How to Define a Winning Product Strategy with Dan Olsen

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It's two things. One is it's the focus on the short term. That gravitational pull, the short term just prevents people from ever lifting their head up and explicitly thinking about strategy. And the second main reason is if you're able to pull your head up, is they don't have a good framework or process for doing it. I need some traction. You need some traction.

Hey, what's up innovators, entrepreneurs, visionaries and disruptors. This is your Traction podcast host, Lloyd Lobo. We're a community of over 100,000 people just like yourself on a mission to help you get the methods, the money and the madness to explode your business growth. Featuring stories and tactical advice straight from those who've done it before, like Shopify, Twilio, Asana, and many more.

I need some traction. You need some traction.

Hey everyone, Lloyd Lobo here, co founder at Boast AI. Boast AI is on a mission to help innovators become successful and change the world by giving them access to government funding and the resources they need to succeed. Today's webinar is brought to you by Boast AI Launch Academy in partnership with Fowler Institute, Lazaridis Institute, BCF Ventures and Growth Lasers. I am super excited for this. Dan is one of the most respected product people I know in the Bay Area in on the planet pretty much. He's been a regular speaker attraction. He's been a good friend and comes.

With a lot of experience.

Google, Facebook, Amazon, Uber Box, Walmart. He also wrote the bestseller the Lean Product Playbooks. How to Build Product for How High Growth Year before last the last event before the pandemic, Dan ran our product summit at Traction and we had some of the best speakers and content there. So, Dan, lots of love for you, man. Looking forward to meeting in person one of these days, but without further ado, take it away.

Real pleasure to be here today. I want to talk a little bit about product strategy and I know you guys will definitely leave time for plenty of Q and A at the end. So I'll just share some advice and then we can talk about strategy. Basically start out with a technical background and then shift it into the business world. I went to business school at Stanford. I live here in Silicon Valley. I've been out here ever since. I was out here for grad school and when I was trying to figure out what to do after grad school, I learned about this career called product management and it sounded great and I'd never done it. I asked people, where's the best place to learn? So I started my product management career at Intuit. I was very fortunate. I learned a lot. Much of the advice I'm sharing with you, the foundations of it, came from my beginnings at Intuit. After Intuit I went to some startups. I co founded a startup and what I do these days is I do product training and consulting like basically sharing best practices and advice. Like today I also believe in product community as part of why I love the Traction Events are always so much fun just to get together with community and share notes and meet people. I have my own community called Lean Product Meetup. We have over 10,000 members. I can tell you a little bit more about it later. But yeah, Lloyd already mentioned some of the companies that helped out and actually here I found this photo of me at Traction conference back in 2016 is my first time there. Really enjoyed it and was fortunate to have been back a few more times. And as Lloyd said, the last time we had in person to coordinate the Product Summit track, which was a lot of fun. So I know we probably have a mix of people on the call today. We probably have some entrepreneurs, some marketers, some product managers, some engineers, people from a lot of maybe some designers from different disciplines. I'm guessing we do have a lot of product managers since it's so rare to have so many product managers together. I always like to start off with a little bit of a product management secret that not everybody knows necessarily. Only a small group of product managers know this. And that's the product manager's motto. And the product manager's motto is a bit like Spider Man's motto. Can somebody help me out with what Spider Man's motto is?

Yes, responsibility comes no power.

