Product Strategy – Insights
Continuing with the product strategy series, in this article I’d like to discuss my favorite, yet the most difficult, aspect of product strategy, which is to generate, identify and leverage the insights that will provide the foundation of the product strategy.
You’ve probably heard the stories about the insights about customer behavior that drove early Netflix to rapid growth and profitability; or the insights around new user onboarding that drove early Facebook to explosive growth; or the insights around customer trials that Slack and Salesforce.com leveraged to spread like wildfire across businesses.
In this article, we’ll explore where these critical insights come from, and how to make sure you’re finding them, as they can hide among the thousands of other data points you’re likely collecting.
There are a few things I need to make clear before we get into this:
First, if you’re looking for some paint-by-number playbook or framework for coming up with these insights and a solid product strategy, I’ll save you some time and tell you right now you’re not going to find that here.
As I’ve tried to emphasize throughout this series, product strategy requires real effort and thought:
“Good strategy … does not pop out of some ‘strategic management’ tool, matrix, chart, triangle, or fill-in-the-blanks scheme. Instead, a talented leader identifies the one or two critical issues in the situation—the pivot points that can multiply the effectiveness of effort—and then focuses and concentrates action and resources on them.” – Richard Rumelt
Second, in every single case I know of, including every instance where I was able to contribute to the product strategy myself, this never happens without real preparation.
You might have an epiphany in the shower, but that’s only after you’ve spent hours studying your data, your customers, the enabling technologies and your industry.
The information that’s in the strategic context – the company objectives, the company scorecard/dashboard, and the product vision – is the foundation for any kind of significant insight. So, studying this is all part of “doing your homework” as a product leader.
Third, it’s important to realize that these insights can come from anyone or anywhere. You might find inspiration in an industry analysis on Stratechery, a chat with a sales person, a new enabling technology, a seemingly random comment from a customer, or an academic paper.
But without that preparation you probably won’t recognize the insight even if it’s right in front of you. My main point here is that you never know what might help you connect the dots, so always keep an eye out, and an open mind.
All that said, there are four consistently effective and valuable sources of insights, and strong product leaders spend much of their waking hours contemplating these:
For so much of what we do, the big insights that form the foundation of successful product strategies come from an analysis of the product data. Especially related to your business model, your acquisition funnel, your customer retention factors, your sales execution data, and hundreds of other important indicators of the state of your company.
You might have a theory about which customers respond best to your product, so you run an analysis and realize that in certain situations, your product is a dramatically better fit. You realize you can either find more customers like that, or work to replicate that dynamic with other types of customers.
Often, you will get an idea about the data, and you’ll have to construct a test to obtain the specific data you need. This is normal, and the sooner your organization gets good at running these sorts of live-data tests, the better your chance of lasting success.
It’s normal today for product teams to be running live-data tests on a near-constant basis. You learn something on every test, but every once in a while, you learn something truly important, a potentially valuable insight.
The key is to know enough to spot this learning, and then leverage this learning into meaningful action.
User research is all about insights, which is why I’m such a fan of having strong user researchers in the organization. Mostly the insights they generate are qualitative and therefore not “statistically significant,” but don’t let that fool you – qualitative insights are often profound, and can literally change the course of your company
The user research community generally breaks down insights into two types. The first is evaluative which essentially means, what did we learn from testing out this new product idea? Did it work or not, and if not, why not? The second type of insights are generative. This means, did we uncover any new opportunities that we weren’t pursuing, but maybe we should be?
This is actually the source of a very common confusion in product teams. For the most part, in product discovery, our learning is evaluative. We already have a problem we’ve been asked to solve, so we’re not actively looking for other problems to solve – we’re focused on finding a solution that actually works.
We of course have lots of product ideas, and we test those ideas out with prototypes on actual users, and we can quite quickly learn the major reasons this product idea may or may not work.
But anytime we interact with users and customers, we have a chance to learn more about them, and sometimes we discover even bigger opportunities than the ones we’re looking into at the moment. Even if they love the new thing we’re testing out, we may realize there is an even bigger opportunity if we’re open to it. This is an example of a generative insight.
