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Product Managers: Here’s How to Craft a Winning Strategy

Building a strategy is hard work, but it’s a requirement of the product manager’s job. Why?

Complexity, obstacles and alignment challenges will exist whether you address them or not. Without a proactive strategy in place, your team will react, and this reaction becomes your strategy. The difference between these two, proactive and reactive, can be more easily understood as alive strategy versus dead strategy.

Our work in tech is in the service of something, and we usually call that thing impact. The more responsibility you have, the greater the risk becomes if you fail to make an impact.

Right now, when we see tech currently going through a downturn, the lack of good strategy is apparent. Even though we’ve gone through a period of “free VC money” and record growth, more than 15,000 tech workers were laid off in May alone, with more likely to come in the foreseeable future.

That is the cost of a lack of impact due to bad strategy.

Product management has a large part to play here since our job is to create an environment in which the team is consistently making better decisions over time.

So, how do you know if your strategy is reactive?

  1. Your team suffers from an inability to say why you’re doing something. When they can give answers, they’re inconsistent, even among teammates who are together every day.
  2. Your releases have no rhyme or reason over time. What you work on in March has no bearing on what you’re working on in December.
  3. Your measurements lack consistency. You can’t tell what’s important, so you measure everything or nothing, and no one looks at it either way.

Let’s talk about how we can avoid the pitfalls of reactive strategy and create a good one instead.

We will go in-depth with Jill, the director of product management at Bobco, and Jasmine, her latest PM hire.

Product Managers: 3 Components for Your Strategy

  1. Diagnosis.
  2. Guiding policy.
  3. A set of coherent actions.

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What Is a Good Product Strategy?

As Richard Rumelt writes in his classic work on the subject, Good Strategy/Bad Strategya strategy has three active components:

A diagnosis that defines or explains the nature of the challenge. A good diagnosis simplifies the often overwhelming complexity of reality by identifying certain aspects of the situation as critical.

A guiding policy for dealing with the challenge. This is an overall approach chosen to cope with or overcome the obstacles identified in the diagnosis.

A set of coherent actions that are designed to carry out the guiding policy. These are steps that are coordinated with each other to work together in accomplishing the guiding policy.

These three components — diagnosis, guiding policy and coherent action — exist to overcome the complexity, obstacles and alignment challenges that any group will face. These are all the arch nemeses of reactive strategy. Let’s compare each and talk about how they neutralize the reactive elements of bad strategy.

When Jill sat with Jasmine during her first one-on-one after onboarding, she let Jasmine know she would be responsible for crafting the strategy for her product line.

Jasmine was nervous. She’d never really created a strategy. In fact, she had mostly spent her time up to that point following whatever the product leader said, and she had shipped efficiently. This approach was good enough for some companies, but not Jill, who expected her PMs to run strategy.

Jill smiled at the end of the meeting “I expect you to counter me when I’m wrong and do so with clarity and facts. Don’t worry, here’s a book that will help you.”

Jill slid a copy of Good Strategy/Bad Strategy across the table.

“You’ll need the three components that this book lays out — a diagnosis, a guiding policy, and coherent actions. Come back to me with a draft, and please ask me any questions.”

Diagnosis Tells You Why

Your team suffers from an inability to say why you’re doing something. When they can give answers, they’re inconsistent, even among teammates who are together every day.

The road to hell is paved with good intentions. In this case, that good intention is assuming that, since everyone is a professional, you all know the goals. Teams that work together all the time but never talk will find themselves on a nice, sweet march to hell.

The problems here start pretty small. You assume that the team knows why you’re together. I mean, you’ve mentioned the team’s objective once or twice. Someone asked you about it in the hallway, and you answered. If the other team members had questions, they would come to you just like that one person did.

Except they don’t.

Yes, you work with professionals, but those professionals have to respond to myriad inputs coming from all directions. Without explaining the nature of the challenge and what aspect needs the most focus from the team, people will apply energy everywhere. Soon, you find yourself near the end of the quarter and, although the team has done a bunch of work, it lacks impact.

So, ask why. Like a great story, you have to show the problem, not just tell it. Asking why is a way to see if the team understands what you’re showing them. If the diagnosis you’ve written down comes back to you through your team’s answers, you’re in the clear. If not, you have an opportunity to dig into what you’re showing (ie, your strategy) and see if it’s clear enough to ensure alignment.

Jasmine realized that the diagnosis wasn’t clear for her product line. Sure, there were revenue targets, but that didn’t really tell her anything.

She brought Jill her dilemma, and Jill just answered her with one quick response: “Did you ask?”

Jasmine realized she was overthinking it and talked to the managers of other groups, who were more than happy to tell her all of their problems. Once she got them all, she noticed that each group mentioned more or less the same issues — such as maintaining costs, differentiation and high error rates.