Yeah. So David got the Spider man quote is with great power comes great responsibility. The product manager's quote is a little bit different. With great responsibility comes no power. So unfortunately we have to influence without authority. No one reports to us. And being a product manager, it's a hat to be worn. For those of you that are co founders that don't have an explicit product manager, one of you is wearing that hat. It's a hat that needs to be worn. It's the responsibility that needs to be done. And one of the main responsibility of a product manager is to achieve product market fit, right? And product market fit is a term that got very popular with the lean startup movement. It wasn't really super well defined and that's what led me to write my book. Lean Product Playbook is after working with so many different product teams, I saw a meta pattern of what has to be there for market. So I wanted to show the pyramid real quick to put this strategy talk in context and then we'll dive headfirst into strategy. So the product market pyramid, it's a five layer pyramid. And the way to think about it is each of the layers is one of the key hypotheses that you need to get right enough in order to achieve product market fit. So the foundation of the pyramid, everything starts at the bottom with the chartered customer. Whose life are we trying to make better? Who are we trying to create value for? And the idea is like a real pyramid. Each layer builds on the layers beneath it. So the next layer up to our customer is underserved need for that customer who we're trying to create value for. What are their underserved needs? And we want to focus on needs. We're going to talk about this more needs instead of features and solutions. Far too often people start jumping to features and solutions before really thinking about the customer problem. And then you'll notice the word underserved there. We want to have a sense of just a well served meet. Are people happy with how it's getting met today? If so, that's probably not the best opportunity. You want to find places where it's something that's really important, but they're not. So these two layers together, these are the market layers. Together they form the market. And if you look in an economic or marketing textbook, it'll tell you a market is a group of people that share a set of common needs, right? And you don't actually control them in the sense that making their decisions for them, they get to make their decisions. You can target which market you want to go after and you hope and you're trying to convince them to buy your product. But what you control are actually the three product layer. The way I like to express the three product layers is your value proposition. Now in an ideal world, this would build directly on the underserved needs, right? But we don't know yet. There is A gap here. Right. Your value proposition is, okay, what are we going to actually promise to customers, hey, our product does this for you, it solves this problem for you. And how are we going to do that in a way that's better than the competition? The next layer up from that is feature set or functionality. Right. And this is where the concept of MVP comes in. Minimum viable product. We don't want to over scope or overbuild until we confirm that we're heading in the right direction. The way to think about this is your customer uses your feature set to enjoy the benefit that are in your value proposition. And then the final layer of the pyramid, the last product layer is user experience. Right. The way to think about this is the user uses the user experience to take advantage of the functionality to get the benefit in your value proposition. Right. So again, these are the five key processes you need to get right enough in order to have product market fit, which is just okay, targeting this market. We're making these decisions and assumptions up here in these three product layers. How well is that resonating with the target market? And you don't have to get these perfect, but if any one of these five layers is significantly off, it's going to prevent you from achieving product market fit. So where does product strategy live? Product strategy lives firmly in this value proposition layer. What benefits are we going to provide and how are we going to do so in a way that's better than the competition? Right. So I'm going to focus on the other talks. I talk about the slices of the pyramid. I'm going to focus solely on the value prop one year to get really clear on it. So I love we're going to talk about product strategy. If people have want to chat, if anybody wants to chime in with what when they hear product strategy, what things come to mind? What does it make you think of when somebody says product strategy? So Allison said how to achieve objectives. That's great. Thanks so much, Allison. Michaela says, what makes our product unique among comedian products definitely says how can we make their life easier. Arun says how we're going to implement product vision. Yep. Ronnie says, what will our product be used for in five years time? That's an important aspect of it. Right? We're going to talk about that in a sec. All right, cool. People talking about modernization and channels. But Kayla also says, what are long term goals? But you know, we got another long term thing. Someone's dropping PLG product LED growth. All right. It's another buzzword these days that's good. What problems to solve and how to sell it. Excellent. Cool. So we got a lot of great thoughts here. I'm going to show you mine at a high level. It's basically your plan for how you're going to win in the market, right? That's basically what it is. It should be informed by competitive analysis. People are saying, how are we going to be better than the competition? We need to focus on that. And then this is a really important point that a couple people touched on. It's got to be focused on the long term versus the short term. So often we are just sucked into the day to day grind. Right. Got to get this reason story written, got to build this design, co design this, build this, hit this meeting, hit this customer call. We are so short term focused and maybe thinking about one day ahead, maybe a few days ahead if you're lucky. Like you're thinking about this whole sprint. A two week sprint is very rare to be able to pull your head up and look farther along. And the way I like to think about it, I'm a physics nerd at heart is like this black hole, like the gravitational pull of the short term, it's so strong that if you let it, it will consume all of your time. And so in some companies it may feel like a luxury to be able to pull your head up and go, okay, let me try to think one month, one quarter, six months ahead. Because you know the day to day is going to take care of itself. So that long term researcher, that's a key difference between being strategic and being tactical. I think that's really important. My favorite definition of product strategy is saying no. That's my favorite definition of strategy is it means saying no. And I like to refer to this Steve Jobs quote where it comes from. Basically where Steve said, people think focus means saying yes to the thing you've got to focus on. But that's not what it means at all. It means saying no to the hundred other good ideas that there are. Innovation is saying no to 1,000 things. And so I like to paraphrase that by saying strategy means saying no. And what I like is that he's not saying those other ideas are dumb. He's actually saying they're good ideas. Right? So he's saying you gotta say no to even good ideas. And I like to pick on our friends. I don't mean enterprise sales. Not everyone's like this, of course, but. And if we have an enterprise salespeople on here, hopefully you can laugh along with us. Enterprise sales goes out Calls on big customer, prospective customer, Google. And Google goes, hey, is your new product going to feature a. What does the enterprise salesperson say? Almost always, oh, yeah, yeah, yeah. Sign the $5 million contract. Yeah, hey guys, you got Google, we got to build feature A, right? The next enterprise salesperson goes, and calls on IBM. IBM goes, hey, is your product going to feature B? What salesperson say, right, they're going to say they have an incentive to say yes, right? But that's not being strategic. If you're just saying yes to all requests, then you're not really being strategic. And if no seems a little harsh, then what you can think about is not now, right? Not within this Sprint, not