Product Manager. Ex-Farfetch, Skyscanner. Working on something new.
There is a recurrent thread going on in tech circles that contrasts 1) the philosophical approach of companies that have adopted the lean startup practice of rapid customer development cycles, and pivoting with your learnings, vs 2) companies that are thesis-driven, have a big mission and are relentless in pursuing it, bending reality to their will — using examples of product visionaries like Jobs, Gates and Musk.
One very recent example (at the time of writing):
The conversation has degraded into a love/hate discussion around companies doing experimentation, as if being rigorous about your hypotheses and attempting to invalidate your riskiest assumptions somehow precludes you from having a vision of the future and how you’ll change it. I’ll try to address some of the confusion around that in another post.
This one, I’ll use to structure how a Product Manager should think about that future, build out his product vision in material terms, turn it into a product strategy and then pursue that strategy with tactical actions that enable the real product shape to emerge from both convictions at a macro scale, and experimentation at a micro-scale.
Good books and practitioners of product strategy have tried to outline what strategy is, and how it translates into actionable practice over the past few years. Thinking about strategy is not new, of course, but its application to the internet economy and digital products has really been defined more clearly over the past 10 years, and books such as Good Strategy / Bad Strategy and, in particular, 7 Powers — recommended by some of the best founders and investors in the industry - have helped mold this collective knowledge base through amazing synthesis.
Others, like Ben Thompson, Tren Griffin, Web Smith, Gibson Biddle or Ryan Singer, write, teach and distill product strategy through their writing, analogies and analysis. Let’s define strategy through some of their insights:
“Good strategy works by focusing energy and resources on one, or a very few, pivotal objectives whose accomplishment will lead to a cascade of favorable outcomes” — Good Strategy / Bad Strategy
“How will your product delight customers, in hard to copy, margin-enhancing ways?” — Gibson Biddle
“Power: The set of conditions creating the potential for persistent differential returns. Strategy: a route to continuing Power in significant markets.” — 7 Powers
The ideas of strategy and power are directly linked to the fact that, once you’ve achieved it, you’ve established a competitive advantage that can be defined by both the economic benefit that it accrues to your company, as well as the barriers that it imposes on competitors and new entrants.
In other words, it creates a moat. Moats are usually applied to product companies when they’ve established sufficient differentiation that it appears insurmountable for a competitor to cross the gap competitively, given the current market landscape. Google’s dominance in search is one such example of a moat (everywhere but China and Russia). Anyone trying to make a dent on web searches would have to go head-on with G’s technological dominance, brand power, distribution advantages (such as the 9B$ premium it pays for being the default search engine on iOS). For any competitor to disrupt Google in this space, a significant market transformation would have to occur (one such as the explosion of decentralized internet content that led us to the need for Google in the first place).
It’s important to note that Google turned into Alphabet, which is a dominant conglomerate of internet companies, and has probably overgrown its original mission to “organise the world’s information and make it universally accessible and useful”.
Their vision gave way to new visions, and their strategy has evolved alongside them. It has emerged from their thesis, through a culture of experimentation at a massive scale. So while it is clear that the company has changed drastically throughout its lifetime, it is also relatively obvious, in hindsight, that a similarly large and world-changing company would be unlikely to originate from a different strategy.
So before we move on to the 7 powers lenses on Strategy and Power, and how they can be applied to your product development, a picture is starting to be formed as to how working out your strategy and developing a thesis for how the world (or your company) will be different when you fulfill your larger, more ambitious goals, does not change the fact that you’ll pack a lot of assumptions into your problem, solution and execution spaces, that you can invalidate through rapid and rigorous experimentation at a local level.
The outcomes of your experiments — which are ways to de-risk your tactical bets and measure the compatibility of your views and the market’s — coupled with your conviction and relentless pursuit of your thesis, will drive your company forward.
On the importance of uncertainty and emergence, Alex Danco notes, in his Two Truths and a Take newsletter:
First, there’s the problem of emergence. If you start from biology, it’s pretty easy to work your way backwards by reducing biology into its component parts — you’ll find chemistry and physics as its underlying components, with nothing unaccounted for. But it’s hard to go the other way. Life is a complicated, adaptive, messy thing. If you start with physics and chemistry, it’s hard to identify what exactly is the thing in here that gives rise to life. We say that life is an “emergent” phenomenon, which lets us dodge the question of “emerges through what, exactly?”
This talks to the relative ease of working from an ex-post consummation of strategy and boiling it down to its essential tactics and experiments, but also to how hard it is to predict that exact set of steps, and what they would lead us to achieve, had we not have run those experiments (including the many that failed).
The largest players in the industry report 10–30% rates of success in their experiments, which, arguably, could be even worse / more catastrophic if they weren’t able to measure them.
Good Strategy / Bad Strategy identifies one key tenet of great strategy has the fact that it must begin by:
This exercise is very often missing at the highest levels of Product leadership.
Product people, when they can think of a better version of the world, also may think of a series of tactics (typically designed to fit in a slide deck) that can be used to kickstart the product engine, but there’s usually lack of good directional policy — one that allows individuals to make informed trade-offs — and even of coherent and reinforcing actions, which, being successful would compound to let us overcome the obstacles on our way to market power.
Amazon’s product function (in effect guided by their executive shaman’s communication style — see his ’97 shareholder letter), seems to have recognized both the human inability to clearly visualize and describe the changes we want to produce in the future world once our product succeeds, but also how we fail to outline and critically analyze our guardrails and tactical actions in both timely and effective manners.
This has translated to the way the company does product briefs, through their use of 6-pagers as product briefs and the use of the Working Backwards methodology. This gives PMs and Execs the latitude to explain the product in detail and examine its key assumptions and risks, outlining a plan to execute against them. What key hypotheses they have, how they coordinate and compound, how they address the obstacles in their way, and how they’ll eventually lead to a moat.
The purpose of these documents is to lay out your product thesis, with a market and customer-centric voice, and then backtrack all the way to how they’ll play out in policy and tactics in order to make you win.
This means crystallizing your vision of the future in such a way that it is actionable, but that leaves enough latitude for regular failure, of a non-catastrophic nature, while in pursuit of that vision. That is good product definition.
(For more examples of good product definition, definitely check out Basecamp’s Shape Up and Ryan Singer’s attempt to synthesize product shaping).
In the next post, we’ll address the 7 strategic powers, described in the book, by Hamilton Helmer, which gives us a framework to think about the key types of strategic powers (aka Moats), their sources, the benefits they accrue to their holders, and the barriers they impose on challengers. Product leaders can use the framing of the 7 powers of strategy to design their policies and tactics, formulating an approach to achieve their goals.
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