Product Strategy 101: Vision, Strategy and Metrics

Vision:

Vision is a living mental image that expresses imaginative and guided views about future goals. A visionary represents an individual who plans or thinks about the future with imagination and wisdom. In the business world, a visionary is someone who envisions a possible future and then works to bring that future into reality.

There are two main types of visions:

• Global Vision: How you envision the world in the distant future.
• Company or Product Vision: How your company/product will look or what it will do in the future.

A company vision is something you define as a CEO or founder, while a product vision is defined as a product manager. To be a real visionary, you must have strong insights, a great imagination, an understanding of your market, and, importantly, listen to users.

Strategy:

Strategy is the process of systematically using resources and directing actions to achieve specific goals, often planned against a competitor. Michael Porter’s three general competitive strategies are:

1. Cost Leadership: Providing a product cheaper than everyone in your industry.
2. Differentiation: Offering a unique experience or feature set.
3. Focus: Concentrating on a narrow market and ignoring the rest.

Cost Leadership:

• Providing a product cheaper than everyone else in your industry.
• Example: Suppose we are a company producing bicycles and found a way to reduce production costs. There are two ways to use the cost leadership strategy. First, we can continue to sell bicycles at the market price, increasing profits. Second, we can sell below market price, still making a profit, and increase market share. In both scenarios, our product would be offered at a lower cost than everyone else in the industry.

Differentiation:

• Offering a unique experience or feature set.
• Example: Imagine we are a business with a video conferencing application. In a market with several competitors having similar features — making calls, recording calls, high-quality encryption — our company noticed that call quality was the most significant concern for users. So, we added features reducing both packet loss and background noise in calls. This unique feature set would differentiate us from the competition and attract more customers. To use this strategy, carefully listening to or predicting customer needs and addressing those needs not yet met by others is crucial.

Focus:

• Concentrating on a narrow market while the first two focus on broad markets.
• Example: As a company manufacturing cars, we decided to adopt a focus strategy and concentrate on a specific segment of the market. Instead of competing in the broad car market, we chose to produce only sports cars. Focusing on high speed, agility, and unique design for our sports cars, we targeted sports car enthusiasts. Additionally, to support our focus strategy, we intensified our R&D efforts in this area and consistently worked on improving sports car technologies. This way, we aim to achieve a leading position in the sports car segment.

Within the focus strategy, there are two subcategories: cost and differentiation. You can focus on a narrow market and either offer your product at a lower cost or differentiate it.

Vision vs. Strategy:

Having a vision requires the ability to envision a better future. Having a strategy requires the ability to determine the steps needed to reach a goal.

Product Development Hierarchy:

The product development hierarchy is a structure that guides the step-by-step process of implementing and developing a product, from broad goals to detailed tasks. Here are the basic building blocks of this hierarchy:

1. Goals: Define what your product aims to achieve, either in the long or short term. For example, increasing user base by 10% in the next year.
2. Initiatives: High-level efforts that help achieve goals. For example, creating a dynamic film categorization and recommendation system for users to find content.
3. Releases: The delivery or launch of a high-level new customer experience. For example, launching the dynamic categorization and recommendation system on the platform.
4. Features: Sets of capabilities delivered to end-users. For example, the ability for users to create custom categories based on their favorite films.
5. Epics: Large tasks that cannot be completed in a week or require one or more sprint durations. Examples include building the user interface of the system or creating a personalized film rating system based on user watching habits.
6. User Stories / Tasks: A list of tasks that need to be done to complete a story or higher-level task. User stories can be formatted as “As a user, I want to perform X action so that I can achieve Y.” For example, preparing the backend for a system including Rotten Tomatoes ratings.
7. Subtasks: Detailed and technical tasks needed to complete a user story or higher-level task. These tasks often involve step-by-step actions needed to accomplish larger tasks.

Adding Vision to the Product Development Hierarchy: The Very First Step

• Global Vision: Informed view of how the world, technology, and the industry will be in the next 3, 5, 10, or 20 years.
• Company/Product Vision: How your product or company aligns with the world defined by the global vision.

Product Hierarchy Example:

1. Goal: Make the site more user-friendly by increasing user satisfaction.
2. Initiative: Create a dynamic film categorization and recommendation system for users to find content.
3. Release: Launch the dynamic categorization and recommendation system on the platform.
4. Feature: Ability for users to create custom categories based on their favorite films.
5. Epic: Build the user interface of the system.
6. User Stories / Tasks: Prepare the backend for a system including Rotten Tomatoes ratings.
7. Subtasks: Fetch data from Rotten Tomatoes.