within this quarter, right now, within this planning horizon network. And the last kind of harshest definition of strategy is something that's not easily reversed, right? If you make a decision and then the next day or the next week you can flip flop and change your mind. I would argue that wasn't a strategic decision, right? Like when you sail to a new continent and you burn the boats so that people can't sell back and they stop worrying about failing back and thinking about selling back. That's a strategic decision. That's an irreversible. So that's when I think about product strategy and I think the top probably two reasons more companies don't have product clear product strategy. And by the way, I think like less than 10% of product teams, your company have a very clearly articulated product strategy. It's two things. One, is it focused on the short term? That gravitational pull, the short term just prevents people from ever lifting their head up and explicitly thinking about strategy. And the second main reason is if you're able to pull your head up is they don't have a good framework or process for doing it. And so that's what I share with you today, is a framework that's really easy to follow so that you can go back after this webinar and work on your product strategy with your teams. And an important part of that we talked about a little bit is focusing on customer benefit need. And when we're talking about customer benefit, an important concept is the idea of problem space versus solutions based. Now I've been lecturing and talking about this topic publicly since 2007. They're really excited. You hear people talking about the problem space more and more out there. But let me define what they are, right? So problem space is basically a customer problem, need or benefit that the product should address. Let's say, for example, I thought it was too Hard to share photos with your friends and I wanted to make it easier to share photos with your friend. That statement, make it easier to share photos with your friends, that's in the problem space, right? There's no solution yet. I haven't said how I'm going to solve that problem. I'm just getting really clear on the customer problem that I want to solve. And I'm guessing a lot of you here are familiar with the agile user story. Temporary as a blank. I want a blank so I can blank, right? As a type of user, I want to be able to do this so I can enjoy this benefit. That so I can is really the essence of the problem space, right? That's the essence of why is this going to be valuable for customers. So that's problem space. In contrast, solution space is a specific implementation or design to address the customer need. If I said, hey, I want to make it easier for people to share photos with their friends, that's problem space. If the very next thing I said was, oh yeah, and by the way, last week I launched an app that makes it easy to share photos with your friends that apply would be in the solution space or if I hadn't built the app yet. But my friend Joe was a really good designer and Joe gave me a set of mockups for that app. That set of mock up would be in the solution space, right? And so that's the difference. The solution space is how we're actually going to solve the problem, the design or implementation. The problem is what's the customer problem? And what happens is far too often people go rushing in the solution space and starting thinking and designing and building features or solutions before they think about what the real problem, right? And the essence of product strategy has to be grounded in customer problems and benefits, not solutions. Far too often people chasing competitors, which is fe feature checklists, right? It's oh my gosh, they've got a checklist checkbox that we don't have. We got to go copy them, we got to fill all the checkboxes. That kind of competition is usually happening in the solution space. And it's really not. You think about it, it's not really strategic. You're just playing copycat and you're assuming that they knew what they were doing when they built that feature, which is often not the case. And I understand why people start off solutions a lot. We live in the solution space. We live in the real world, live in the solution space. Developers have to ship code, ship product in the solution space. Designers have to design Mockups in the solution space. Right. So it makes sense that solution space would be the default mode of thinking. But good product teams build this mental muscle over time and they realize, hey, I can separate problem space, solution space. And this happens all the time. Someone will be on a feature team and they'll brainstorm some solution, Hey, I think we should build configurator that does this. That's what I call solution pollution. It happens all the time and it's okay, it's going to happen. What you want to do is when somebody proposes a solution is get them to bridge back explicitly think about what the problem was they might have thought about subconsciously without realizing it. Or maybe they didn't, is you just ask why. Okay, cool. You want to add a dropdown? You think we should add a dropdown? Why would that be valuable to the customer? Let's say we're at an E commerce site and let's do a dropdown. What's the drop down for? So that they can fix their shipping. Okay, great. Maybe a dropdown the best way, maybe not. Once we're clear on the problem, we can explore and consider different solutions. Now the way this usually looks in a product theme is on Jira or Trello, you've got tickets like this. Add a dropdown that does this. Build a wizard that does this. Add an API call that does this. Right? Add a menu, create a setting screen at a database. Are these problems or solutions? Right. There are their solutions. This happens all the time. It's so funny. Back on that user story template, usually when I do this in a live audience, like over 95% of people raise their hand and say, yeah, I know the user story template has a blank. I want to blank so I can blank. But for some reason when that Jira ticket opens up, that blank Jira tickets are they getting amnesia. And that goes out the window. And they just put in what they want is during the build. So this happens all the time. And the good thing is Jira lets you have both. It's not an either or. You can have a proper user story and then it has subtasks where you can call out what needs to get built. So the message here is not, hey, never specify what needs to get built. Obviously at some point we've got to specify what do you want me to actually build? What feature do you want me to build? What's the UFS going to be? That's got to be specified. But the point is let's get clear on the problem first. So we want to, we can separate problem space and solution space. I'm going to use an example from Intuit that I'm guessing a lot of people in the state and Canada are familiar with. I used to work at Intuit. One of our big products is TurboTax. Right. It helps in the United States. Everyone's got to do their taxes, has to prepare their taxes, income taxes once a year. The pain. TurboTax is leading solution to do that. So it's a software app. So it's in the solution space. Right. It competes with another software app in the solution space called TaxCap. Right. And normally when you're building a new product or a new feature, you want to start in the problem space and then brainstorm solution space. But you can also reverse path back. Right. So I need some help here. I know May 17th was a tax deadline in the United States. Hopefully we have a lot of people from the states here. Anybody that used TurboTax in last year. So why is it valuable? Let's Explore the problems. TurboTax, why was it valuable to you as a customer? David says, easy to use. Jeb says, maximize Covid benefits. Going to maximize benefits. Vin says, information from my previous years. Extra E filing. I'm going to use this hack real quick. Right. E filing is a great answer. Is it a solution or is it a problem? It's a solution. That's fine. So what I would say is, hey, why is that valuable to you as a customer? And we eventually get to the point of them saying, actually when I have to print it and mail it, it takes. It takes like several hours. And I have to go to the post op, it takes an hour because I got to print it out, go to the post op and stand in line. But with me filing, I can file in seconds. Right. So it ends up laddering up to saving time. Somebody else has simplify. Akeem says, affordable. Ahmad says, peace of mind. TK mentions