Product Strategy VS Business Strategy: What's the difference?
Businesses often confuse progress with failure. Misaligned business and product strategies might cause this. Some firms don't know the difference, causing two crucial deliveries to go in opposing directions.
This time of year, folks start scrambling to finish the Product Roadmap for next year. There are many key reasons to have a roadmap, and taking risks in the new year is a positive thing. Start with these two plans.
Your business plan isn't to add X or adapt your product for a new market.
The business strategy should be clear enough that anyone (particularly Product Managers) can describe it regardless of product or feature. In a new company, this is easier than in a global company.
"Buying products online" isn't a business strategy, but "raising revenue" is. In this scenario, the product strategy is to define the MVP to meet KPIs.
Prototyping and product-market fit are included. Data-driven product strategy is common in startups and innovative companies.
Suppose you're a product manager and the senior team emails you "Build Feature A, B, C." Here business strategy might work because it was well-planned, but without any discussion with the product managers product strategy won’t make any sense. In this scenario, good product managers leave, and the strategic goals don't get done. So, strategise accordingly.
Even if you don't know how to align strategy optimally, work where top management can set business strategy alongside the product team (who take notes on the what, when, why, how, and so on, including KPIs).
This will help the product team define functionalities. This will help link the business and product strategies well.
So, if you're making plans for next year and need a quick tip, here's how you can remember each strategy:
- Business strategy - the overall vision, the what and why
- Product strategy - the how and when, the things to meet the vision
Product Strategy - A Deeper Look
Your product strategy is the plan for making your product or feature. It lists all the tasks your team needs to do to meet your business goals. This article will serve as a guide for your team, and they will refer to it whenever they have questions.
Around 70% of businesses consult their product strategy when making significant decisions. As a result, it's critical to develop a detailed and thorough strategy to ensure that every task is completed correctly and on time.
The product strategy tells how the company will benefit from the product. It describes the problem that the product will solve and its effect on customers and the company. Once this strategy is established, use it to develop the product definition, which explains what you will build and when you will build it.
The product strategy serves as a baseline against which success will be measured before, during, and after production.
The graph below depicts how this relationship works.
Three Elements of Product Strategy
Let's go over each one in turn in the sections below.
1. Market Vision
The market vision describes who will use your product and what that means for the company. It emphasises your target customers, how you intend to position your product, and how it will compare to other competitors in its space.
Your market vision should also include a go-to-market strategy that explains your customers' needs and how you intend to provide a competitive offer.
2. Product Goals
A product strategy cannot be developed without defining key objectives. These are specific objectives or metrics that you will meet due to developing your product. They direct your development team and assist you in measuring success after the product is released.
When setting goals, it's critical to make them time-bound to have a sense of urgency about when you'll complete them. Because you've added a time constraint to its success, this emphasises the importance of your product's development.
3. Product Development Initiatives
Product initiatives are similar to product goals in that they are more conceptual in nature. These are big-picture ideas or trends that your new product will influence.
HubSpot, for example, didn't want to sell software when it launched its CRM. It aimed to establish itself as a thought leader in marketing automation and open up new business opportunities for its users.
That larger picture of the product's impact aided in creating a clear vision for how HubSpot would create and develop its tools over time.
You should be familiar with the core components of designing a product now that we've dissected the anatomy of product strategy. However, organising this information can vary depending on the product you're creating or the management expectations.
Importance of Product Strategy
- It assists in determining the precise procedures to be performed in any event to ensure the product's success.
- It gets the company ready to deal with competitors or changes in the market.
- A product vision is established, which sets the product on its course with periodic intervention, allowing the company to focus on several projects in a short period.
- It helps the organisation figure out its target market and how to get into that market.
The product strategy answers crucial questions such as:
- Which user persona does this product serve?
- What advantages will they gain?
- What are the company's goals for the product life cycle?
Product strategy discusses how the product will develop the firm. It explains the user problem the solution will answer and its customer and company impact.
Once the product strategy is defined, you can determine what to build and when.
