The Word Most Misused in Product
Walk into a product review at most companies and you will hear the word strategy used dozens of times. Our strategy is to win the enterprise market. Our strategy is to be the platform 'of choice. Our strategy is product-led growth. None of these are strategies. They are aspirations or tactics dressed in strategic language. Real strategy is rarer than the frequency of the word suggests, and the gap costs companies enormously.
Richard Rumelt, in his book Good Strategy/Bad Strategy, argues that most so-called strategies are bad strategies : collections of goals, slogans, or wishful thinking, lacking the elements that would make them actually useful. We agree with Rumelt and have watched this pattern in dozens of companies. The discipline of writing a real strategy is harder and rarer than the management literature suggests, and learning to do it is one of the most valuable skills a PM can develop.
Rumelt's Kernel: The Core of Any Real Strategy
Rumelt argues that every real strategy contains three components, which he calls the kernel. They are simple to state and hard to produce. Most bad strategies are bad because one or more of the components is missing.
Component One: Diagnosis
An honest, specific assessment of the situation. What is actually happening in the market? What is the customer struggling with? Where are we strong and where are we weak? What is changing around us? The diagnosis is the part most often skipped or fudged. Teams jump to what should we do before they have agreed on what is actually true . The result is well-coordinated action toward goals that may not match reality.
Component Two: Guiding Policy
Given the diagnosis, what is our overarching approach to the challenge? Not specific actions yet, but the principle that will shape all the actions. The guiding policy expresses the choice of how to engage with the situation: where to apply force, where to retreat, what advantage to lean on, what disadvantage to neutralise.
Component Three: Coherent Action
The specific moves that follow from the guiding policy, coordinated to reinforce each other. Coherent does not mean comprehensive. It means each action makes sense in light of the guiding policy and the diagnosis, and they do not work against each other. Lists of unrelated actions are not strategies, even if each item is reasonable in isolation.
The three components must connect. The diagnosis explains what is true; the guiding policy explains the chosen approach; the coherent action shows how that approach plays out in practice. When all three are present and aligned, you have a real strategy. When any are missing or disconnected, you have a list of slides.
Good Strategy vs. Bad Strategy
Hallmarks of Bad Strategy
Rumelt identifies four common patterns of bad strategy. Each is easy to recognise once you have seen it named.
- 1. Fluff: Vague language that sounds important but says little. Synergistically leverage cross-functional capabilities to deliver next-generation experiences. Strip the modifiers and there is nothing concrete left.
- 2. Failure to face the challenge: Strategy documents that set goals and describe activities without identifying the specific obstacle the team must overcome. Without a clear challenge, the strategy is fighting nothing.
- 3. Mistaking goals for strategy: Reach a billion users. Achieve thirty percent market share. Become the leader. These are aspirations. They do not explain how the team will overcome the things that have prevented them so far.
- 4. Bad strategic objectives: Long lists of objectives that lack coherence or priority. Everything is a priority, which means nothing is. The team is left to pick which objective to work on, and the picking becomes the unstated strategy.
Hallmarks of Good Strategy
1. It identifies the most important challenge. Out of many possible problems, the strategy
names the one whose solution unlocks disproportionate value.
- 2. It chooses where to focus. A strategy that addresses every possible direction is not a strategy. The choice of what to leave undone is as important as the choice of what to do.
- 3. It leverages an asymmetry. Why will this team or company succeed where others have not? What advantage are we using, and how does the strategy amplify it?
- 4. Its actions are coherent. Each action reinforces the others. The whole is greater than the sum of the parts because the parts are coordinated.
- 5. It can be tested. Bad strategies are unfalsifiable. Good strategies make claims that could be wrong; the team will know within a year or two whether they were right.
Translating Vision into Strategy
Vision tells you the future you are trying to bring about. Strategy tells you how to get there from where you are, given what is true about the world today. The translation is not automatic. Many vision-strategy pairs we have seen do not connect honestly: the vision is bold and inspiring, the strategy is a list of feature work that does not advance the vision much. The gap is usually due to skipping the diagnosis.