faster than competing for again, a speed benefit. Timothy is mentioning low cost. James is saying, save me time. So we're hearing some common patterns of saving time and saving money, kind of. Right. Allison says allows me to understand complex tax regulations. Seth also says tax code is complex. Ander says convenience and it's guided. Right. So yeah, those are all great kind of problem space statements. And at a high level, we want to get detailed when we're doing the problems. We want to do what I call peeling the onion. Get very detailed like people were. It's also helpful just to know what's the overall market opportunity, what's the overall Onion that we're talking about. So the overall market opportunity would be something like it helps me prepare my taxes, helps me do my taxes. And if we were on the turbo tax team, we'd want to start in the problem space with that high level vision. And then this is the fun part with your team, before you get the features and solutions, you want to take the time to explore the problem space. Brainstorm. Hey, if we want to help people with their tactics, what are all the things that we could do to help them? Not saying we would. We're doing divergent thinking right now. What are all things we could do? It could help you check your taxes. It's a computer program, right? So it's math. It can make sure your math is all right. As several people mentioned, it can file your taxes. Right? It can, as someone else mentioned, it can maximize your reductions. Make sure you're like getting the biggest write off that you can. It can reduce your auto risk. These are just four examples. And I got a lot of other great examples here in the chat with the audience. So the other thing you'll notice in the chat is messy. People are giving me all kinds of different answers. They're using different terminology. And even when two people were talking about it saving them money or being lower cost or using slightly different words. So the problem space can be a little messy. But you will find that if you write down the benefits you hear from people, when you clean up the list and kind of dedupe it, you'll find that there is, there's often a little bit of structure that's there. And so that's what I call a problem space definition. And I want to show this. We may start out with some benefits that come out of our customer discovery interviews. Help me prepare my taxes, reduce my audit risk and check my return. Right. These would be specific atomic benefit that someone might tell us they like. And if I use that same Y trick, the five wise thing, and I go, can you tell me why that's valuable? Like I did with the E filing, right? Why is that valuable? We might find that while these all sound distinct at the atomic level, they eventually go up to the same overall benefit. And you can envision it as the customers on a ladder. The first answer they give you is like at the bottom rung of the ladder. And each time you ask why, you're getting them to go up one step the ladder to get a what's the overall benefit? So these may all be on the same benefit ladder of empowerment or confidence. And the way that Goes is the story might go as well. Before TurboTax, I had to do my tax. I was doing them by hand. I don't know the tax code. It's complicated. Like several people said, I'm not good with math, but I got to do my taxes. So it's very stressful and I'm really anxious and nervous when I do it. And then I submit it and send it in and I'm sure it's wrong and they're probably going to come by me. But then A friend recommended TurboTax and but held my hand and guided me through and next thing you know, I'm done with my taxes. I feel a lot more confident and empowered. Right. That would be how that benefit ladder was all about. That can be a completely different benefit ladder, which several people touched on about saving you time. Whether it's saving you time preparing it. Hey, when I did it by hand, it took me four days. But now it's urban tax. It takes me four hours or filing. As somebody mentioned, it's a lot faster than E file. And there can be a third benefit ladder around saving money. Several people mentioned this, right. Whether it's saving you money by reducing your tax bill or whether it's like saving money compared to a cpa. Right. So this is an example of a problem space definition and I just want to show you1 for TurboTax. Right. The power of this is at the end of the day, most ideas people come up with are going to come back to one of these three benefits. And we haven't said which of these we're going to do yet, but it helps us understand what we could do to help people within this market opportunity. The last thing I'll say here is you'll notice that you may have noticed they all follow a simple template here. They all start with a verb, an action word, help, reduce, check. That's powerful because it makes you basically realize get clear on what's the product doing to actually create value for the customer. Far too often it's easy to say security, scalability, reliability, and those are okay. But those one word noun, horn is clear about what's it going to do for the customer housing to create value for them. The other thing is, you'll notice whose perspective are they written from. Are they written from the company's perspective or the product or technology's perspective? No, they're written from the customer's perspective. Right. Help me reduce my, check my save me. So that's a good tip to ground you in the problem space is write it from the customer's perspective. And make sure you start your problem statement with a verb like that and it'll be very helpful. Now again, we want to go through and identify which of these are the best ones to address for people, for our users. And one of the things we need to do is, as we said, is compare it to the competition, right? And see how we're going to what's our plan for being better than the competition on how good a job we're doing, delivering on the benefits that we pick for our product. And before I moved out here to Silicon Valley, I mentioned I had an engineering background. I got a master's in industrial engineering. And in that program I studied lean manufacturing. And I studied like quality from the. From the automobile factory days. There was a big movement in the 80s about quality. And one of the frameworks I learned there was the KANO model. And I actually took this and I like to apply this to product strategy. So let me share with you the model and then I'll share how we're going to apply it to get really clear on our product strategy. So the KANO model also talks about customer needs. The X axis here is for any given need that we're talking about. Save time, save money, make me feel confident. How fully does the customer say the product meets the need? On the left hand side it says need not met. You can think about as 0% meet the need. Going all the way up to the right side, you're 100% need, right? So if we said to you, hey, on a scale of 0 to 100%, how much does TurboTax save the need of saving you time on your taxes? You could say, hey, it's 80% or 90%, right? So each need is going to have its own score. And then on the Y axis is how satisfied or dissatisfied is the user as a result of how much the product needs to meet. And that's the idea. Now this seems all complicated. Don't worry about it. The cool thing is about the KANO model is there's three categories. But all we're going to really do is actually brainstorm. Our problem space is categorize them into one of these three categories. The first category and easiest to get your head around is a performance center feature. And the way to read this is going from left to right. As your product meets the need more then more customer satisfaction is created, right? So the farther you go to the right, the more we go up. And if you go to the left, the less the product needs to need the Lower the performance, the lower the satisfaction, right? So more is better, less is worse. If we were in the microprocessor chip business and our micro. Everyone else's microprocessor was 2 gigahertz and ours was 3 gigahertz, we'd be outperforming everybody by 1 gigahertz, right? Let's say I was shopping for a new car, and I go into the showroom and I see two cars, and I like the way they look about the same. And I look at the spec sheet on the window and the specs seem about the same. So far, the two cars are pretty comparable, pretty much even. But then all of a sudden I realized, hey, this car has twice the miles per gallon, right? Twice the fuel efficiency