Product strategy helps understand a product's success before, throughout, and after development.
Business Strategy - A Deeper Look
A business strategy is a business document that offers a plan of action to assist leaders in achieving organisational goals. The detailed strategy provides business requirements to guide the hiring process and inform resource allocation.
It shows how the different teams can work together to help the company reach its goals. As a result, organisations increase their market competitiveness, improve customer happiness, and mobilise their business operations.
Importance of Business Strategy
A business strategy plays an important role in a company for multiple reasons, let’s consider the following pointers:
A business strategy in a company is essential because it establishes a vision for the entire organisation to follow. When your coworkers have clearly defined jobs and tasks, you may more effectively lead and motivate them.
A strategy brings together many people who all want the same thing. It ensures that no one loses sight of the organisation's primary goal.
A business strategy of any company enables decision-makers to recognise trends and potential growth prospects. To be competitive, businesses must constantly adapt and reevaluate their strategies.
As a result, a firm strategy is a flexible resource that organisations can use to respond to the market, social, and technological changes. It keeps them from becoming complacent.
A business strategy encourages companies to reflect on the marketplace. It guides how your company is operating both inside and outside. Businesses that recognise their own strengths and weaknesses gain a better understanding of themselves. This is crucial for gaining a competitive edge and maintaining long-term profitability.
Important Elements of Business Strategy
Five crucial components can assist you in developing an effective business strategy. They are as follows:
Your organisation's mission statement or business aim identifies a market gap that your company hopes to fill. This vision should be the foundation of whatever business strategy you develop. Consider a company strategy to be a thorough action plan explaining how those in control should achieve the organisation's goal.
SWOT stands for strengths, weaknesses, opportunities, and threats and is an acronym. Because it provides a snapshot of the company's current situation, this study is crucial to your business plan. Identifying these four crucial areas can help you prepare for any potential roadblocks. It displays which assets you may use and which flaws you should address.
The Basic Principles
Based on the organisation's basic principles, your company strategy should offer unambiguous instructions on what individuals should and should not do. Coworkers are motivated to hold themselves to the organisation's standards when they write down their values.
A corporate strategy must implement a vision and plan. You can correctly deploy your resources after doing a SWOT analysis. Operational strategies prioritise what needs to be done immediately vs what can wait. It helps you manage your time and resources more effectively.
To assess the efficiency of your business strategy, you must include a method of measuring your performance. A firm strategy works best when you break down your aim into smaller, verifiable milestones. You may, for example, use smaller financial goals to gauge your output.
Many strategies at various levels are usually required in business because a single strategy is insufficient and incorrect. As a result, a conventional firm structure always has three tiers.
Business Strategy Shapes Product Strategy. ALWAYS!
Consider the last time you scheduled a vacation or road trip. You probably had a specific destination and planned your route, lodgings, and money accordingly.
If you went on a more spontaneous trip, you were probably not attached to a specific outcome. It was a fun trip—but not one you'd choose if you had specific goals or locations in mind.
Your product roadmap is in the same boat. "Let's see where the road takes us" is not a revenue-generating strategy. A product roadmap is a path that leads to a specific goal or destination.
Your company has specific goals and a business strategy in mind, and as the company grows, the risks of misalignment within the organisation increase.
Let's look at why it's critical to align product strategy with business strategy to achieve company goals and avoid having your product roadmap and company vision diverge.
The Significance of Synchronising the 2 Strategies - Product Strategy VS Business Strategy
A solid product roadmap contributes to fulfilling the company's vision or mission statement, also known as the end objective of business strategy.
Consider Google's stated mission: "to organise the world's knowledge and make it widely accessible and valuable." What impact might such a vision have on Google's product and service development? This structure makes little sense for Google product teams and engineers to design for specific demographics or geographic locations.
A useful product roadmap would cover how each user interacts with and uses the product, regardless of their background or location, and whether or not they are always successful. Anything less would be inconsistent with the company's goals and plans, putting trust and reputation at risk.
