job of creating value for the mainstream customers and users and for your business. ([Location 405](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=405)) - Note: When to enter Growth Fase?! - you have to find ways to attract more customers and users and clearly differentiate your product, since competitors may start to copy some of its features. ([Location 408](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=408)) - You may want to start unbundling your product and promote features to products in their own right, or you could employ product variants. ([Location 411](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=411)) ##### Maturity, Life Cycle Extension, and Decline - A number of techniques can help you make an aging product attractive again including enhancing its capabilities and adding new features. ([Location 418](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=418)) - Note: Sometimes you may want to remove features and declurer the product. Or taking the product to new market segment. Or bundling with other offerings to increase its attractiveness - Development Develop a valid strategy: a strategy that results in a product that is beneficial, feasible, and economically viable. ([Location 433](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=433)) - Introduction Adapt and improve your product to achieve product-market fit (PMF). This may require incremental changes such as improving the customer experience, adding new features, and refactoring the architecture. But it may also make a more drastic change or pivot necessary. Aim to achieve the break-even point for a revenue-generating product by the end of this stage. Ensure that your business model is scalable. ([Location 435](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=435)) - Growth Sustain the growth by penetrating the market and fending off competitors. Keep your product attractive, and refine it. Manage the growth by unbundling your product or by creating variants, for instance. Ensure that your product is profitable (if it is meant to generate revenue). ([Location 438](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=438)) - Maturity As growth stagnates, extend the life cycle and revive growth by taking the product to a new market, for example, or bundling it with another product or service. Alternatively, milk your product by serving the late majority. Defend its market share and focus on profitability for revenue- generating products. ([Location 441](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=441)) - Decline Reduce cost to keep the product profitable for as long as possible, then start phasing it out. ([Location 444](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=444)) #### Capture Your Strategy with the Product Vision Board #### Complement Your Strategy with a Business Model ##### Common Business Models - Common business models for digital products include subscription, freemium, advertising, and bait and hook. ([Location 476](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=476)) ##### Capturing the Business Model - Competitors describes the strengths and weaknesses of the competition and their products. It uses your insights from performing a competitor analysis and helps ensure that your product stands out. ([Location 493](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=493)) - Revenue Sources captures the way your product generates money: ([Location 495](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=495)) - Cost Factors states the cost incurred by developing, marketing, selling, and supporting your product. ([Location 497](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=497)) - Channels are the ways you will contact your users and customers to inform them about your product and to sell and deliver the product. ([Location 500](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=500)) ##### Business Model vs. Business Case - The business model explains how the product is monetized, but it does not quantify the revenue generated or the cost incurred. That’s done by a business case, which forecasts the product’s financial performance, typically over the next two to three years. ([Location 505](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=505)) - Depending on your product’s innovation type, a realistic business case can be challenging to create, ([Location 507](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=507)) #### Choose the Right Key Performance Indicators (KPIs) for Your Product - Using KPIs and collecting the right data helps you balance opinions, beliefs, and gut feelings with empirical evidence, which increases the chances of making the right decisions and providing a successful product. ([Location 516](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=516)) ##### Making the Business Goals Measurable - In order to choose the right KPIs, use the business goals stated in the product strategy. ([Location 519](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=519)) - Instead of stating that the new product should create x amount of revenue per year, I could say, for instance, that the product should increase the company’s revenue by 5 to 10 percent within one year after its launch, for instance. While this goal might still be unrealistic, I have at least drawn a line in the sand that progress can be measured against. ([Location 527](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=527)) - Tags: [[favorite]] ##### Choosing Relevant Indicators - Avoid vanity metrics, which are measures that make your product look good but don’t add value ([Location 533](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=533)) - use the business goals to choose a small number of metrics that truly help you understand how your product performs. ([Location 538](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=538)) - Think of driving a car. A small number of indicators are helpful for getting to your destination, including speed, fuel consumption, and revolutions per minute. If the car dashboard always showed other data, such as oil pressure or battery status, it would be harder to take in the relevant information. ([Location 540](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=540)) - Quantitative and Qualitative KPIs ([Location 545](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=545)) - quantitative indicators, such as daily active users or revenue, measure the quantity of something rather than its quality. ([Location 546](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=546)) - Qualitative indicators, such as user feedback, help you understand why something has happened—for instance, why users aren’t as satisfied with the product as expected. ([Location 547](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=547)) ##### Lagging and