as the other car. While all other things being equal, I would pick the car with the higher fuel efficiency because for most people, that's a performance benefit feature, right? So more is better, less is worth. The second category is must have benefits or features. Now, the best way to read this is to start actually on the right and say, okay, if the product 100% meets the must have needed, how do customers feel? They're not jumping up and down. They're not up here, high satisfaction. They're just like neutral. Yeah, okay, that's fine. But as we go to the left, as the product fails to meet the need more and more, that's where customers get increasingly dissatisfied and unhappy, right? That's the definition of a must have. I know must have is a term that can get thrown around loosely by stakeholders and say, we must have this feature, but this is the Kano model. The customers respond this way. They expect you to have it in your product. If you don't have it, they're unhappy, basically. Right? So that's the second category. Let's say again, I was shopping for cars. I go into the showroom, I see this car, and it just looks amazing. I'm, oh my gosh, this is my dream car. And then I look at the specs on the window, and the specs are awesome, right? The engine horsepower, the torque, auto braking, all this stuff looks amazing. But then I poked my head inside the car and I realized, hey, wait a minute, this car doesn't have any seatbelts. I wouldn't buy the car. I'd be afraid of dying or getting hurt if I drove the car, right? So seat belts are a must have when you're buying a car. But if car A has five seat belt and car B has 100 seatbelt, they don't say car B is £20 on car A. Once you have one seatbelt per person, you check off the must have, you're not going to make anybody happy. And so one of the specifics you want to avoid is you can't compete and win on must have. You just have to have the must have. So don't try to be like, hey, our MVP is all must haves. Our product is all must haves. It's not going to create any positive customer excitement or value. All right, so we got performance must have. The third category is Delighters Delighter benefit or wow features, also called wow features. The way to read this is, hey, if the product doesn't do this, doesn't have the Delighter benefit or feature, doesn't cause a problem because people aren't weren't expecting it to be there. But by having a delight or benefit or a wow feature, it can really create a lot of positive value. The example, sticking with cars here, a big number here would be not today, but if you go on hot tub time machine back to when the first cars came out with GPS navigation, it was a delayer. Let's talk about solution. Problem. My GPS navigation solution. What problem? The GPS navigation solve. Somebody want to chat in there? What problem is solved for people getting lost. Avoid getting lost. Michaela. That's a good one. Yeah. Eta. Yeah. Find the fastest route. Cool. Distracted driving, navigating. Exactly. Yeah. Don't have to use your phone. Cool. Yeah. And this is back in the days before we had phones that had GPS built into it. Right. So, yeah, I would say something like, it helps me figure out how to drive from where I am to point B or from point A to point B. It helps me figure out how to do that. Right. And if we think about the solutions before GPS navigation, I know a lot of folks, you're probably too young to remember, but people actually used to carry around paper maps in their car. And you would stop, you'd pull out this map and you'd try to figure out where the heck you were going and look at it. Right. Or you'd ask for directions from somebody, or you just wing it and try to, like, get there on your own. Try to use the forest or use bird navigation to get there. Right. And then for a little while, when MapQuest and Google Maps first came out, you couldn't get it on a phone. But you print it out. Remember, you print it out and bring it with you. That was better than having to look at some big paper map. And then eventually we get GPS navigation and With GPS navigation, the first cars put in the address of where you're going and it just fundamentally changed how you got from point A to point of view of the disruptive innovation. Right. It was the delighter. But what happened? Over time, more and more cars got GPS navigation. Tom and Garmin came out with their add on unit and now we are just all navigating with their phone. That's the other thing is the problems don't change anywhere as quickly as the solutions, right? The need to be able to figure out how to drive from point A to point B. That's been around. And so you've got paper map, then MapQuest and Google Map and then now we all just use our phone. Right? Bring it out. Right. So there's different solutions that come and go and that just shows you that this is not a static picture, it's dynamic picture where these needs and features migrate over time so that yesterday's delighters become today's performance features become tomorrow's must haves. And the pace with which that happens just depends on the level of innovation. Competition, your space. So why am I telling you all this? The cool thing is you don't really know all the details of the KANO model. All you need to know is, hey, there are three categories of customer benefit. There are must have, performance and delighter. And we're going to use that to categorize the benefits and identify how we're going to be better than the competition. Now the way we do that is we create what I call product strategy grid. Simple table. Step one is you list for your product category, for your market category, the onion that you're working on, what are the must have benefits? One per row. What are the performance benefits? One per row and one of the event, one per row, Right? So that's the first step you do. Second step is create a column for each of your key competitors and a column for your product. And here I've shown two competitors. You can have three or four, you don't want to have 10. That would be a little, little overwhelming. But pick your key competitors and list them. The next step you want to do is you want to rate how good a job is each competitor doing on each of these benefits. And I've kept this a little abstract so you can imagine what it might be. Peer space. In a sec we're going to talk about real world example with real benefits so it becomes a little more tangible. But what you want to do is score the competition. So if we score the competition, we might see something like this. And by the way, honestly, high, medium low usually works pretty well. You don't need to get super complicated. If you were in the chip business and you wanted to track gigahertz of us versus competition, sure, put in gigahertz. But honestly, high, medium low works as long as like the relative score across a row makes sense. So what is this saying? This is saying, and by the way, yes or no is usually adequate for must haves and dividers. This is saying both of our competitors have the Mustang. Of course they do. Competitor A is high on Performance Benefit 1. Competitor B is low. So competitive bay is better. A is the best and is much better. Competitor B is high and performance better two and much better than competitor A. They're both so so performance better T3, neither one of them is really crushing it there, but they're both so so. And delighter. And competitor A has a delighter benefit A. This is the competitive landscape that we want to have in mind. Or we pick our strategy. Right? Because what you're trying to do here is, okay, where do we want to play often? Where do we want to be the best? Where are we going to say no? Remember that Steve Jobs coach? I run this exercise in my workshops all the time. Most people, the most disciplined groups will pick two highs in that right column. When I do the exercise, usually teams are picking three or four highs. I've even run it where out of six benefits, people picking five highs, they couldn't make up their mind. We got to remember Steve Jobs. We got to pick our battle. This is the essence of our strategy. We are saying no. What are we going to say no to? Right. It may be tempting to say, hi, we're going to win all the things and be the best all the things. But one, you don't have the resources to do that. And two, it would not clear create a clear positioning in the market. You want to really have tough decisions with your team about where do you want to pick our battle, how are we going to be best? And so given this backdrop, we might go