If you’ve ever sat in a meeting where someone confidently declared, “Our strategy is to be the best in the market,” you’ve witnessed what is called the strategy illusion. It sounds good. It feels directional. But is it actually a strategy?
Most organizations don’t actually have a strategy. They have aspirations, plans, or a collection of initiatives, but not a coherent strategy that guides meaningful decisions.
This guide is my attempt to synthesize everything I’ve learned about strategy into something practical. Whether you’re defining your first product strategy or refining an existing one, I hope this helps you think more clearly about the choices that matter.
Table of Contents
- 1. What is Strategy? Understanding the Basics
- 2. Why Most Strategies Fail
- 3) What Good Strategy Actually Looks Like
1. What is Strategy? Understanding the Basics
Before we can build a strategy, we need to understand what strategy actually is. This section explores the true meaning of strategy and why it’s fundamentally about making hard choices.
1) Strategy Definition: More Than Just a Plan
At its core, strategy is about making a set of integrated choices to succeed in your market.
- It’s not a mission statement.
- It’s not a list of goals.
- It’s a deliberate positioning that allows you to create and capture value in ways your competitors cannot easily replicate.
Think of strategy as the answer to this question:
How will we achieve sustainable competitive advantage?
The key word here is sustainable. Anyone can win temporarily through luck, timing, or brute force spending. But strategy is about building a position that endures, where your advantages compound over time rather than erode.
| What Strategy Is | What Strategy Is Not |
|---|---|
| A set of integrated choices | A vision statement alone |
| Focused on sustainable competitive advantage | A list of initiatives or projects |
| About differentiated positioning | Doing what competitors do, but “better” |
| Requires difficult trade-offs | Trying to be everything to everyone |
When evaluating your product decisions, ask yourself: “Does this choice strengthen our differentiated position, or does it just add another feature to the pile?”
2) Strategy is About Choices and Focus
Here’s an uncomfortable truth: strategy is not about doing more things. It’s about doing fewer things, but doing them exceptionally well.
Every “yes” to one initiative is an implicit “no” to countless others. This is the concept of opportunity cost applied to strategy. When you choose to pursue Enterprise customers, you’re choosing not to optimize for SMBs. When you decide to compete on user experience, you’re accepting that you might not win on price.
The companies that struggle most are often those that refuse to make these choices. They chase every market segment, add every requested feature, and respond to every competitive move. As a result, They become mediocre at everything and exceptional at nothing.
Three questions to test if you’re truly making strategic choices:
- What are we explicitly choosing NOT to do? If you can’t name specific opportunities you’re declining, you haven’t made real choices.
- Would a reasonable competitor make the opposite choice? If everyone in your industry would make the same decision, it’s not a differentiating strategy.
- Does this choice create tension? Real strategic choices feel uncomfortable because they involve genuine trade-offs.
Consider a productivity app deciding between two paths:
| Path A: Power Users | Path B: Casual Users |
|---|---|
| Complex feature set | Simplified interface |
| Steep learning curve | Immediate usability |
| Higher price point | Freemium model |
| Smaller market, deeper engagement | Larger market, lighter engagement |
Neither path is inherently better. But trying to serve both equally well often leads to a product that satisfies neither group. Strategy means picking a path and committing to it.
3) Vision vs. Strategy: What’s the Difference?
Vision and strategy are often confused, but they serve very different purposes.
Vision is your destination. Strategy is the path you’ll take to get there.
Your vision describes the future state you’re working toward. It’s aspirational, inspiring, and relatively stable. Your strategy, on the other hand, describes how you’ll navigate toward that vision given your current resources, market conditions, and competitive landscape.
This distinction matters because:
- Changing your vision signals a fundamental shift in what your company believes and values. It should be rare and significant.
- Changing your strategy is a normal response to new information, market shifts, or learning what works. It should happen as needed, without abandoning your ultimate destination.