Vision Examples from Business:

Disney:

• Global Vision: Expects a decrease in cable television and a rise in individual subscriptions in the next decade, especially as young people tend to follow content from smart devices.
• Company Vision: Aims to be one of the three major subscription services shortly and deliver content directly to consumers by building a broad and diverse library.

Facebook:

• Global Vision: Foresees a future where everyone worldwide is connected to the internet, and artificial intelligence enables natural communication with computers.
• Company Vision: Aims to have everyone globally connected to the Facebook ecosystem by 2026, planning to add over a billion new users with the internet.org operation.

SpaceX:

• Global Vision: Believes that for humanity to survive, it must become a multi-planetary species, with Mars seen as a suitable place for human life.
• Company Vision: By 2030, SpaceX aims to be the leading provider of technologies enabling multi-planetary travel and settlement, with the goal of making human life possible on Mars.

Visionaries from the Business World:

Martin Cooper:

• A visionary in Motorola’s communication systems division, acknowledged as the father of the cell phone.
• Realized the vision of creating the first mobile phone by using professional photographers to take high-quality photos and later adding them to the website.

Elon Musk:

• Envisions a future where humanity inhabits Mars and establishes an interplanetary civilization.
• SpaceX’s Starship rocket is designed to achieve this goal, with the company making significant strides in innovative solutions and cost-effectiveness in space travel.

Henry Ford:

• Ford Motor Corporation’s vision was to create a world where everyone could afford a car.
• His strategy was to focus on a single model and continually improve and reduce its cost over time.

IBM:

• Faced a significant loss in 1993 and shifted strategies to focus on IT services.
• Restructured the industry by building computers from components of other manufacturers and aimed to be the largest contractor for delivering goods to space.

Netflix:

• Changed its vision by transitioning to a subscription system different from the traditional model.
• Today, stands out as a content creator, adapting to changing times with a constantly updated vision.

Strategy Examples:

Airbnb:

• Global Vision: People can rent unused rooms in others’ homes.
• Strategy: Used professional photographers to increase photo quality, take better photos, and add them to the website.
• Result: Sales increased exponentially.

Microsoft:

• Global Vision: Everyone will need software to run their computers.
• Strategy: Built and licensed MS-DOS, increasing demand for this software as computers became more widespread.
• Result: Microsoft became a global leader in computer software.

These examples illustrate the interconnectedness of vision and strategy, demonstrating how a clear vision informs effective strategies to achieve goals in various industries.

Creating a Roadmap

Every company creates roadmaps differently, and while roadmaps are generally not set in stone, having a general guide is useful. So why do companies create roadmaps?

Reasons for Creating a Roadmap and Alternatives

Managers and Investors Prefer Quarter-Based Roadmaps: Investors and managers often like to see quarter-based roadmaps that show a company’s future plans and goals. These roadmaps clearly indicate what a company plans to achieve in each quarter.

You May Have a Real Deadline: In some cases, a project may have a real deadline, and you can create plans by drawing a roadmap.

Prioritizing by Importance

Prioritizing projects by importance involves organizing projects based on priorities such as “Near Term,” “Mid-Term,” and “Long Term.” This method keeps everyone aligned but doesn’t impose strict deadlines.

Methods for Prioritization

Assumption testing: Prioritize based on assumptions. Test the riskiest assumptions first. Evaluate your assumptions on a scale from 1 to 10. Rank them from least risky to riskiest. Assign a score based on risk and importance. Add these two values to prioritize.

BUC method: Named after Business benefits, User benefits, and Cost, this method can be translated into business benefits, user benefits, and cost. Score the factors: Evaluate each factor on a scale of 1 to 10. For example, you might score business benefits as 8, user benefits as 9, and cost as 5. Sum the benefit scores: Add up the scores for business and user benefits (e.g., 8 + 9 = 17). Subtract the cost: Subtract the cost from this total (e.g., 17–5 = 12). Prioritize based on the resulting score. A higher score indicates higher priority.

MoSCoW method: Stands for “must-have,” “should-have,” “could-have,” and “won’t-have (this time).” This method is useful for organizations that need to prioritize product features. It can be used in different situations and helps resolve conflicts among stakeholders. Start with “Must-have” first.

What Are Metrics, and Why Are They Used?

A metric is a measurement or indicator used to quantify, monitor, or evaluate the performance of a process or system. Metrics are employed to measure, improve, and achieve goals related to your product.

Metrics differ from Key Performance Indicators (KPIs) in that KPIs are customized, strategically important metrics used to measure and track an organization’s primary objectives. Metrics, on the other hand, are more general measurement tools that may not necessarily be tied to specific strategic goals. Every KPI is a metric, but not every metric is a KPI.