with something like this. Of course we're going to have the must have benefit. We're not going to worry too much About Performance Benefit 1, we're going to be better than better B, but we're not going to try to be better than player A. We're going to say no to performance benefit two. Right. We're just not going to worry about that one. And we're going to try to be the best at performance benefit 3. Right. The other guys are medium and we're going to try to be high. Maybe we've identified a target market, Buckingham Pyramid, that really values this benefit. So we're going to go after them and try to meet their needs better than anybody else. Maybe we have some technology solution ideas as to why we're going to do a better job meeting that need. And then we have an idea for a delighter. The whole point, the main point of this exercise is to identify and get clear on your hypotheses about what are your unique differentiators are. What's the performance benefit where we're going to be the best. That's the aim of this exercise, is where can we be the best? By analyzing the competition. And usually you're just going to have one. Almost always it's a luxury. If you can have more than one, you want to get to one person, you try to work on number two later. And then also any unique differentiators you have, that's what matters the most. Again, you don't compete on Mustang. This is the way to think about. This is the special sauce of our product. So obviously when you're building a V1 product, you want to get clear on what's our special sauce, how are we going to win in the marketplace, what's our strategy? Right. Even if you're building a new feature, you want to get clear, and how is it going to be better than the competing features of our. And I will say, if you already have the product in market, which I'm guessing many of you do, it's okay, you can go try to reverse engineer this product strategy grid so you can shore it up and get really clear on how you want to win in the marketplace. So that's the goal. So that's the tool I've explained, prompt space and customer benefit and model and the categorization. And so that's all you want to do. I've got a generic example here. And what I want to do is close out with a tangible example that a lot of you are probably familiar with. So who's familiar with Instagram? Usually when I do this, like over 90% of people raise their hand. The reason I pick these products is so that people can relate to it. Now, the thing is, we're not going to talk about Instagram today. Instagram has been around for a long time. It's a very mature product. What I want to do is go back in time and tell you a story about when Instagram first came out. We're going to get in hot tub time machine and go Back again. Now, when Instagram first came out, they were a mobile photo sharing app and there were already several other mobile photo sharing apps that were there. They were. There was a crowded market and they came in and they quickly showed up to number one. And you don't see that often. Right. It's rare for a product to enter a crowded market and suddenly just shoot up the number one and completely dominate that market. You do see it every once. I would argue every time you see that happen, it's because they had such a clear, compelling product strategy. They were so outperforming and such a clear delighter. If you're lucky. If the best thing is to have a combo of a clear outperformance delighter, by any minimum, they outperform that you can reverse engineer why that happens. So that's what I want to do is not today. Let's go back. For those of you that remember when it first came out, what we're looking for here and people are putting in some ideas, which is great. How do they outperform the other mobile photo sharing up, by the way, when you're one tip, one clue or hint that you're talking about performance is you can quantify it. If you think about the examples that I shared, I mentioned, hey, microprocessor, gigahertz, chip, speed. Everyone else was two, we were three. There's a number. We can quantify it. Right. I mentioned miles per gallon or fuel efficiency. Okay. This car is 20 miles per gallon. This one's 30 miles per gallon. Right. So that's how you're outperforming. You should quantify their performance difference. And then the other thing is a delighter. So how did they out delight or outperform the other people? So Ahmad jumped in with the answer. Photo filters. That's great. Yeah, photo filters definitely were part of their product strategy. Let's go back to solution space and problem space. Are filters a solution or a problem? Nicola says people are saying solution. Yeah. And that's fine. Again, we're not trying. It's not a video. Somebody says solution. Now all we do is we use that Y trick and say, great. As an early Instagram user who discovered filters, why were they valuable to you? So let's get clear on the problem that maps to it. Right. Why were they valuable? As an Instagram user, why were filters useful to you? Shane says, make my amateur photos look cool. That's right. Problem. Differentiate yourself, differentiate photos. People are not pros. They want to look like pros. That's exactly right. Non professional that's right. So you see, again, the problems is a little messy. Wearing slightly different answers. The things that I hear from people are make my photos look unique, make them look artistic, make them look better, make them look more professional, make them look more interesting, help me express myself, all those kind of things. So I would just sum it up as it makes my photos look good. It's all under that umbrella with light nuances, excellent cool. And then the last thing is where filters are performance. Were they outperforming or were they a delighter? As a delighter. Right. In the early days of these mobile photoshooting apps, they didn't have these filters. You didn't expect these filters to come out. Right. So you saw these probably friend's photo with some amazing filters like Dan, where'd you get that thing? I'm like, Instagram. And you go in there and check it out and you're totally delighted. Right. Here's the interesting thing. How about Today, if in 2021, we were to launch a new mobile photo sharing app, would we have to have filters or not? Yeah. It went to a must have, as David said. Right. Remember I talked about that evolution, how things go from a delighter to must have. Right. Everybody got used to the filters and so now it's a must have. And we'd be laughed out of the App Store if you launch a photo sharing app with Netflix. That's great. All right, cool. So we got one of the key parts of their product strategy, which was make my photos look good supported by filters. Any other delighters that come to mind or performance, any way that they outperformed or other ways to delight. They did. People have ideas about. David says stories. I know a lot of people have stories that came out later. They didn't have that early day one. Somebody said sharing. They do have sharing. Anson said, loads faster. There we go. Sachin got it right. Sachin got cool. So there was. Sachin just said, perceived upload time of photos was much faster on old 3G. And that's right. So for those of you that weren't around back then, the way that these apps worked is you would launch the app, you'd land the camera would open in the app, you'd line up your photo and you take your photo and then you do whatever you're going to do with the tags and editing and then you'd hit the upper and that was it. Now, when you did that on Instagram, it would feel two or three seconds faster than all the other app. Right. It just. It was Two or three seconds faster. Now, we probably have a lot of techies on the phone. They're like, okay, wait a minute, Dan. Like, the megapixel of the camera is the same. So it's the same megabytes. The file size we're uploading is the same. The bandwidth is the same. 3G or Wi Fi bandwidth. So the bandwidth is the same. Maybe they have some crazy compression. No, everybody had the same compression. So what was it? How do they magically. How were they magically able to upload the same file with the same bandwidth, the same compression? How could they do that faster? Right. What they did, it was actually a clever UX hack, and that's why the person that said it said perceived uploads. What they did, as I said, is every other app would wait for the user to tap the upload button. The UX team, it was actually the UX team. And Instagram said, you know what? Like, 90% of the time people upload the photo. Yeah. Every