A Useful Sequence
- 1. Restate the vision in concrete terms. What does the world look like when you have succeeded? Who has benefited? How is their life different?
- 2. Diagnose the present. What is true today that prevents this future from existing already? What is the shape of the gap between now and then?
3. Identify the most important leverage point. Among all the things that prevent the vision,
which one, if changed, would most accelerate the rest? This is the focus of the strategy.
- 4. Articulate the guiding policy. Given the leverage point, what is the team's approach to changing it? Not specific actions yet, but the principle.
- 5. Define coherent actions. What will the team actually do to act on the guiding policy? These actions should reinforce each other and clearly serve the guiding policy.
- 6. Specify what we will not do. Equally important: what is explicitly out of scope? What temptations will we resist? A strategy without explicit non-goals tends to drift.
Components of a Real Product Strategy
Beyond Rumelt's kernel, a working product strategy in the modern tech industry usually addresses several specific elements. They are not all required for every strategy, but a strategy that ignores all of them is incomplete.
Element Question It Answers
Customer focus Who specifically are we serving, and who are we not?
Problem focus What primary problem are we solving for them, and what are we not solving?
Differentiation Why will customers choose us over alternatives, and what will we be uniquely
good at?
Distribution How will the product reach customers? Through what channels, with what
motion?
Business model How will the value created be captured? Subscription, transaction,
advertising, marketplace?
Defensibility What keeps us strong as competitors arrive? Network effects, switching
costs, data advantages?
Pace and sequencing In what order do we tackle these things, and what do we do first?
A strategy document should address each of these explicitly, even when the answer is this is not part of our strategy yet . The exercise of going through them surfaces gaps. Many companies find, in working through the list, that they have made implicit assumptions about distribution or defensibility that do not stand up to scrutiny. Better to surface that early than to discover it three years in.
Time Horizons in Strategy
Different strategic decisions belong at different time horizons. Confusing them is a common source of bad planning.
Three Year Strategy
The horizon at which most product strategy work is appropriate. Far enough out that you are not just describing this quarter's roadmap. Close enough that the conditions you are reasoning about are roughly knowable. Most strategic choices about market focus, business model, and differentiation belong here.
One Year Plan
Within the three-year strategy, the one-year plan answers what do we do this year specifically . It is more concrete: which customer segments do we target this year, what bets do we make, what milestones do we set. This is closer to roadmap than strategy but inherits its shape from the strategy above.
Five-to-Ten Year Vision
The longest horizon, where the vision lives. The strategy operates in service of the vision but does not try to be the vision. Most companies that try to write five-year strategies either become vague (because the world is unknowable that far 'out) or rigid (because they treat speculation as commitment). Better to have a flexible vision and a more concrete three-year strategy.
Pitfalls in Product Strategy
Pitfall One: The Strategy as Roadmap
Many product strategies are actually roadmaps in disguise: a list of features the team plans to build, organised by quarter. These do not address the questions a strategy must address. They describe activity, not direction.
Pitfall Two: The Strategy of Yes
A strategy that includes everything cannot be a strategy. It can be at most a wish list. If the strategy says we will pursue every segment, every channel, every business model, every competitor's strength, the team has not made any choices. Sometimes this happens because choices are politically difficult. Easier to put everything on the slide than to tell the head of one segment that they are not in the strategy. The result is that nobody is in the strategy in any meaningful way.
Pitfall Three: The Strategy of No-Diagnosis
Many strategies skip the diagnosis entirely. They describe what the team will do without first establishing what is true. Without the diagnosis, there is no test for whether the proposed actions are appropriate. The strategy could be excellent or terrible and there would be no way to tell.