Leading and Lagging Metrics

Metrics play a critical role in business strategies and performance tracking. They are often interconnected and come in two main types: leading metrics and lagging metrics.

Leading Metrics:

These are metrics that, when changed, cause a change in another criterion. They help guide the performance of an organization or individual. For example, if weight loss is the goal, weight is a lagging metric, and changes should be made to leading metrics such as calories consumed and calories burned within a specific period.

Lagging Metrics:

These are metrics that change based on changes in other metrics in the past. In the example of weight loss, weight is a lagging metric that changes based on decisions made previously.

There are various types of metrics, including:

1. Monthly Active Users
2. Returning Users
3. Churn Users (Lost Users)
4. App Store Reviews
5. Social Media Posts and Tweets

Real-Life Examples Companies may have many similar metrics, but when it comes to engagement, there are some product-specific metrics.

Examples:

Twitter

• Growth Metrics: total monthly new users, monthly/daily active users, activated users
• Engagement Metrics: logging in multiple times a day, time spent on the website, number of tweets sent per user, average likes, retweets, and followers, number of direct messages sent

YouTube

• Growth Metrics: monthly/daily active users, total new users, activated users
• Engagement Metrics: video views per user, average view duration

Facebook

• Growth Metrics: new users, monthly active users
• Engagement Metrics: news feed position clicks, number of messages sent, time spent on the website (including Instagram and WhatsApp), average likes given and received by users

Types of Metrics Metrics can be categorized based on their types:

1. Growth and Activation Metrics: Monitor how your product is growing and becoming active. Examples: total new users, new users by source, activated users
2. Retention Metrics: Track whether people are using your app repeatedly. Examples: retained users, resurrected users (resurrected users are those who haven’t used the app for a long time but start using it again)
3. Engagement Metrics: Monitor how often users interact with your app. These metrics can be customized for each company and product.
4. User Satisfaction Metrics : Measure how satisfied users are. Examples: Net Promoter Score (NPS), number of customer complaints, app store ratings
5. Revenue Metrics :Track how you are increasing your revenue. Examples: customer lifetime value (LTV), customer acquisition cost (CAC), monthly recurring revenue (MRR), annual recurring revenue (ARR)

Characteristics of a Good Metric

Good metrics have specific characteristics:

• Understandable: The metric should be understandable by everyone.
• Ratio or Proportion: The metric should represent a ratio or proportion.
• Relevance: The metric should be genuinely associated with your product.
• Changeable: The metric should be adaptable to change.

H.E.A.R.T Metric Framework

1. Happiness: Measures how happy the user is.
2. Engagement: Measures how engaged the user is with the product in the short term.
3. Adoption: Measures how many users are trying the app.
4. Retention: Measures whether users come back each month. 5. Task Success

Measures whether users are doing the most important thing in your product and whether they are successful at it.

H.E.A.R.T Metrics Within the YouTube User Experience Metrics:

1. Happiness: Measuring how happy YouTube users are is an indicator of the platform’s success. Metrics such as user likes, comments, and shares reflect happiness. Additionally, understanding whether users enjoy content produced by content creators is important.
2. Engagement:Another key to YouTube’s success is how often users interact with the content. Metrics like comments, likes, shares, and subscriptions help measure engagement. Also, the duration users spend watching videos is important.
3. Adoption: Another metric that evaluates the platform’s success is the rate at which new users adopt the platform. In addition to new memberships, how users begin using platform features is essential. For example, the rate at which users accept live streams or 4K videos can be measured with this metric.
4. Retention: YouTube’s success is also measured by how long users stay connected to the platform. The frequency with which users visit the platform regularly over a certain period is measured by the customer loyalty metric. The long-term retention of users on the platform is a sign of success.
5. Task Success: A measure of success is how easily users can perform specific tasks (e.g., searching for videos, watching, sharing) while using YouTube. Metrics such as search result accuracy, video playback speed, and user interface usage help measure task success.

A.A.R.R.R Metric:

The A.A.R.R.R (Pirate) metrics framework, created by Dave McClure and commonly used by software and service businesses, helps measure key stages of a business, including user acquisition, activation, retention, referral, and revenue generation.

Acquisition: This stage represents the process of attracting users. You should measure where you’re getting users from and whether these users come back to use your application.

Activation: Activation is the stage where users sign up and engage with your application. Measure the users who have registered and started using your application.

Retention: This stage aims to keep users engaged with your product over an extended period. Measure how often users return and make repeat orders.

Referral: Users are more likely to refer your application to others if they are satisfied and happy with it. Measure how often users recommend your application to others.