Leading Indicators - Lagging indicators, such as revenue, profit, and cost, are backward-focused and tell you about the outcome of past actions. Leading indicators, in contrast, help you understand how likely it is that your product will meet a goal in the future. ([Location 551](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=551)) ##### Looking beyond Financial and Customer Indicators - You should therefore look beyond financial and customer indicators and also use the relevant product, process, and people indicators. ([Location 560](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=560)) ##### Leveraging Trends - Compare the data you analyze to other time periods, ([Location 563](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=563)) - Trends allow you to better understand what’s happening and to take the right actions. ([Location 565](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=565)) - four perspectives: financial, customer, product and process, and people. The groups are inspired by David Norton and Robert Kaplan’s work on balanced scorecards, ([Location 569](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=569)) #### Track the Product Performance with a Product Scorecard - Once you have selected the right KPIs for your product, you should collect the relevant data and regularly analyze it. A product scorecard or dashboard can help you with this. ([Location 575](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=575)) - Note that the frequency at which the relevant data above becomes available, and how much effort is required to collect it, will vary. ([Location 586](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=586)) #### Complement KPIs with Operational Metrics - In an agile context, product goals are delivered in a stepwise fashion by a number of sprints, which should have their own goals and success criteria. ([Location 596](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=596)) - Higher-level goals are therefore progressively broken down into tactical ones, and KPIs are complemented by release and sprint-specific metrics. ([Location 605](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=605)) #### Engage the Stakeholders ##### Stakeholder Identification - A stakeholder is anyone who has a stake in your product—anyone who is affected by it or shows an interest in it. ([Location 616](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=616)) - In order to identify the stakeholders, ask yourself whose help you need to develop, release, and provide the product. ([Location 618](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=618)) - Tags: [[favorite]] ##### Stakeholder Analysis and Engagement - the grid analyzes the stakeholders by taking into account their power and their interest; ([Location 624](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=624)) - This results in four stakeholder groups: players, subjects, context setters, and the crowd, ([Location 625](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=625)) - To find out if a stakeholder is likely to be interested in your product, consider if the person will be affected by it; and to understand if a stakeholder has high power, ask yourself if the individual can influence, or even veto, product decisions. ([Location 626](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=626)) - Stakeholders with high interest and high power are called players. ([Location 630](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=630)) - Be aware that collaboration requires leadership. As the person in charge of the product, you should be open and collaborative but decisive at the same time. ([Location 636](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=636)) - Tags: [[favorite]] - Subjects are individuals with high interest but low power ([Location 640](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=640)) - People with low interest but high power are called context setters. ([Location 643](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=643)) ##### Collaborative Strategy Workshop - The objective is not to create a definitive and correct plan of action, but to establish a shared initial strategy. ([Location 656](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=656)) - Review and Update the Product Strategy ([Location 658](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=658)) - As your product develops and grows, and as the market and the technologies evolve, the product strategy has to change, too. ([Location 659](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=659)) - Reflecting on the product’s performance using KPIs should help you understand how successful the product is and if the product is meeting its business goals. ([Location 665](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=665)) - Considering what the competition is doing allows you to understand if your product is still adequately differentiated, or if competitors have caught up and are imitating some of its features. ([Location 666](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=666)) - Reviewing technology trends and regulatory changes will help you discover opportunities to enhance and future-proof your product. ([Location 667](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=667)) - Looking at your company and any changes in its business strategy will help you understand if the business goals captured in the product strategy are still valid. ([Location 668](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=668)) - How often you assess the strategy depends on the product maturity and the market volatility. ([Location 671](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=671)) - For younger products and dynamic markets, I recommend reviewing the product strategy once per month; for more mature products and markets, perform a strategy check every quarter. ([Location 671](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=671)) - This gives rise to four growth strategies: market penetration, product development, market development, and diversification. ([Location 685](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=685)) - Market penetration means incrementally enhancing an existing product to increase its market share. ([Location 686](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=686)) - Product development involves creating a new product for an existing market—a market you already serve. ([Location 686](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=686)) - Market development refers to entering a market that’s new to your company with an existing product. ([Location 687](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=687)) - Diversification implies developing a new product for a new market ([Location 688](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=688)) ### STRATEGY