Best Practices for Developing a Product Strategy: Choosing Your North Star Metric

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Aug 19, 2023
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Best Practices for Developing a Product Strategy: Choosing Your North Star Metric
Introduction:
Developing a product strategy is crucial for the success of any business. It serves as a guide to the future, based on the information available at the time. However, product strategies are not set in stone; they should be revisited, revised, and expanded upon as circumstances change and more information becomes available. In this article, we will discuss the best practices for developing a product strategy, with a specific focus on understanding the problem, identifying unique value, outlining execution plans, and choosing a North Star Metric.
Section 1 - Understand the Problem:
Every product strategy starts with a clear and concise problem statement. It is essential to know the problem you want to solve and for whom you are solving it. Start by defining the problem in ten words or less, focusing on the unique issue your product aims to solve. For example, Airbnb connects travelers with unique places to stay, while Google focuses on organizing the world's information.
Defining your audience is equally important. Identify who you are solving the problem for and who has the power to decide if your solution is the right one. In consumer products, these two groups are often the same, but in enterprise products, they may be different. Understanding your audience helps tailor your product strategy to their specific needs and preferences. For instance, Facebook initially targeted college students, while PayPal focused on eBay sellers and small online sites.
Before expanding to multiple markets, it is advisable to win in one market first. By doing so, you can refine your capabilities and later apply them to adjacent verticals or experiences. To understand the market, analyze the competitive landscape, define market segments based on behavior or needs, determine the market size, and identify your competitors.
Section 2 - Identify Your Unique Value:
To stand out in the market, you must identify your unique value proposition. This value proposition is what sets your product apart from competitors and makes it appealing to your target audience. Some examples of unique value propositions include Amazon AWS, which offers computation capabilities at scale, and Apple iPhone, known for its human-centric design.
It is essential to ensure that your unique value aligns with the problem you are solving and the needs of your audience. By focusing on delivering value that resonates with your target customers, you can differentiate your product and gain a competitive advantage.
Section 3 - Outline How You Will Execute:
While strategy is important, execution is what determines success. Many companies may have similar strategies, but those that excel are the ones that execute their plans effectively. To outline your execution plan, start by defining what winning looks like for your product. Set measurable goals that serve as indicators of success and continuously monitor your progress towards achieving them.
Identifying potential risks and pitfalls is also crucial. Assessing potential challenges and developing contingency plans will help you navigate obstacles and maintain momentum. Remember that an executable strategy is more valuable than a perfect strategy that cannot be implemented. The right strategy at the right time should feel obvious, and if it doesn't, it may be necessary to evaluate the readiness of the organization or the market.
Actionable Advice:
- 1. Define a clear problem statement and understand your target audience. Knowing the problem you are solving and who you are solving it for is crucial for developing an effective product strategy.
- 2. Identify your unique value proposition and ensure it aligns with the needs of your target audience. Stand out in the market by delivering value that sets you apart from competitors.
- 3. Outline your execution plan by setting measurable goals and identifying potential risks. Continuously monitor your progress and be prepared to adapt as necessary.
Conclusion:
Developing a product strategy requires a thorough understanding of the problem, the target audience, and the competitive landscape. By identifying your unique value proposition and outlining a clear execution plan, you can position your product for success. Remember to choose a North Star Metric that aligns with your business model and focus your efforts on the inputs that drive that metric. With a well-defined product strategy, you can navigate the challenges of the market and achieve your goals.
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