However, because that vision may change over time, it is also critical to incorporate flexibility into your strategic product plan; keeping aligned with a company's business strategy alterations necessitates more than simply communication.
5 Tips to Align your Product Strategy and Business Strategy
Knowing and comprehending the business strategy is insufficient. You must create actionable strategies to integrate and sustain this alignment into how your product team works every day. Here are a few suggestions for you as a company's product manager.
1. Understand the Company's Strategy and End-goals
This is the first and most critical stage in the alignment process. Ambitious product teams usually innovate, develop, and create in isolation. Even if the motivation is good, product mismatch will result in detours, blockages, and reroutes. If the firm vision has not already been appropriately articulated, you should comprehend it.
2. Track the Money Invested
The strategy frequently comes before revenue. It occasionally pursues it. Where is your company's money spent and earned? What revenue targets are CEOs held accountable for? The answers to these questions will give you a good idea of what your company's strategic goals are.
3. Explore, Explore, and Explore
Look for recordings of recent all-hands meetings, board meeting summaries, or company-wide speeches. Present to the C-suite, investors, and board members the company's overall aims and goals—the same goals that those same stakeholders will enquire about at the next quarterly meeting.
4. Describe Your Vision
If those areas lack a clear company strategy and direction, the product team may be able to assist in developing them right away.
5. Keep Target Audience in Mind
The most successful businesses constantly prioritise the demands of their customers. What is the point of that high-quality product if there is no market or potential audience for it? Consider what your present and prospective customers want. They are, after all, your key revenue—and strategy—drivers. Maintaining a customer-centric perspective can assist you in remaining focused on the most crucial aspect of your company's strategy.
How to Align Your Business Strategy With Your Product Strategy?
1. Find the Intersection of Product and Business Goals
At least a portion of this alignment should already exist. Even if there is a major disconnect between your product roadmap and business objectives, you may adjust the course and get back on track. Compare your product roadmap to your company's vision and mission statements, then do a quick gap analysis to discover where product development leads to company objectives.
2. Visualise the Current and Future Situations of the Organisation
Using current and future state diagrams, you can assess and visualise where you are in your product strategy roadmap and where you want to go. This diagram will help you visualise how product strategy can support company goals as the company expands if you include your current and long-term company strategy goals.
3. Make Touch with Sales and Marketing
Of course, product development teams aren't the only ones trying to align their goals with the broader company's goals. Marketing and sales have an incentive to stay tightly connected with broader strategic objectives because they are the firm's key demand-gen and revenue producers.
While product management and marketing work closely together, extending that collaboration to other marketing divisions and sales teams who receive more direct feedback from potential and current customers is vital. This information gives important context and insight into your product roadmap.
4. Leadership Approval
The easiest way to double-check your approach is to go right to the source once you've done everything to align your product strategy with your company plan. Set up some meetings with key executive stakeholders to put your strategy to the test. As your organisation grows, incorporate their feedback and repeat the process.
The Final Road!
One of the most challenging difficulties for a product manager is aligning the product strategy with business strategy and corporate goals as the firm grows.
Establishing a collaborative culture and utilising visualisation tools will assist you in continuing to produce products and experiences that customers enjoy while remaining focused on the goals that will propel the organisation ahead.
Zeda.io can assist you in developing the finest business plan for your company to align your product strategy for effective results. But how?
Well, here are few pointers on how zeda.io can help you out with your product strategy:
- Don't just focus on improving your core product but find a way to be innovative that has nothing to do with the primary product and creates an ancillary advantage by considering the entire user and customer experience. Zeda.io offers the easiest and most effective way to communicate with your customers and maintain their interest as your product evolves.
- Use existing products to expand your market reach by finding new customers.
- Make sure that your company's goal, product strategy, and budget are linked together by connecting the dots between the many aspects of a company's business plan and its products.
- Help you prepare annual R&D expenditure and budgeting for effective management of your product portfolio and a daily process.
- Providing you with the correct governance, finance, and a tried-and-true process for screening, choosing, and executing product development projects required to nurture new product ideas and fill the pipeline with successful new products.
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