Pitfall Four: The Borrowed Strategy
Some companies adopt a strategy because it worked elsewhere. Product-led growth worked for that competitor, so we will do product-led growth. The fact that it worked elsewhere does not mean it fits this company's situation. Strategies are context-specific, and what worked for one team may fail for another even with the same playbook.
Pitfall Five: The Strategy That Cannot Be Tested
Strategies should make claims about the world that could turn out to be wrong. Customers value integration over flexibility is testable. We will deliver excellent products is not. Untestable strategies are unfalsifiable, which means they are more like declarations of identity than guides to action.
How to Pressure-Test Your Strategy
Once you have drafted a strategy, run it through these questions. Each is a stress test that good strategies pass and bad ones fail.
- 1. Could a competitor read this strategy and have a clear, specific plan to defeat us? If yes, the strategy is too transparent or too unspecific. If no, the strategy is doing the work of being a hard-to-counter point of view.
- 2. What does this strategy say we will not do? If the answer is unclear, the strategy lacks focus.
- 3. What would have to be true about the world for this strategy to fail? If you cannot answer, the strategy is unfalsifiable.
- 4. If we executed perfectly on this strategy and it did not work, what would the autopsy say went wrong? Strategies that have no plausible failure modes are usually too vague.
- 5. Could we make every product decision next quarter using this strategy as the lens? If not, the strategy is not actionable and will not influence real work.
- 6. Does the strategy leverage something specific about us that others cannot easily copy? If we win, what is it that allowed us to win? If we cannot answer, we are betting on luck or execution speed alone, neither of which is a defensible long-term position.
Communicating the Strategy
A strategy that lives only in a slide deck is not a strategy. It must enter the working memory of the people who will execute it. Several practices help.
Write a Strategy Memo
A two-to-five-page document that walks through the diagnosis, the guiding policy, and the actions, in narrative form. Memos are read more carefully than slides and produce sharper thinking in the writing. Distribute it widely. Solicit reactions. Iterate based on feedback.
Test for Quotability
Find the two or three sentences from the strategy that you would most want a senior leader in another team to remember. If those sentences are not quotable, sharpen them. People do not remember whole documents. They remember vivid sentences.
Reinforce Through Decisions
When making real decisions, name the strategy explicitly. This decision serves our strategy of focusing on the mid-market because 'it solves a problem the mid-market has and the enterprise does not. The repetition cements the strategy in the team's heads and trains them to use it as a lens.
Review Quarterly
Once a quarter, review the strategy explicitly. Has anything changed in the diagnosis? Are the actions still serving the guiding policy? Are there new evidence points that suggest the guiding policy itself needs revisiting? This review is rarely dramatic, but its absence allows strategies to drift into obsolescence without anyone noticing.
A Final Word
Real strategy is hard to produce because it requires choices that feel uncomfortable. Choosing where to focus means choosing where not to. Diagnosing honestly means admitting weakness. Specifying actions means committing publicly to a course that could be wrong. The discomfort is why most teams settle for slogans and lists instead. The teams that overcome the discomfort produce strategies that compound, while the others churn through annual rewrites of decoration that nobody uses.
If you are early in your PM career, the most useful exercise we know is to write a one-page strategy memo for an existing product you use, applying Rumelt's kernel. Diagnose the situation. Articulate a guiding policy. Propose coherent actions. The exercise will sharpen your strategic thinking faster than any amount of reading. Do it for several products over a few months. The pattern recognition that develops will serve you for the rest of your career.
Key Takeaways
- Real strategy has three components: an honest diagnosis, a guiding policy, and coherent action. Missing any of these produces bad strategy.
- Most product "strategies" are actually goals, slogans, or lists of activities. They lack diagnosis, focus, and differentiation.
- Strategy translates vision into action. The translation requires honest diagnosis of present-day constraints, not just aspiration.
- A working strategy specifies what you will not do as clearly as what you will. The exclusions are part of the focus.
- Pressure-test your strategy by asking whether it is testable, leverages a specific advantage, and could actually fail. If all answers are no, you have decoration, not strategy.