Think of it like planning a road trip. Your destination (San Francisco) is your vision. Your route (I-5 vs. coastal highway vs. flying part of the way) is your strategy. If you hit unexpected road construction, you reroute, but you don’t suddenly decide to go to Seattle instead.
The leadership dimension:
There’s also a helpful parallel between vision/strategy and leadership/management:
| Vision & Leadership | Strategy & Management |
|---|---|
| Inspires and motivates | Organizes and executes |
| Sets the destination | Plans the journey |
| Answers “Where are we going?” | Answers “How will we get there?” |
| Relatively stable | Adapts to circumstances |
Great product leaders do both. They paint a compelling picture of the future that makes people want to join the journey, and they make the hard strategic choices about how to allocate limited resources along the way.
2. Why Most Strategies Fail
One of the most dangerous situations a company can find itself in is believing it has a strategy when it actually doesn’t. This section examines why this happens and how to recognize the warning signs.
1) The Strategy Gap: Thinking Without Doing, Doing Without Thinking
Here’s a pattern I’ve observed repeatedly: leadership teams spend days in offsite meetings, produce impressive slide decks, and emerge convinced they’ve defined a winning strategy. Six months later, the organization is scattered across dozens of unrelated initiatives, teams are confused about priorities, and meaningful progress remains elusive.
What went wrong?
(1) The two failure modes
Most strategy failures fall into one of two categories:
| Failure Mode | Description | Symptoms |
|---|---|---|
| Thinking without execution | Endless analysis, beautiful frameworks, but no action | Constant “strategy sessions” that never translate to product decisions; teams waiting for direction |
| Execution without thinking | Frantic activity, shipping features, but no coherent direction | High output velocity but metrics don’t improve; building whatever stakeholders request |
Both failure modes share a common root cause: the absence of genuine strategic choices. In the first case, leaders avoid making hard decisions by hiding behind more analysis. In the second, they avoid the discomfort of saying “no” by saying “yes” to everything.
(2) The comfort of false strategy
Why do smart leaders fall into these traps? Because real strategy is uncomfortable. It requires:
- Admitting you can’t serve everyone
- Accepting that some bets won’t pay off
- Disappointing stakeholders whose priorities don’t make the cut
- Committing to a direction before you have perfect information
It’s psychologically easier to maintain the illusion of strategy through vague aspirations (“We’ll be customer-centric!”) or endless activity (“Look how many features we shipped!”) than to make the difficult, specific choices that real strategy demands.
2) 5 Common Strategy Mistakes to Avoid
Through my experience and research, I’ve identified five misconceptions that frequently masquerade as strategy. Recognizing these patterns is the first step toward building something more substantial.
| Misconception | What It Looks Like | What’s Missing |
|---|---|---|
| Vision = Strategy | “Be the #1 platform for X” | How you’ll achieve it |
| Plan = Strategy | Detailed roadmap with dates | Why these actions create advantage |
| No Long-term Strategy | “We’re agile and adaptive” | Directional coherence |
| Optimization = Strategy | Improving current metrics | Positioning for future advantage |
| Benchmarking = Strategy | Copying industry leaders | Differentiated approach |
(1) “Vision = Strategy”
“Our strategy is to become the leading platform for creative professionals.”
Why it fails: A vision describes where you want to go, but says nothing about how you’ll get there. Vision and mission statements are essential components of strategy, but they are not strategy itself. They provide the destination; strategy provides the route.
A vision without strategy is like declaring you want to climb Everest without planning your base camps, equipment, or acclimatization schedule. The aspiration is clear, but the path to achievement is entirely undefined.
The fix: After articulating your vision, ask: “Given our current resources and market position, what specific choices will we make to move toward this vision? What will we do differently than our competitors?”
(2) “Plan = Strategy”
“Our strategy is to launch in three new markets, hire 50 engineers, and ship our mobile app by Q3.”
Why it fails: A plan is a list of actions. Strategy is the logic that connects those actions to competitive advantage. Without that connecting logic, a plan is just a collection of activities that may or may not create value.