once in a while they don't upload the photo, but most of the time they upload the photo. So let's just upload it. The second they take it, let's start uploading it in the background. We'll still have the upload button there. So by the time they do whatever they're doing at the upload button, like two or three seconds are going to go by. It's going to seem way faster. Right? Going to seem way faster. So that was an outperform. We can quantify it. Everyone else was taking six or seven seconds for the upload, and these guys were taking four or five, something like that. All right, cool. So that also. It's a performance. And then last but not least, on the Delighter, Akeem is mentioning portrait videos. Portrait and avoided horizontal. They actually didn't even let you do portrait. But you're onto something else that they did. They did something else that made your photos look good. We had the filters, which obviously made your photos look good. This was more subtle way of making your photos look good. Another feature that they did, and I actually remember the first time I saw it. I remember the first time I launched Instagram. Now, when you take a photo on a phone, your phone's a rectangle. So you can take a tall rectangle photo like this portrait mode. You can take a wide rectangle photo like this landscape mode, and each of those is going to look great, especially with the filters. There's no problem until you then combine those different photos into a single feed. And when you Combine them in a single feed. That feed is a fixed width, only has so many pixels. So these tall, skinny photos are going to be fine, but these wide photos are going to have to get shrunk down. And so they knew that would be the case. They don't want to have some photos shrunk down, some photos not shrunk down. It would look janky. So they said, hey, we're going to avoid that. We're going to make everything a square. And then you don't get into that aspect ratio issue. So it was a more subtle way. They made your photos look good, not at each individual photo level, but when you took them all together. Awesome. So great. So we've actually hit all the things that I had in mind and we can create the problem, spacing problem, the solution space for Instagram. Right? This is how I would describe it. Right? We have the benefit of make my photos look good, which is supported by filters and also the square aspect ratio. And we have the benefit of Post my photos quickly, which is supported by the photo upload UX pack. Right? And so now we have what we need to recreate what was Instagram's initial product strategy. So let's create the problem space kit for Instagram. We have must haves, performance and delighters, right? We have all the other photo sharing apps and we have Instagram. So let's fill this out, right? The must have. We don't even talk about the must have. Obviously, if you're a photo sharing app, you got to let me share my photos. Everybody does. Now, on the performance benefit, we talked about posting my photos quickly. Everyone else is low and Instagram is high because of their clever photo upload. And then on the lighter front, let's make my photos look good. Everyone else is not doing that well and these guys are doing a lot better because they're using the filters and the square aspect ratio. So if we say what were their unique differentiators? These are their unique differentiators, right? And again, I mentioned briefly, when you've got a clear outperform benefit plus a unique delighter, that is a very powerful combo your product is. If your product strategy nails it like that, you're going to be creating so much more customer value than all the other products that you're going to see, you're going to quickly become number one. And time and again, when you see a new product enter a crowded market and shoot up to number one, because they had a very clear outperform plus a delighter in their product strategy. Now, sometimes I tell the story and every once in a while I'd be like, Dan, this is a, this is a nice pretty package you tied up in a bow here. Is this just revisionist history? How do we know that this was Instagram's intent and their plan? And I always love it when companies share their initial doc so you get a sense for what they were thinking at the time. So lucky for luckily for me, someone on the UX design team from Instagram early on shared a deck where they talked about the strategy, about the UX upload hack and other things. And in that deck they also share the original tagline for Instagram. Now, I don't necessarily expect anyone to remember from back in the day what their tagline was, but I happen to have a slide here, so I want to share with you. Their tagline was fast beautiful photo sharing. What I love about this is only four words but it's very powerful. There's a lot of strategy packed into those four words. In fact, they have their whole product strategy packed into just these four words. They have their must have photo sharing. We're a photo sharing app. That's what we do. They have their performance benefit. Hey, we're fast. We're faster than everybody else. We're fast on upload, Our app loads faster, everything's faster than everybody else. And beautiful. They're delighter, right? We make your photos look more beautiful than anybody else out there with our filters and our square crop and so on. And. And you can imagine this is the cool thing about a nice strategy, it lasts a long time. Sure, they came out the gate with the photo upload hack and the filters, but they've done a lot of other things to make sure it's a fast experience, it's a beautiful photos and that you can share things in all the ways that you want to. So I hope that advice on how to create a product strategy get is helpful for you. I want to thank you guys for taking the time with me here. Real quick. I mentioned briefly that I've been running a lean product community here. It was over seven years ago. I started it, over 10,000 members each March. I just host the top product, the kind of speakers you would see attraction found. We took it online with COVID So now we have people around the globe to come in. Our next event is actually July 22nd. We're Peten Shah, he's going to talk about product, market fit and so you can go to meetup.com product and join our group for free and if you want also if you're interested in what I was talking about. Every once in a while I teach public workshop. My next one, I have one coming up in August 17th to 19th. So David asked a good question which is David Daniels, do you ever track follow technology infrastructure chance to build a product vision prevention for instance, location based capabilities for the mobile phones. Enter the taxi healing border. Yeah, it's a tough thing to do, right? The problem is far too often because in solutions based thinking people start in the solution space too early. And there are numerous examples like the one I like to give is the segue. Right. The guy who invented the segue thought nobody was ever going to walk again. I was like, oh my gosh, this is going to be so amazing. No one's going to walk. So he fell in love with the solution. And it turns out that for most people, you know what, walking was perfectly fine. It wasn't a big deal. They didn't want to spend that money. They didn't want to be riding a Segway around. In fact, as I like to say, it only resonated if you think about it. It goes back to our customer. It resonated with two distinct test customer groups. Let's see if the group can identify them. Usually I have some funny pictures of those groups in my deck. Let's see who did segue resonate with. It didn't resonate with the mass market. Got Paul Blair. That's right. Mall cop. Right. Mall cops, police. Like same mall cop. Yeah. Security guard. Police use case. And Andrew got the other one. Tourists. That's right, yeah. So I will say so back to your question. Yes, you should be keeping your eye on what is technology enabling and GPS navigation enabled people to do away with paper maps. So but you always want to connect it to that problem. Have that tight napping up rate. This new technology is emerging. How can it really make solve a problem better? There's so many different solutions like chatbot. I remember when chatbots came out. What's your chatbot strategy? Everyone's like no one was talking about what was it actually going to do for people, why was it going to be beneficial? And the number of companies actually pursuing chatbots. There was a bubble chatbot and now bubble has burst. Right? Same thing a