DEVELOPMENT #### Segment the Market - Segmenting the market means dividing the potential customers and users into distinct groups. ([Location 727](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=727)) - Note that segmentation is not only beneficial for developing new products; it also helps you derive variants from an existing product. ([Location 733](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=733)) ##### Segmenting by Customer Properties and Benefits - You can form segments that are based on the customer properties, or on the benefits that your product provides. ([Location 737](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=737)) - Common customer properties include         •demographics such as age, gender, marital status, occupation, education, and income;         •psychographics, including lifestyle, social class, and personality;         •behavioral attributes like usage patterns, attitudes, and brand loyalty;         •geographic regions such as Europe, Middle East and Africa (EMEA), and Asia-Pacific (APAC);         •industries or verticals—for instance, automotive, education, finance, and health care for business markets, also called business-to-business or B2B; and         •company size, such as small and medium-size enterprises (SMEs) for B2B products. ([Location 737](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=737)) - Note: Customer properties: Demographics, Psychographics, Geographic, Industry or verticals, and Size of the company. - An alternative approach is to divide the market using the benefit the product provides or the problem it addresses ([Location 750](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=750)) - Focusing on the needs and benefits can therefore result in different segments, and consequently a different product. ([Location 755](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=755)) ##### Choosing the Right Segmentation Approach - Once you have created your initial benefit-based segments, you can refine them by using appropriate customer properties. ([Location 759](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=759)) - The great thing about benefit-based segmentation is that it reduces the risk of overlooking people who are likely to take advantage of your product; it also offers you the opportunity to reconstruct the market boundaries. ([Location 763](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=763)) - Whichever way you segment the market, avoid the following two mistakes: First, don’t blindly follow predefined segments. I have seen product managers cling to existing customer-based segments while trying to create new, innovative products. Unsurprisingly, the outcomes were rather poor. Second, don’t discard an idea because it does not fit into predefined segments. You may miss opportunities to create a new product or to discover new markets. ([Location 770](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=770)) #### Pick the Right Segment - A great tool to do this is the GE/McKinsey matrix (Coyne 2008). While the matrix was originally developed to assess a business portfolio, it can also be applied to market segments. It encourages you to assess your segments according to their attractiveness and the strength of your business, ([Location 780](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=780)) - The effectiveness of the matrix depends on your ability to define what attractiveness and business strength mean. ([Location 788](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=788)) - Several criteria may be used to determine how attractive a segment is, including the following:         •Need: How strong is the need, and how much does the group benefit from the product?         •Segment size: How big is it?         •Growth rate: Does it show signs of growth?         •Competitors: Who are the main competitors, and how fierce is the competition?         •Entry barriers: Are there any barriers for entering the segment—for example, high switching or high setup costs? ([Location 788](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=788)) - Tags: [[favorite]] - Note: Attractiveness as: Need, Segment size, Growth rate, Competitors, and Entry barriers. - In order to understand the business strength, investigate your ability to serve the segment. Do you have the necessary skills, knowledge, and expertise to do so? If not, can you acquire them? How difficult and expensive is it to acquire customers? Do you have the right marketing and sales channels in place? If not, what will it take to establish them? ([Location 796](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=796)) - “Markets that don’t exist can’t be analyzed,” ([Location 800](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=800)) - If it turns out that you have picked the wrong target group, then select and test the next segment. ([Location 803](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=803)) #### Use Personas to Describe the Customers and Users - Personas are fictional characters that usually consist of a name and a picture; relevant characteristics, behaviors, and attitudes; and a goal. ([Location 809](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=809)) - Understanding the personas’ goals allows you to create a product that does a great job at creating value for the customers and users. It avoids the fallacy of a solution-centric approach: worrying more about the product and its features and technologies than the reason people would want to buy and use it in the first place. ([Location 812](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=812)) ##### Persona Tips - Any persona description should be based on knowledge gained from direct interaction with the target customers and users. ([Location 815](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=815)) - Describe the characters according to your market insights. Do not make them fit your ideas and assumptions! ([Location 819](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=819)) - Distinguish between customer or buyer personas and user personas, as their goals and characteristics may significantly differ. ([Location 820](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=820)) - Working with a primary persona creates focus and facilitates decision making: the goal of the primary persona should largely determine the user experience (UX) and the product’s functionality. ([Location 824](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=824)) - If that’s the case, then resegment the market, unbundle your product, or introduce product variants. ([Location 826](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=826)) - Note: When you cannot identify the primary persona then your market is too large or your product has become complex. ##### A