Revenue: This stage represents generating revenue from your users. Measure the rate at which users make purchases from your application and the revenue generated from those purchases.

Example of A.A.R.R.R Metric for Instagram

Acquisition: Instagram uses various channels to attract users. For instance, Instagram acquires users through organic search, the explore tab, ads, and sharing by other users. In the acquisition stage, Instagram tracks where users are coming from and how often they return to the app. Evaluating the effectiveness of ad campaigns, the explore tab, or hashtag usage is part of this stage.

Activation: Instagram is used to encourage new users to sign up and create profiles. In this stage, it’s important that users create Instagram profiles, start gaining followers, and engage with the platform. Users making their first posts, following other users, or liking and commenting on content are part of the activation stage. Instagram measures activity by encouraging new users to perform these interactions.

Retention: The retention stage involves keeping Instagram users using the platform regularly. Measuring how often users log in, update their content, and engage with other users indicates retention levels. Instagram encourages long-term commitment and continuous content creation.

Referral: Instagram is a social network where users engage by sharing content or following other users. High-quality content and interesting shares encourage users to recommend Instagram to their friends and family.

Revenue: Instagram generates revenue through advertising and ad campaigns for businesses. Additionally, e-commerce businesses sell their products through Instagram. The revenue stage includes measuring revenue from ads, the success of businesses in selling on Instagram, and other revenue sources. Instagram helps advertisers and businesses succeed in advertising and selling on their platform.

Tracking Your Metrics in Practice

Tracking metrics is a crucial part of evaluating and improving a business’s success. If you work in a company, you probably have a list of metrics to track and tools to use for tracking. However, if you’re just starting and don’t know which metrics to track, the following tools can be helpful.

Tools for Tracking Your Metrics

Google Analytics: Google Analytics is a powerful tool for monitoring the performance of your website or application. It allows you to track visitor statistics, page views, conversion rates, and more.

CrazyEgg: CrazyEgg is a tool that visually displays user interactions on your website. It provides heatmaps showing which areas are clickable, where visitors navigate, and where they focus their attention.

KISSmetrics: KissMetrics is a customer analytics product that helps you define, understand, and improve the metrics that drive your online business.

Mixpanel: Mixpanel is an event analytics service that tracks user interactions with web and mobile applications. The collected data is used to create custom reports and measure user engagement and retention. Mixpanel works primarily with web applications, especially SaaS, but also supports mobile applications.

Optimizely: Optimizely allows you to conduct A/B tests and experimentation research to learn which features or designs perform better.

Segment: Segment is a Customer Data Platform (CDP), which means it facilitates collecting, transforming, sending, and archiving first-party customer data from your digital properties (websites, apps, etc.). You can use Segment to collect, transform, send, and archive your first-party customer data.

Cohort Analysis

What is a Cohort?

A cohort refers to a group of users or customers who interact with your business for the first time. This group consists of individuals who engage with your business during a specific time frame.

*Why Should We Conduct Cohort Analysis?

Conducting “cohort analysis” is crucial for understanding the impact of changes in your business. This is especially useful for understanding how users behave based on when they joined your business.

Example Scenario: Product Manager of a Mobile App Company

Imagine yourself as a product manager for a mobile app. One day, when observing the effects of changes made in June on your app in July, you notice that the average time spent in the app has decreased by 40%, and interactions per session have decreased by 30%. However, to understand the reason behind these changes, you need to take one more step. This is where cohort analysis comes into play. In this case, when you conduct cohort analysis, you might realize that users who joined before your changes don’t like them, whereas new users don’t have anything to compare and find the current state of the app acceptable.

How to Perform Cohort Analysis:

To conduct a cohort analysis, you take users who joined at a specific time and compare their behaviors on key metrics with users who joined at a different time. Here are the essential details and design steps to consider when performing cohort analysis:

Time Framing:

• Classify the users you want to observe based on a specific date range (usually a week or a month).
• Example: If you want to examine support requests related to your product, you can choose a monthly time frame to classify customers based on their shopping season. This way, you can understand if someone shopping in winter is more likely to request assistance than someone shopping in summer.

Observation Period:

• Determine how long you want to observe the cohort’s behavior.
• Example: If you set a one-week delay, it means you want to know if a customer requests help within just one week after their purchase. If you want to examine a longer period, you can choose a month.

End Date:

• Determine the date when all data is officially collected and can be analyzed.
• Example: This is usually the end of the month in which the last person who can complete the defined delay period is observed. For instance, if a retrospective analysis is done at the end of the year with a one-month delay, the end date would be the end of January.