What is the antidote to a reactive product strategy?
How any company can build a visionary product strategy, using purpose as their lens.
Around 40% of products launched each year fail.
Most code that is written in organizations is never used. Developer chats on forums like Stack Overflow are overflowing with threads lamenting wasted work.
And even the largest companies fail to pivot when the market is moving away from their core product, like the famous example of Kodak successfully designing the first digital camera…and then deciding to scrap it. The reason? It presented too much of a risk to their core product, the film camera.
With short-term revenue as the only measuring stick, even a revolutionary innovation can look like a threat.
Why do most new initiatives fail?
The tough reality is that most companies simply are not visionary.
Instead, most companies build their company and product strategies reactively. They focus on “keeping up with the Joneses” of what competitive companies are doing. And even more often, companies jump from potential revenue opportunity to potential revenue opportunity, without much deeper conviction in the opportunities value aside from the potential revenue it could bring. As companies busy themselves with chasing opportunities in reaction to new external triggers (market shifts, competitors, customer feedback, etc.), they somehow always find themselves a step behind their more innovative peers.
The good news is there’s an antidote to reactive product strategies: a Purpose-Driven Product Strategy.
By combining a clear and meaningful purpose, with an approach to systematically driving innovation by seeking out and vetting opportunities that align to purpose — any company can become a visionary leader in their market.
A company's purpose has to be authentic to create an advantage
The most important thing that a clear, authentic company purpose does for an organization is to have something bigger than just revenue to align their team towards. Revenue is important, but if it is all a company is chasing, it’s all too easy to chase every new opportunity for revenue that arises…and all too hard to take big risks that challenge the status quo.
At its best, a purpose acts as your “lens” through which all decisions are evaluated, small and large. A great company purpose answers two big questions:
- Why do you exist?: Why does your company exist? How is the world different as a result of your work?
- For who?: Who do you serve? This answer helps keep your team laser focused on your most critical customer, even if you serve many stakeholders.
The Purpose-Driven Product Strategy
A purpose-driven product strategy entails using purpose to answer three big questions; what to build (versus buy), what to say “no” to, and how else might we build new value around our purpose?
1. Using purpose to answer the “Build versus Buy” question
Build Versus Buy is a well-known analytical model to determine what a company should build internally versus find ways to outsource. This analysis typically explores dimensions related to cost, specialization, internal team competency, etc. I’d propose a new dimension: purpose.
As product owners, we should put every new opportunity through the filter of: “Does this opportunity support our company purpose?”. And if yes, then ask, “Is this the biggest opportunity we could pursue around our purpose right now?” If we can’t answer confidently “yes” to those two questions, then that “opportunity” may really be hiding enormous opportunity costs.
If a feature is core to your differentiated purpose, build it. To help identify the features that are most core to your purpose, ask:
- Why would someone use this product?
- What’s different about your offering that no else is doing?
- What are the few things we need to own as our IP that are most central to our differentiation?
- What is our critical behavior change that we need to make in order to be successful?
For anything that is not absolutely essential to your differentiated purpose, try to buy it. This category includes the “halo” of supportive features on the periphery of your product that are essential to have, but are not unique to your organization. These features are not the place to innovate. Follow the ‘status quo’ for these features as much as possible, and invest your time on the things that differentiate you instead.
Some examples might include:
- Search functionality (unless your purpose is to revolutionize search)
- Insights dashboards (unless your purpose is to revolutionize analytics)
- Credit card processing (unless your purpose is to revolutionize payments)
- Transactional emails and email notifications (unless your purpose is to revolutionize email)
- …You get the idea.
Look to existing code packages and libraries, purchasable vendor solutions, existing algorithmic models that can be applied to your use case, or try open source software (check the license first, of course). If a commodity solution exists for something that you need but which is not core to your differentiated purpose; use the commodity.
2. Using Purpose to figure out when to say “no”
Time is always limited, and everything a company says “yes” to pursuing comes at the opportunity cost of something else. Your most valuable asset in any company is knowing when to say “no”.
