How do we validate that our product strategy is the right one?
This is a natural question and I would specify the question a bit to say "how do we validate that our product strategy is the right one for us?"
Might seem like a small delineation, but the truth is, no one strategy is right for every company or product. What works amazingly for one company could yield paltry results for another.
For that reason, I'd say the best starting place to determine whether you're developing a strategy that is right for your situation is
- To be clear on the first principles you're designing around
- Try your hardest to maintain an environment of intellectual honesty that normalizes healthy friction (by healthy friction, I mean people care, are not afraid of unnecessary repercussions for sharing original ideas, and communicate in a compassionate way with one another)
- Have a bias for action instead of perfection
Every strategy looks great in a deck or on a whiteboard, but you have to be willing to put something out there and see what the world tells you. To paraphrase Mike Tyson, everyone has a plan until they get punched in the mouth. If you've designed your strategy from your principles, aligned them to your goals, brought people along the journey with you, and aren't afraid of changing your mind due to feedback (👊🏾 ), you'll be able to inch yourself closer to what's best for your company.
First, define "right" by establishing clear goals – is it product-market fit? Is it growing an existing product to a certain milestone? These will help you determine the right form of validation to apply to each stage.
For products that haven't yet achieved market fit, early & rapid customer feedback cycles are the best form of validation I've seen – push your target users to tell you over & over again in surveys & interviews that what you're building is something they must have, ideally by getting them to sign up or even pay you before you've even built it.
Once you have a clear sense of your goals after product-market fit, figure out what inputs drive those outputs – for example, if your goal is 10x growth in total customers in a year then maybe you need to significantly grow your weekly signups. And if your product initiative is to reduce the number of steps in your signup flow, then your target metric is likely to be improving conversion at the end of that flow. Once you implement your product initiative, test whether it's hitting your goal and iterate rapidly until you find the best path forward.
Pick the right input metric for each product initiative based on the goal for the initiative & track it closely to figure out whether your product strategy will get you to your goals.
I'm going to borrow shamelessly from Jeff Gothelf in his book, Lean UX:
"With your prioritized list of assumptions in hand, you’re ready to move to the next step: testing your assumptions. To do that, transform each assumption statement into a format that is easier to test: a hypothesis statement.
Generally, hypothesis statements use the format: We believe [this statement is true]. We will know we’re [right/wrong] when we see the following feedback from the market: [qualitative feedback] and/or [quantitative feedback] and/or [key performance indicator change]. You can see that this format has two parts. A statement of what you believe to be true, and a statement of the market feedback you’re looking for to confirm that you’re right.
Expressing your assumptions this way turns out to be a really powerful technique. It takes much of the subjective and political conversation out of the decision-making process and instead orients the team toward feedback from the market. It also orients the team toward users and customers."
Pitch ideas with a mind towards how you can test them. Can you test them beforehand? Or do you need to launch and monitor? How will you know? Call this out to the leadership team for each idea.
Most situations don't have "one right" product strategy. Some market/product situations have several strong/good strategies. In other situations there may be no winning strategies for your company/team.
But "how should we validate that our product strategy is good?" Let's look at 3 examples: (1) validating a new strategy you're considering, (2) validating a strategy the team is executing against but without market feedback yet, and (3) validating a strategy for which you can gather real customer data.
Evaluating new strategy proposals:
Good strategies lay out a credible path to the right destination.
Does the strategy lead the product/team/company to a desirable place? Happy customers? A healthy business?
Is the strategy credible? Is your company/team likely able to execute on it to arrive at the desired destination?
Is there data to support the strategy? E.g. latent user behavior in which people are working around a missing product/solution? Market research on underserved and/or unmet needs? Early b2b sales conversations leading to strong interest?
Does your strategy play to your company/team strengths? Your assets and position in the market?
Are your strengths/advantages sustainable? (sometimes called a "moat")
How will competitors and new entrants likely react? Does your strategy still "win" after these reactions?
Does the strategy make it clear what you will NOT do? A good strategy clarifies which "good" projects/investments the team will not invest in.
Evaluating a strategy your team is executing against (to build product):
A good strategy aligns, stabilizes, and empowers teams.
Has the strategy aligned people and reduced debates (especially repeated debates)?
Is the strategy helping people and teams make decisions locally in a way that's consistent with the direction and destination you need to reach together?
Is the strategy leading to stability in product/project execution? E.g. consistent priorities for multiple quarters? Less fire fighting? Less churn?
Evaluating a strategy with market feedback:
Your product metrics should be telling a story consistent with your strategy.
If your strategy has you repositioning your product as a solution to a new set of problems, how are the market surveys changing every month/quarter?
If your strategy has you winning customers over from a competitor, how's that going every week/month?
If your strategy has you building more engagement with your users, how is engagement improving?
If the product data isn't matching the path laid out in your strategy - it's time to investigate why. Maybe the execution needs to be better. Maybe the strategy needs to be changed.