little bit with AI. It's AI machine learning, deep learning. That's a solution looking for a problem. Right. So you want to but so not to say it can't be useful but you want to always ground it. So you want to have your feet in the problem space world really Clear and your feet in the technology world so you don't miss the trend. I will say too, David, every once in a while there's a platform change or a major shift, right? Mobile VR potentially, like a lot of people thought VR was going to change everything in every kind of timeline. It turns out the pace of that is not happening anywhere near as quickly as people expected. Right. Or the App Store. So you want to be mindful of when these major technology shifts happen so you can hop on the new bandwagon, but when you do it, don't fall in love with the solution. Just make sure you're grounded in the problems. Greg Zen says any tips for PM coming onto a product that was built solution first. Yeah. So Greg, solution thinking, solution pollution is pervasive. So many products are built that way. There wasn't a lot of good thinking. It's perfectly fine. You can actually just assess where you're at. You can reverse engineer. Okay, who do we think our customers are? What do we think the problems are that we're solving for them? And then you could say let's go talk to them about how good a job our product doing solving them for them and then you can close the gap. One thing I didn't have time to cover today, I mentioned the idea of underserved or well served needs. I have an important versus satisfaction framework that I like to use to kind of score. Is this a well served need? Is this an underserved need? So you can totally do like an audit of an existing product using importance and satisfaction to see how good your solutions are doing and close the gaps on the ones that really aren't creating as much customer value. So you can totally retrofit or apply this thinking and methodology after the fact. That's why I said those of you existing products, even if you didn't have a clear product strategy, you can try to figure out what it should be. What's the closest what do we think it is? What are we implicitly said it is with what we've done and are we happy with that or do you want to be deliberate and take it in a different direction? What advice do you have for companies? Transition from services led all customer to product led platform. God's question. Yeah, I see this a lot. Some companies start out as consulting companies or services companies and when you're a new startup you're chasing, you can fall into the trap of chasing revenue. You have zero revenue. So some client comes along willing to pay you revenue if you build a custom solution for them so you Say sure. And they do that for one and they do it for the next and next and next thing you know, you're like a custom software shop. And I get that that's what's going on is custom engineering going to a product led a platform, right? The advantage of a platform maintaining that custom code across multiple clients is really tough. And the tech that is just building. So what you want to do in an ideally in a product led company, you're like pattern matching across your clients and saying, okay, here are the needs that like we know 60% of people in this vertical have this need, this other need. Now it's just one or two companies that are saying that all are things being equal. Let's address the wider use case need. If you're already in a custom software situation, you just want to do that kind of analysis across your feature set. And as you refactor where you build your new platform, you want to just make sure it supports the capabilities for the largest breadth of people. And sometimes, I hate to say it says you have to fire your customers as your company evolves and grows, you realize, gosh, in the early days, yeah, we were servicing small accounting firms, but now we've migrated over time and we're surging more like enterprise financial companies. You might have to let those people go and getting that clarity of your product strategy. Certainly what I've talked about today is you come up with your hypotheses. Once you get your product in market, then you're going to see how is it going? Is this product strategy resonating with people or not? You're going to have to iterate it and tweak it and perhaps pivot. Right. And so over time, as you get clarity on that, what vision that's going to create the most value, you're going to iterate it. Caroline says, any tips to help stakeholders in a typically sales driven company to understand the value part better approach. And I like to take a step back. Some companies are very sales driven. Like sales calls the shots. Like I was jokingly saying about the enterprise salespeople, whatever they sell, they come back and tell the product team and the dev team, here's what you got to build because I just sold it, right? They're selling vaporware and then they're writing the checks later. And then there's also other companies that are engineering centric engineering kind of drives and figures out what they want to build. And those two extremes are not necessarily optimal. You want a healthy balance. But sales, product management, engineering and design, the number one Thing I would say is it goes back to Scott's question is if all we do is take customer requests from customers and we say yes to everything, we're going to end up. There's, there's. For those of you don't know, I live in the Bay Area in San Jose. There's a place called the Winchester Mystery. The guy that made the Winchester rifle got rich off making the early rifle. And he and his family, the way they built this house, they would constantly add on and they would add on and like different sections have different designs. It just looks weird, like a Frankenstein mystery house, Winchester thing. If you just say yes to every customer request, there's no strategy. You're just like letting your customers randomly guide how your product roadmap is moving over time. You're going to end up with Winchester Mystery House features. So that's what you want to do. And so maybe hopefully at some point again in the early days, you got zero revenue, you're going to chase revenue a little bit and hopefully that doesn't go too on, on for too long. And at some point you can take a step back and say, gosh, our product is like six different verticals and six different industries and we're writing so much custom code that when it comes time to update or add new features, it's just like a mess. It takes so much engineering effort. If we consolidate this into a platform, right, and how do we be more strategic and think across different customers about how we can pattern match and make sure that what we build, we're going to build a feature. Gosh, wouldn't it be great if 80% of people in our target market use this feature instead of just 10% of people? So that tends to be the best thing. That tends to be the best approach to doing that. Because the other thing, I'll say too, I forgot to mention back to solutions based problem space. If Google says, hey, is your product going to feature A? And you think you're doing the right thing by suiting and saying, yes, it will, we're going to go build that for you or IBM and you go build feature A. The number of times I've seen an enterprise client ask a startup for a key feature and the startup kind of moves heaven and earth and does this huge grand gesture to launch the feature and then it launches and then the big enterprise client doesn't even use the feature. Sadly, that happens a lot. And why does it happen? Because they weren't even clear on their problem, right? They had solutions based thinking, someone at their company said we need this feature, but they weren't sure why they needed it or how it was going to help them. And so even if, even if people are asking for solutions, you can say, oh great, can you help me understand why that would be valuable to you to make sure you really nailed the problem instead of just building a solution? So hopefully those are some helpful tips.

Thank you everyone for joining us. Dan this was fantastic. Every time I listen to you I learn a ton. I've stepped away from a product role.

Here now that we have a whole.

Product organization, but always bring the feedback to the team. This is fantastic.

Thanks everyone for joining us.

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I need some traction. You need some traction. Let's get some traction.

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