Business strategy – in 8 categories of product management

Every company needs to have two key strategies – a business strategy and a product strategy. Both are important for a product managers assignment, and they need to be aligned with each other.

The business strategy is the overall game plan for the entire company. It’s decided by the top leaders and defines things like the company’s goals, which markets they want to target, how they will make money, the company culture, and how they will measure success. This business strategy sets the boundaries for all the other strategies in the company. The product strategy, on the other hand, is specific to an individual product or product line. It’s created by the product team and outlines the plan for that particular product, like who the target users are, what key features it will have, how it will be priced and sold, and what the product roadmap looks like. While more narrow in scope, the product strategy must support the broader business strategy.

The business strategy says “what” the company aims to do and “why”, while the product strategy defines the “how” for executing on a specific product within those bigger goals.

Before getting into strategies, every company starts with the definition of a mission and vision. The mission is an ambitious but achievable goal in the market, often starting with “Be the most…” Many companies also have a “north star” metric – a key target that everything is aligned towards, like a guiding light.

The vision is the company’s big, aspirational dream for the future. It evolves over time as the market changes, and consists of the company’s core values and purpose, as well as bold long-term goals and a vivid description of achieving them. Once the mission, vision, and north star are set, the company can define its business strategy by understanding the ideal customer, defining the business model, analyzing competitors, and being ready to adapt to changes in the broader environment. This business strategy should be reviewed at least yearly to adjust for changes in those key areas. The company should also set a focused set of goals that are well-defined, aligned with the strategy, and clearly communicated – this promotes alignment and increases chances of achieving the mission.

Guided by the the business strategy, a product team creates the product strategy, starting with a product vision derived from the company’s overall vision. This involves the whole product team and should be a clear, inspiring view of the future that aligns with customer needs and company goals. Roman Pichler presents a canvas to help you create your product vision.

The product strategy is a high-level plan that helps realize the product vision by answering five core questions: who is the product for?; why would people want to use and buy it?; what kind of product is it and what makes it stand out?; what are the business goals? In essence, the product strategy provides a high-level roadmap for realizing the product vision by clearly defining the target audience, value proposition, competitive differentiation, and intended business impact.

In recent years, many organisations started adopting Objectives and Key Results (OKRs) to set outcome goals as part of the product strategy. While Product Strategy outlines the broader efforts to move closer to the long-term Product Vision, OKRs implement specific aspects of the Product Strategy throughout short cycles like a quarter.

The product strategy directs the product roadmap that translates this vision into an action plan using a ‘now, next, later’ approach based on past progress and future targets. Roman Pichler calls them outcome-based roadmaps, an approach to create valuable roadmaps.

So in summary – the business strategy is the big-picture direction, while the product strategy drills down into executing on a specific offering, but they must be completely aligned for the company to succeed.