Persona Template - I like to reuse the persona names in my user stories, for instance. ([Location 838](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=838)) - Don’t clutter your persona descriptions, and make sure that they are easy to understand. ([Location 841](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=841)) #### Find an Itch That’s Worth Scratching - vitamins, as they don’t solve a pain or an urgent need. They rather provide a nice-to-have benefit, similar to vitamin supplements. ([Location 859](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=859)) - Products that address a problem are referred to as painkillers. ([Location 860](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=860)) - If the benefit is weak or the barrier to employing the product is high, then people are unlikely to buy and use your product. ([Location 865](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=865)) - You should therefore pay attention to any potential purchase and usage barriers and reduce or remove them, especially as you try to achieve product-market fit. ([Location 870](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=870)) #### Clearly State the Value Your Product Creates - Selecting the main problem or main benefit can require trading off user vs. customer needs; depending on your product, they may even be conflicting. ([Location 887](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=887)) #### Make Your Product Stand Out ##### The Strategy Canvas - The vertical axis describes the degree to which each competitor offers or invests in the factors. ([Location 899](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=899)) - To apply the canvas, you first determine the key factors. These are the factors that products within the same category compete on, such as price, features, and design. ([Location 899](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=899)) - Make sure you choose the factors that define the current standard in your market and are used to advertise and sell products, rather than the ones that favor your own product. ([Location 903](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=903)) - If the two are too close together, then you haven’t differentiated your product sufficiently. ([Location 906](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=906)) - What you would like to see instead is a value curve that significantly diverges from the industry standard, ([Location 908](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=908)) - The area where your product does not face any competition is called a blue market or a blue ocean ([Location 909](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=909)) - it also help you move into noncompetitive areas where growth opportunities exist. ([Location 911](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=911)) - When we compare the iPhone value curve to the industry standard, we see that Apple removed certain features, such as physical keyboard and video; reduced some, such as voice quality and e-mail integration; improved others, such as mobile Internet and media player; and created two new ones—a touch screen and a stylish design. By adding two new factors, Apple created a new blue market. If we fast-forward seven years and consider how the smartphone market has changed, we see that competitors have moved into the blue market and have matched the original iPhone’s features. At the same time, Apple has created new factors and raised others, including the number and size of iPhone models, the battery life, and the camera and video capabilities. ([Location 916](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=916)) - Note: The iPhone strategy ##### The Kano Model - The Kano model looks at two dimensions: the degree to which a feature is provided, shown on the horizontal axis, and the resulting customer satisfaction, depicted on the vertical axis. ([Location 925](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=925)) - What you need are delighters. As the name suggests, these features delight or excite customers. ([Location 930](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=930)) ##### Comparing the Two Tools - The Kano model also predicts that delighters will become performers over time, and that performers will in turn into basics. In other words, the features that help differentiate and sell your product today won’t ensure its attractiveness in the future. ([Location 936](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=936)) #### Eliminate Features - The trick is not to blindly add features, but rather to explore which ones you can remove, thereby simplifying and decluttering your product. ([Location 945](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=945)) - Removing and weakening features helped Apple reduce time to market; resulted in an uncluttered, easy-to-use product; and made the new and improved features stand out. ([Location 956](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=956)) - You can combine the Eliminate-Reduce-Raise-Create grid with the Strategy Canvas ([Location 958](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=958)) - Eliminating the right features requires a solid understanding of your target group and the problem your product solves ([Location 961](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=961)) - “Innovation is not about saying yes to everything. It’s about saying no to all but the most crucial features.” ([Location 963](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=963)) - Note: Steve Jobs quote ##### Product Replacements - Determine instead how large and heterogeneous the user group is, what job the product does for its users, and how it is actually employed. ([Location 966](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=966)) #### Offer a Great Customer Experience - many companies focus so much on the features of their products that they forget about the context in which they are used. ([Location 974](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=974)) - it is important to get the overall customer experience of your product right and to remove any barriers that make it difficult for people to use the product. ([Location 980](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=980)) - you don’t necessarily have to change the user-interface design or the features of your product to create more value. ([Location 987](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=987)) - In order to create a consumption map for your product, follow the three steps below. ([Location 993](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=993)) - Note: 1. Identify the key touch points. 2. Determine how people interact with your product and your company. Then find out where your chain excels and where the competition is better. 