That made it easy to turn the diagnosis into an eigenquestion, and when she brought it back to the team, they found themselves close to finishing Jasmine’s sentences. They felt like they understood the problem. Once Jasmine told them a list of the people she talked to, the team felt confident they knew what needed attention.

Jill stopped by later and heard Jasmine recall how easy it was to get this information. Jill nodded, simply saying, repeat the problem in every meeting, and you’re in the clear.

Guiding Policy

Your releases have no rhyme or reason over time. What you work on in March has no bearing on what you’re working on in December.

If you zig the first time and zag the next, you’ll end up right where you started. If you zig twice and zag three times, you’ll end up slightly further away from your initial spot. If you do both hundreds of times randomly, who knows where you arell be.

When you can’t trace your steps, improving your decision making is difficult because you don’t know what worked and what didn’t. Since your job as a product manager is to consistently improve the decision making of your teamthis is a huge problem.

Guiding policy informs how the team changes direction by setting some loose rules and comes in handy by letting the team know what is important over other possible venues. Think of it as “this over that,” where you make a decision about what kind of team you are. This could mean you value speed over completeness or complexity over simplicity.

Strategy is about making hard choices. Don’t fall into the trap of saying good versus bad: That distinction doesn’t guide policy at all. You need to make purposeful choices, and saying something like “We should be making the customer something they want instead of a piece of crap” isn’t giving your team a choice at all.

Descriptive strategies empower teams by not telling them what to do, giving them the freedom to solve problems, while perscriptive ones don’t. As PdMs, we don’t — and shouldn’t — offer any discrete output. So, when you’re prescriptive, you’re pretending to be the expert because you’re telling the team exactly what kind of output to generate. Guiding policy helps your strategy become descriptive without falling into the trap of being prescriptive.

This helps you pivots make sense, keeping your next move in the spirit of what you intend to build even when you have to make a change.

Think of the guiding policy as a boundary around a track. It keeps you in bounds, no matter how much you zig or zag. This way, your team can move, and you won’t lose track of where you are.

Jill looked at Jasmine’s guiding policies: “This doesn’t really help me make any choices because you aren’t asking anyone to make a choice. You have fast over slow here, and everyone is going to choose fast.”

Jasmine remembered something that Rumelt says: Strategy helps teams make decisions. Good versus bad (or in this case, fast versus slow) isn’t a choice, so it isn’t worth putting in the strategy. Choices that don’t force us to make a decision are what Rumelt called that fluff.

Jasmine then made a shift and revised the guiding policies. To avoid fluff, she wanted to see what brought the team tension. The tension ensures that they’re making a choice instead of fluff.

She sat with her team and put two columns of words on a whiteboard. In the middle, she put the word “versus.” If the team all chose one, she eliminated it immediately.

It was clear that they didn’t need guidance. The team, when asked about a particular “this” or “that,” spoke about what drove them. In saying these things out loud, each team member also helped the others understand their points of view.

Soon, she had a nice list of “this versus that” qualities, and Jasmine then labeled the list “Guiding Policy.”

Coherently Moving Forward

Your measurements lack consistency. You can’t tell what’s important so you measure everything or nothing, and no one looks at it either way.

If you don’t know what to do, you’ll sit still. A still team is no team at all. Your next coherent action gives everyone something to decide. Without that coherent action, the team will either do its own thing or just stand still.

Product managers are the holders of strategy, so our job is to get the conversation going. Thats the objective of the coherent action. It isn’t about the action itself; it’s designed to get the team moving forward.

Even if the team says no to the proposed action, you are in a place to ask what they think and get a better next action. In fact, getting everyone involved is better. The team will care much more about actions they’ve weighed in on. Setting those actions in front of the team and tying them to the diagnosis and guiding action will drive the strategy forward, one way or another.

Jill looked at the guiding policy and diagnosis.

“The strategy is mostly here,” Jill remarked. “Now comes the easy part: What’s next?”

Jasmine realized that the sprints were getting a little disorganized because the team worked on different “next tasks” with no short-term goal, and Jill’s question immediately made sense. What was the next goal? How did they know they would be successful? What would help them get there?

Jasmine took the next meeting and asked those questions to her team. She found out soon enough there was a lot that she and other team members didn’t know about the work other people on the team did. They put all of these tasks together in Jira and created a checklist around the major objective. They wouldn’t move forward until the next step was clear.

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Good Strategy Is Simple but Not Easy

All of the things I’ve described here — setting a diagnosis, creating guiding policy, and setting coherent action — are simple. You’ve probably done all three before.

You also know they aren’t easy by any means.

Great diagnosis, guiding policy, and coherent actions require a team to trust you to stumble a bit out of the gates, and adjust on the fly. That said, good strategy is a long-term bet that can help your team consistently get better.

If you do nothing else as a product manager, do this and you’ll have done your job.

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