This is the story of how organizations evolve to pursue a clear product strategy.
We’ll follow the story of your hypothetical startup as it matures into an high-performing established organization to consider what the use of strategic objectives looks like at every phase of growth.
That said, the 5 stages of strategic maturity are independent of the age or size of the organization. Though it’s unlikely a startup could achieve the highest stages, it’s not impossible. And there are more than a few enterprises that may find themselves performing at the lowest stages.
My hope is that after reading this post, you’ll be able to identify your organization’s current stage and what you might do to advance it to the next one. After all, it’s only through pursuing a clear strategy that you can progress towards product excellence.
Ready for your evolution to begin?
Stage 1: I trust my gut
You’re at your company’s weekly all-hands, and you gaze around at your three colleagues in attendance (the remaining three dialed in).
You are a seed stage startup, and your pre-owned microwave just signaled the ramen is ready.
The meeting begins and, as usual, the topic of the hour is user needs, product gaps, and feature prioritization.
“What should we work on next?”
Like early hominids navigating the savanna, startup product managers live a tenuous existence. Indeed, life for many startups is nasty, brutish, and short.
At this phase, setting a six-month strategy, or even setting quarterly OKRs, feels as absurd as Thod the cave dweller deciding what he’ll eat for dinner on a particular evening next October.
Every other day you receive new inputs that shatter previous notions about what your users (current and future) really need. Your view of the market and its key players remains fuzzy, so the strategy you’ll use to achieve your product vision is still a work in progress. And if you’re creating a brand new market category, you’re playing a game that doesn’t yet have any rules.
Objectives in the startup
With so much in flux, can your startup be expected to pursue predefined objectives?
Some would say no.
“I’m not totally convinced that a startup should use objectives and key results before achieving product/market fit, unless that objective is ‘find product/market fit.'”
– Christina Wodtke, Radical Focus
In a world where 70–90% of startups fail, early stage companies can’t afford not to pursue objectives, even if they’re more open-ended and liable to change.
And as we’ll see, strategically-aligned objectives are just as critical for established companies. They face higher customer expectations and more competitive pressures than ever.
When objectives are overlooked, teams fall back on one thing and one thing only:
Stage 1 companies prioritize what to build next by trusting their gut.
With no formalized product strategy or prioritization framework, decisions are made ad-hoc in the head of the product manager, head of product, or CEO.
You might be all too familiar with what happens next…
The perils of neglecting strategy
Without a defined strategy set in place, you charge ahead responding to feature requests, solving a problem for one segment, and then a different problem for another. But no matter how hard you try, no customers ever seem fully satisfied. They gradually revert to their old solutions or drift off to competitors.
Meanwhile, your colleagues all have conflicting opinions on the best way forward. Each is exposed to different inputs from customers and the market but lack a shared understanding of what users really need or how to eclipse the competition.
With rising pressure and an ever-growing number of inputs, it’s easy to sink into analysis paralysis or a cycle of reactivity, losing all confidence in your ability to decide the right thing to build next. And that means a full-scale mutiny may be on your hands if you’re ever asked to justify why the team is working on feature X anyway.
Stage 1 is unsustainable.
There must be a better way - a more strategic approach, where focusing solely on one segment could then catapult you to another and another (think Tesla delivering the Roadster as a means to one day selling a mass-market sedan, like the Model 3).
For now, there’s only one way to claw yourself out of this primordial goo (i.e. ramen), and it starts with standardizing the criteria you use to prioritize what to build next…
Stage 2: Simple prioritization framework
The next stage (and the first step onto dry land) may require the biggest leap, but it’s easiest to define.
Stage 2 companies prioritize their efforts around a simple prioritization model – value vs. effort. They may refer to other prioritization criteria, but objectives (that would serve as guideposts for pursuing their strategy) are not clearly defined.
As you enter this phase, you and your colleagues begin to externalize information that until now, only lived in your heads.
You score features based on their perceived value, whether that’s a function of solving voiced customer needs or helping the product succeed in the marketplace. It’s in a system everyone can refer to and arrive at a shared understanding of every idea.
Later you factor in effort estimates (informal t-shirt sizes, or formal estimates received from the delivery team) and use these to decide which features are both valuable and feasible enough to send into delivery or add to the next sprint. (In stage 2, chances are you’re still racing to stay one step ahead of the developers.)
By systematically capturing and scoring feature ideas, you begin to feel more at ease. With an early prioritization system in place, you’re less bogged down by an inundation of feature requests. The weight of prioritizing ideas in your head has been lifted.
Stage 3: Prioritizing around objectives
Stage 2 was a step in the right direction, but how is feature value really defined anyway? And what’s to save you from committing the fundamental error of spreading your efforts too thin across the needs of multiple segments?
To evolve to the next phase, you need to ensure your prioritization criteria is actually aligned with your product strategy – that plan you have for reaching your 2-5 year product vision.
Of course, for startups, that time horizon may be on the shorter side, and it will be closely aligned with achieving product/market fit. But the key to evolving to stage 3 is defining clear guideposts, or objectives, to help you pursue your strategy and measure your progress:
- Solve core need X for customer segment Y.
- Drive business need X to help the product and business success.
Stage 3 companies have a strategy supported by simple objectives aligned with the needs of a target segment and the needs of the business. They use these objectives to prioritize what to build next, and to communicate the why behind each feature on their roadmap.