3. Aim to provide what the customers want, where and when they want it. Steps inspired by using Value-stream mapping techniques. - This helps you identify short-term improvement measures; it also helps you prepare the product for the next life cycle stage ([Location 1010](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=1010)) #### Build Variants and Unbundle Your Product - Creating product variants and unbundling your product are two powerful techniques that help you increase the benefits your product provides by launching a new, specialized version. ([Location 1012](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=1012)) - Tags: [[favorite]] - A product variant is a variation or specialization of a product. ([Location 1014](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=1014)) - Creating product variants establishes a product line, or a collection of related products, which is also called a product family. ([Location 1017](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=1017)) - Unbundling your product means promoting a feature or feature set to a new product. ([Location 1018](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=1018)) ##### Benefits - Unbundling features and introducing product variants can enable you to effectively grow the product, serve a new segment, generate more business benefits, and increase the product’s competitiveness. ([Location 1021](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=1021)) - Creating new, specialized products simplifies your original offering, helps you avoid these issues, and lays the foundations for future growth. ([Location 1027](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=1027)) - creating specialized products help you better serve an existing audience and take your product to a new target group. ([Location 1030](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=1030)) - unbundling a product and introducing a new variant can increase the business benefits and open up new revenue streams. ([Location 1036](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=1036)) - both techniques can help you respond to market changes and increase your product’s competitiveness. ([Location 1039](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=1039)) ##### Drawbacks - One of them is the danger of offering too many specialized products, thus giving customers and users too much choice and potentially leaving them confused and frustrated. ([Location 1043](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=1043)) - A second drawback is that the newly created products may cannibalize your existing ones. ([Location 1050](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=1050)) - Third, introducing a product family creates the need for portfolio management. Dependencies of the family members have to be managed, and the release dates have to be coordinated. ([Location 1053](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=1053)) ##### Shared Assets and Platforms - When you spin off a feature or develop a new variant, you should consider creating standards and assets—including components, services, and other architectural building blocks—that the product family members share. This ensures a consistent user experience across the different products, and it can reduce the development effort required. ([Location 1057](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=1057)) ##### Summary #### Create a Product Bundle - The opposite of unbundling a product is combining separate products into a bundle: a newly formed, bigger offering. ([Location 1087](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=1087)) ##### Benefits - Creating a product bundle is helpful when the individual products are too small or not attractive enough to succeed on their own. ([Location 1090](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=1090)) - bundling can help you gain an advantage over the competition. ([Location 1094](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=1094)) ##### Drawbacks - First, don’t turn people off by creating bundles that are too big. ([Location 1097](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=1097)) - Second, don’t restrict the buying choices of your customers too much. ([Location 1101](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=1101)) - Finally, don’t forget to harmonize the user experience across the bundle to make it easy for users to change between products. ([Location 1105](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=1105)) #### (Re-) Position Your Product - Creating a successful product requires more than simply delivering the right features. It also involves developing a strong brand that clearly communicates what your product stands for and that resonates with its customers and users. ([Location 1109](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=1109)) - Product strategy and brand should therefore be closely aligned. ([Location 1114](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=1114)) - In order to build a strong product brand, be clear on your company’s overall branding strategy and decide if and how to create a subbrand for your product. ([Location 1114](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=1114)) - If you create a product that users and customers don’t associate with the company brand, then it may be best to create a new brand. ([Location 1119](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=1119)) - If you want to take your product to a new market or extend its life cycle, you should consider repositioning or rebranding it. ([Location 1122](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=1122)) - In his book Crossing the Chasm, Geoffrey Moore distinguishes five customer groups: innovators, early adopters, early majority, late majority, and laggards. The innovators are technology enthusiasts; they buy and use your product as soon as it is launched. The early adopters are visionaries who can see how the product benefits them. Together, they make up the early market, which corresponds to the introduction stage on the product life cycle model. ([Location 1138](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=1138)) - Note: Quote from Crossing the chasm ### STRATEGY VALIDATION - the need for your product might not be strong enough, the segment you’ve chosen might not be right, or the technologies might not be feasible. ([Location 1158](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=1158)) - to maximize the chances of releasing a successful product, you should systematically identify and address the key risks before you fully implement the new strategy. ([Location 1159](https://readwise.io/to_kindle?action=open&asin=B01F749SF6&location=1159)) - Tags: [[favorite]] #### Iteratively Test and Correct Your Strategy