The product development strategy is a complex process with many moving parts. It’s easy to get lost in the details when you’re trying to build an effective plan for your business.
This article provides a blueprint to help you navigate this space with as much nuance and precision as possible.
Product development strategy is a massive topic in the business world, and there are many different opinions and perspectives on having a solid product development strategy for your company. In this article, we will understand these ideas and offer our take on creating an effective product development strategy that can help you succeed in your industry.
We start with a definition of product development strategy. We then discuss the four components that make up this process: consumer research, market analysis, competitor analysis, and future trends.
Next, we look at what drives these factors before ending our discussion on how to execute an effective product development plan.
Product development strategy is a crucial component to the success of any company. It’s often discussed in abstract and broad terms without many tangible examples or case studies.
In this article, we try to navigate through these murky waters with as much nuance and precision as possible. We will explore what product development strategy involves, how it has evolved, and provide an overview of some of the most effective strategies for today’s companies.
As the product development cycle has become faster and more complex, so have the strategies that companies use to achieve their goals. There are three main types of plan: focused (or “pursue”), platform (or “leapfrog”), and portfolio (or “diversify”).
Each strategy decides on a different combination of products that companies choose to focus on. Instead, these strategies are not mutually exclusive; they can be mixed and matched together depending on the situation (ex: focused + platform). This article will explain how each strategy works before discussing their combinations.
First, let’s discuss the “focused” or “pursue” development space. This space has been most popular amongst established companies in a given industry who want to maintain their lead. It is also the best strategy to pursue when a company needs its next big hit (ex: blockbuster).
An excellent example of this is Apple. They followed the focused development space for the longest time by taking their existing platform and iterating on it with new features. They did so until Steve Jobs decided that he wanted to disrupt an entirely different industry: the cell phone industry. This process led to the invention of the iPhone, which was a total departure from their previous products and services.
Another example is Amazon who follows this method by selling everything under one roof. They disrupt many industries, including retail, publishing, product development, and cloud computing.
The danger with following this strategy is how one can get lost in the details. Instead, you must focus on the big picture and create a vision for where your product or service can go. For example, Tesla is very clear about its vision of transforming transportation to sustainable energy usage with electric vehicles. They can do this by constantly innovating on each segment of an automobile, including battery technology, charging, and driving mechanisms.
It is critical to have a product development strategy that aligns with your company vision and values while ensuring you are on track to achieve strategic goals. Without this plan in place, you will face uncertain growth opportunities and not be able to meet the financial obligations of investors or lenders if they decide to start withdrawing support from your organization and its operations.
For many companies, it is easy to get caught up in the excitement of new products and ideas without having a long-term strategic plan that sets you apart from your competitors with an innovative product development strategy. This idea can be further extended into creating or modifying business models through patience and planning for growth opportunities.
The platform or leapfrog strategy is used by businesses to create a new product or service that disrupts an industry by leapfrogging the competition. This is done in two ways: (a) creating a better product or service than what is currently available, or (b) entering the market with a lower price point than your competitors.
Both of these approaches have their challenges but are still valuable strategies. The former is most applicable when the industry has a fixed mindset and expects that products with significant improvements will be more expensive than existing options on the market. This strategy can be applied during product development or later in your business life-cycle to gain an edge over competitors.
The latter can be used to enter a market with a lower cost point than competitors. It is also applicable to offer customers more affordable prices for products with the same quality as those provided by your competition during product development. Still, it is sold at a fraction of their cost. It is crucial to bear in mind how much you can spend before designing and producing your new product, or else it may lead to unsustainable losses.
There are two primary ways to undercut the competition: price and quality. You can offer a higher quality product than existing options on the market at a lower price, or you can submit a more inferior quality product but available at a lower price than your competitors. Both of these strategies have their benefits and drawbacks.
There is something called the “experiment” development strategy, typically associated with new companies looking to break into an established industry (ex: Facebook entering social media). This company wants to explore its options by trying out several different strategies or features. Whether this will work for you is based on the market’s reception to your experiment.