Examples of product objectives
Which objectives you choose to target user needs will depend largely on your product and the 1-5 core needs you’re solving for your target segment. In productboard’s early days, that looked something like:
- Provide B2B SMB product managers with a centralized repository for all their product inputs
- Help B2B SMB product managers prioritize around user needs 10x better than they can do in Excel
- Let B2B SMB product managers share an attractive roadmap that auto-updates when their plans do
It’s also common to have a wildcard objective or two to target miscellaneous (but still important) enhancements:
- Address critical user pain points in the product today
The objectives you choose to target business needs will depend largely on your strategy and business model, but all products have a few needs in common:
- Increase new user adoption
- Drive ongoing user engagement
- Reduce customer churn
- Recapture value to sustain & grow the business
- Achieve virality to acquire new customers
At this stage, the objectives may be somewhat open-ended, and you may still be prioritizing just-in-time to stay a step ahead of the delivery team, but you’re now charting a clear course toward achieving your strategy.
Stage 3 companies may also attempt to quantify their success by pairing objectives with key results. But the KPIs they often use represent lagging indicators (e.g. Increase revenue) that are too high-level to be actionable.
Stage 4: Sophisticated strategy, measurable key results
So far we said objectives are the guideposts that help you chart your course and measure your progress. But we didn’t say much on the latter. In fact, this is the primary characteristic of teams that have advanced to stage 4.
Stage 4 teams define measurable and actionable “key results” for their objectives - metrics or other KPIs that allow them to track their progress and know when an objective is complete. They strive to reach these on predefined intervals, or work cycles, at the end of which they evaluate how they did and set new objectives and key results for the coming cycle.
This has a number of implications for how stage 4 teams work…
Regular cadence for prioritization
If you ever felt like you were flying blind when prioritizing features just-in-time before adding them to the Kanban board or planning them for the upcoming sprint, this will be a huge improvement. You’ll now be able to focus the team’s efforts around a single objective for the coming 6-, 8-, or 12- weeks (the most common cycle lengths) and plan work further in advance.
Focusing on one objective at a time
This would have been inconceivable in the early days when you were still flying by the seat of your pants and seemingly adjusting course several times a week. But now that your strategy is crystallized, with fewer surprises around every turn, you can afford to go deep on solving certain user/business needs end-to-end and innovate in a way you just couldn’t do when the team was tackling five things at once.
At this stage, each delivery team focuses on one objective at a time, but discretionary time may be set aside to tackle miscellaneous unforeseen issues. For even more #synergy, you can also have multiple teams simultaneously tackling the same objective, or working on adjacent objectives. (I jest, but this is a very real effect you can take advantage of.)
Now that you’re solving discrete objectives end-to-end over a set time period, you’ll want to track your progress and decide how you’ll know the objective is complete by deciding on measurable key results for each objective. That way, at the end of the cycle the team will know whether to move on to another objective, or keep iterating on the same one.
Examples of key results
So if at productboard our team’s objective was…
- Help B2B SMB product managers prioritize around user needs 10x better than they can do in Excel
…then we might aim to achieve the following key results.
Over the 2 months following launch:
- 50% of weekly active users sort their features by the User impact score at least once a week (to monitor top-requested features).
- 75% of projects have enabled the Prioritization matrix for prioritizing features within an objective. 30% of weekly active users use it at least once a week.
- Fewer than 5% of all customer churns are due to reverting to Excel.
- The customer advisory board will send unanimously positive feedback on new advanced feature filtering.
Whatever you choose as your key results, just make sure they’re an exhaustive list of the conditions that must be met for your objective to be deemed a success.
By measuring your progress, you’ll instill accountability (for yourself and for the team) that brings out the best in everyone. You’ll work smarter by knowing whether or not you’re on track (and making adjustments as you go). And from all these learnings, you’ll continuously improve as you move from one objective to the next.
Stage 5: Everyone understands strategy & objectives
If you’ve made it this far, your rough-and-tumble startup is probably looking more like an established SMB, fast-scaling company, or smooth-running enterprise. Your product launches grace the front page of Product Hunt, you strut about in a Patagonia vest branded with your company’s logo, and you dine on fancy avocado toast at will. Congratulations! You have arrived.
The fact is, it’s easier to set clear objectives and pursue measurable key results on paper and much harder to successfully accomplish them in reality. And that’s what separates the final stage from the rest.
Stage 5 teams have an impressive track record of successfully achieving stretch goals - objectives that push the organization to new heights. Their objectives incorporate a sophisticated picture of the market and customer segmentation. Quarter after quarter, they tangibly advance the organization toward accomplishing its 2-5 year product vision!
Such successful execution is only possible in organizations where product leaders have rallied everyone around where the product is headed next, and why. In these high-flying organizations, everyone from marketing to sales, customer success, operations and HR, have full clarity around the product strategy, objectives, and even the key results being used to measure progress.
At the end of the day, everyone has a stake in the product. After all, they rise and fall with its success. (Just ask a marketer what it’s like to market features that no one needs, or ask a salesperson what it’s like to predictably close deals for a product without a clear strategy.)
Meanwhile, the product team stands to benefit greatly from opening up the black box of product management, no longer making decisions in isolation but sharing the rationale with colleagues who become true partners in the process. And it’s a virtuous cycle! Partners in sales, marketing, and customer success means better feedback from the frontlines helping to define better objectives and deliver better features - all aligned with needs of users and needs of the business.
You better believe all of this represents a giant leap down the path toward product excellence.
Evolution is the most harrowing process known to mankind. But defining objectives to pursue a clear product strategy needn’t be!
How are you planning on driving your organization to the next stage of strategic prioritization? What’s holding you back? Join the discussion below!
At the end of the day, clear strategy is just one of 3 pillars to achieving product excellence. Where do you stand on the others?