Or, even if a product team is not actively trying to do discovery on a particular problem, as part of the team spending time with users and customers every week (you are doing that, right?), we uncover new and potentially important problems to solve, or needs not being met.
Too many organizations are either not doing this ongoing learning about their customers, or even if they are, they are not set up to leverage the insights that are generated, so the learnings are all too often ignored.
The enabling technologies are constantly changing, and occasionally a technology comes along that allows us to solve long-standing problems in new, just-now-possible ways.
If the technology is new, you very likely don’t have anyone on the teams that has been trained on this new technology, and this fact ends up scaring off many leaders, or they occasionally think they have to partner with a third-party that does have the necessary experience. But if the technology is important to you, your company needs to learn that technology.
The good news is that this is rarely that difficult. Your best engineers are probably already considering this technology and would love to be able to explore further.
In the best organizations, it is the engineers that often identify these enabling technologies and proactively bring the possibilities to the leaders, usually in the form of a prototype.
There is always a great deal to learn from the industry at large. I don’t just mean your competitive landscape, but major industry trends, insights in other industries that may pertain to your industry, and insights from similar markets in other regions of the world.
I’ve written earlier about my favorite sources of industry insights, but there are always some number of analysts covering nearly every space, and you should be following those that you consider among the best.
More than a few CEO’s have decided the best way to obtain these industry insights is to outsource this to one of the management consultancies, such as McKinsey, Bain or BCG.
I admit to mixed feelings about this. The people at these firms are often very strong, but they have two big factors working against them. First, their focus and their experience is almost always on business strategy, and rarely product strategy (and they often won’t even know the difference). Second, the typical duration of their engagement is rarely enough time for them to gain the level of depth in your business needed for true product strategy work.
So the result is that their insights are not usually considered relevant by the product leaders or product teams. Partly they’re right, the insights are not relevant, but partly the issue is that it’s very easy to discount insights found by a third-party.
What I have found is that if you are able to recruit one of these management consultants to come join your product organization, they can often be coached into exceptionally strong product managers and product leaders.
In a strong product organization, these four types of insights are always the subject of interest and discussion, both at the leadership level and at the product team level.
But half the battle, especially in larger organizations, is getting the relevant insights into the right minds at the right time.
It is often remarkable how much a product team learns, especially as they are working on product discovery on important problems. Yet it is easy for that learning to stay just with that product team.
The insights that are generated need to be shared and communicated. Unfortunately, the most common way that most teams try to share these learnings is by writing them down somewhere – an email, slack, or a report. Sadly, this is rarely effective.
The product leader or design leader is often the first person to “connect the dots” between learnings of different teams, and see real opportunities.
The key is to make sure these learnings, whether they are coming from the data, customer visits, enabling technology, industry analysis, or any other source, make it to the product leaders.
In many ways, leaders are given the data they request, not the data they need, especially to make insightful strategic decisions.
This is an important benefit of the weekly 1:1’s.
This is also another example of how empowered product teams don’t need less management, they need better management. These leaders need to take the learnings and pass them along to other teams that may benefit from this insight, and more generally help to build their understanding of the holistic business.
One practice that I have long advocated is that the head of product should be aggregating the key learnings and insights from all the different teams in her areas, and at the weekly or bi-weekly all-hands, she should be summarizing the most important of these learnings and sharing with the broader organization.
This sharing serves a few purposes:
First, it helps the broader organization, including the other product teams but also stakeholders, get a better understanding of the learning and insights that happen every week in the product organization.
Second, it ensures that the leader is truly grokking all the key insights and not just passing along some status in an email.
Third, it is very hard to anticipate exactly where key insights will have the most impact, so it’s very important to share the insights broadly, especially across the other product teams.
One way or another, as a product leader you will need to identify insights that you can leverage to generate the necessary impact.
At this point, we have focused on a small number of truly important problems for the business, and we have identified what we believe are the linchpins for moving the needle for those problems. Now we’re ready to turn those insights into actions.
Note: In the article on Focus, I highlighted the First Round Review article on the Pandora Prioritization Process, and pointed out how it was an example of a complete lack of product strategy. Coincidentally, in this week’s First Round Review article, they discussed the product strategy of the Superhuman team, which I would argue is an excellent example of a product strategy based on focus and insights leading to effective action.