When to say “no”…
As your company grows, the frequency of potentially revenue-generating opportunities that come to you inbound will increase exponentially. It’s easy to follow your purpose when you have nothing to lose and no one is offering you anything; it’s harder when people are clamoring to work with you waving fistfuls of money.
But if a feature, product, or partnership would conflict with your purpose, it’s likely that opportunity will cost you far more in the long run than the bit of revenue it might bring in.
Let’s use an example to illustrate. Take a hypothetical company, “Athena”, that has a purpose of “Create a generation of confident women by championing natural beauty”. A partnership opportunity arises with a well-known weight loss supplement with a habit of body shaming women in its advertising in order to sell its product. If the “Athena” purpose is authentic, no amount of revenue could make that partnership worth the loss of trust with their customers and the backwards steps that it would cause them to take around their purpose.
Use your purpose to confidently walk away from opportunities that would undermine your goals, even when money is on the line.
…And when to say, “No, for now”
Unfortunately, few real-world situations are as “cut and dry” as the above example. When launching a new product, product leaders will often hear strong demands from potential customers for — what I’ll refer to as “table stakes” features — often accompanied by a mournful, “If you only had [X] feature, we’d love to sign on as a client.” They’re often the integrations, admin panels, reports, settings, data pass backs, etc..
They are red herrings. Companies do not get adopted by because they had all the same settings and integrations as their peers. They get adopted only if their offering was significantly different and better in some way than their competition to make it worth switching. “Table Stakes” features can present a blocker to adoption, but will never be the reason for adoption.
The longer you can push out your non-differentiated, “table stakes” features, the better.
Say “No, for now” to anything that isn’t core to differentiating your company, until your differentiation is well-established and you’ve saturated the market of “visionaries” and “early adopters”. As soon as you extend to the early majority and beyond, you will be pushed to deliver more tactical features and offer a “whole product solution” with training, supplemental features, and integrations.
Take your big, differentiated, visionary swings early.
3. Purpose as a guide — and a mandate — to keep innovating
When a company is dedicated to pursuing a purpose, rather than just building a product, suddenly a world of new opportunities opens itself. Your product division can always ask, “how else might we create new value around our purpose for the people we serve?”.
A purpose-driven product strategy should ideally always involve testing the next several ideas for how you’d add new value around your purpose. These could be simple no-code prototypes, but prioritizing asking “what else?” will embed a culture of continuous improvement guided by purpose into your product strategy.
By starting with a novel template of an authentic purpose and asking how they might add new value around this purpose, companies will be more likely to generate novel ideas than companies that are simply trying to think of new revenue channels.
Product leaders can create a more visionary company culture overall
When product leaders can “come to the table” with ideas for ways their company can create impact around your purpose and drive revenue impact, product teams shift from being seen as people that fulfills requests, to a team driving strategy — and revenue.
A purpose-driven product strategy enables companies to take bigger risks, know when to say “no”, identify seemingly endless new ways to add value and new products that support their guiding purpose, and see success as measured not only by revenue generated but by impact.
Companies that lead from a place of purpose are the ones that build a consistent pattern of changing their market, and the world.
Further Reading
Article: Build vs. Buy Analysis. This article breaks down the factors that are typically assessed when determining if it is more advantageous to build a feature internally, or “buy” it (either from a vendor, by outsourcing, or by using existing open source technology).
Article: Myths about Product Failure Rates. This article delves into the widely shared stat that “95% of products fail”, and aggregates a number of detailed studies on product failure rates. The cited studies show a range anywhere from 40–95% of companies failing, and break down reasons why. Scroll to the second section for a detailed list of empirical studies on product failure rates, as well as differences by industry.
Book: “The Advantage”, by Peter Lencioni, on how companies that are purpose-led have an advantage over-reactive peers.
Book: “Crossing the Chasm”,by Geoffrey A. Moore, on how to prioritize, position, and market products at different stages of the innovation adoption lifecycle. This is one of the most helpful books I have ever read to inform product strategy and product marketing.