Third, let’s discuss the “fork” strategy, which is typically associated with a large corporation that wants to branch out into another industry without disrupting its current business model (ex: Microsoft entering mobile). This company has already built up an audience and platform, but they want to explore other options by branching off from where they are currently.
A small or large company can also use an “acquisition” strategy. A smaller company may want to merge with or acquire another company to access its technology, customer base, or other resources. A larger company may like to purchase another company to expand its product line and make sense of the ever-changing technology landscape.
There are also a few other “strategies” that companies can use for product development, but these seem to be the most common. Companies need to determine which strategy is best for them and then develop an action plan.
What are the critical components of a product development strategy?
There are a few key things that companies need to think about when developing their product development strategy. Here are the most important ones:
With its products, what does a company wish to accomplish? What is the end goal? This is the stage where you write down your company’s mission and vision and your product goals.
This acts as an anchor for your product development strategy and is the foundation of all that follows. Inspire your team workers by setting big goals. This is also the section where you get to define the “why” of your product vision.
The vision of your product is more than just a statement and it also insinuates the changes you need to make for your product vision to be realized. For example, if your company’s product goal is to “increase our market share by 20%,” you are implying that there needs to be some kind of marketing component included as part of the development strategy goals and vision.
The strategy portion of your product development plan should answer these questions:
- What needs to be done for the vision to be realized?
- How will we know if we are successful?
- Who is responsible for what tasks?
Once you have answered those three questions, it’s time to evaluate other vital elements of your strategy. The first is the product development process itself which includes how long each step will take and what kind of resources it requires.
Next, you’ll need to determine when certain milestones must be hit not to disrupt your overall timeline. You also need to have a backup plan if the goals aren’t met on schedule.
The next step in this process is to set goals and objectives.
What do you want your product to achieve, and how will it make money?
Last but not least, you need to have a communication strategy in place, so everyone is on the same page. This includes stakeholders, team members, and anyone else involved in the process.
If you can answer these questions thoughtfully and deliberately, you’re all set to get started on your product development strategy. This step needs to have SMART goals- Specific, Measurable, Achievable, Relevant, and Time-bound.
The next step is to have a roadmap. This will help you visualize the steps necessary to achieve your goal, and it can be adjusted as needed.
If something goes wrong or the original plan needs to be changed, that’s okay too! As long as you’re being flexible and adjusting along the way, you’ll be able to reach your goals.
The essential aspect of the product development strategy will be this roadmap. A product roadmap that guides the process is not just confined to product launches or enhancements. It should also include aspects such as:
- The competitive landscape and how you plan to stay ahead
- How you will prioritize initiatives, and what are your criteria?
- What channels you’ll use for communication (both internally and externally)?
The next component of the strategy is to have a go-to plan and calculation of metrics. This will help you measure success and continue to course-correct as needed. Without this, it’s impossible to know whether or not your product development strategy is effective.
Some factors you’ll want to consider in this calculation are:
- How much revenue growth is expected?
- What are the customer acquisition costs?
- Lifetime value
- What is the cost to develop the product?
- How long will it take to break even on investment?
Product stickiness, feature adoption, and other engagement metrics are essential. As your product grows, these numbers can change, and you’ll want to make sure that the trend is positive.
You’ll also need to define a successful outcome for your company and set realistic goals.
This framework can help you prioritize initiatives and decide which products are worth your time. It’s essential to have a set of criteria that you’re using to evaluate potential outcomes, or else you’ll
This will help you define how your product will be launched and which distribution channels you’ll use to get it out there.
A good team
Finally, make sure that all team members fully understand their responsibilities and engage them in this process as much as possible! You should have a solid team that understands its role and is excited to work on your product.
Members of a team include a product manager, product designer, developer, and UX/UI designer. They need to work together to understand the users, create a feasible technical solution, and develop a product that meets business goals.
The three main components of this process include:
- Product Strategy
- Distribution Channels
- Team Engagement & Communication
The best strategy is to have a clear product vision, build a great team to execute it, and use the proper distribution channels. This will help you create a successful product!