Many organizations confuse a project roadmap with a strategy. The roadmap says what you’ll build and when. Strategy explains why these specific choices will help you win against alternatives.
The fix: For every major initiative in your plan, you should be able to articulate: “This action strengthens our competitive position because…” If you can’t complete that sentence convincingly, the initiative may be activity without strategic purpose.
(3) “Long-term Strategy is Impossible in a Fast-Changing World”
“The market moves too fast to plan beyond the next quarter. We just need to stay agile and respond to changes.”
Why it fails: This misconception confuses strategic direction with detailed planning. Yes, specific tactics and timelines will change. But companies that only react to market movements, without a proactive strategic direction, become perpetually reactive.
They chase every trend, respond to every competitor move, and shift priorities with each new piece of information. Eventually, they’re outmaneuvered by competitors who do have a clear strategic direction and can make consistent, compounding investments toward it.
The fix: Separate your strategic direction (relatively stable, 2-5 year horizon) from your tactical plans (flexible, quarterly adjustments). Your strategy should be durable enough to guide decisions even as specific circumstances change.
(4) “Optimization = Strategy”
“Our strategy is to improve conversion rates by 20%, reduce churn by 15%, and increase NPS by 10 points.”
Why it fails: Optimization makes your current business better. Strategy positions you to build a different, more defensible business. These are not the same thing.
When you focus exclusively on optimizing existing metrics, you’re essentially running faster on the same track. Meanwhile, a strategic competitor might be building an entirely new track that makes yours obsolete.
Optimization is important, but it’s vulnerable to two risks:
- Competitors can copy your optimizations relatively easily
- You may be optimizing toward a local maximum while missing larger opportunities
The fix: Balance optimization investments with strategic investments. Ask: “Are we also making bets that could fundamentally change our competitive position, not just improve our current performance?”
(5) “Benchmarking = Strategy”
“Our strategy is to adopt the best practices of industry leaders. If it works for Spotify/Amazon/Salesforce, it will work for us.”
Why it fails: Strategy is context-dependent. What works for a company with different resources, market position, customer base, and history may not work for you. In fact, directly copying a competitor’s approach often fails because:
- You’re fighting on terrain they’ve already optimized for
- Their strategy reflects trade-offs that made sense for their situation
- By the time you’ve copied it, they’ve moved on to the next evolution
The result of pure benchmarking is becoming a slightly worse version of whoever you’re copying. You become a “me too” competitor competing on someone else’s terms.
The fix: Study competitors to understand the landscape, but make your own strategic choices based on your unique strengths, constraints, and opportunities. Ask: “What can we do that would be difficult for them to copy, given their current commitments?”
3) What Good Strategy Actually Looks Like
If strategy isn’t vision, plans, optimization, or benchmarking, what is it?
Strategy is the integrated set of choices that positions you to win in your chosen market.
Let’s break this down:
(1) “Integrated set of choices”
Your choices must work together as a system. Your target market should align with your value proposition, which should align with your capabilities, which should align with your go-to-market approach. Isolated good decisions don’t create strategy; coherent, mutually reinforcing choices do.
(2) “Positions you to win”
Strategy is fundamentally about competitive advantage. It’s not enough to participate in a market; your strategy should explain why customers will choose you over alternatives and why competitors will struggle to replicate your success.
(3) “In your chosen market”
Note the word “chosen.” Part of strategy is deciding where to compete, not just how. The playing field you select dramatically shapes your odds of success.
(4) The starting point
Building strategy begins with illuminating your options. Before you can make choices, you need to understand what choices exist:
- What markets could you potentially serve?
- What customer problems could you address?
- What capabilities could you build or acquire?
- What competitive positions are available?
Once you’ve mapped the possibility space, strategy becomes the act of focusing your resources on a select few options that together create a defensible position.
This is why strategy requires courage. You’re not just picking the “best” option from a list. You’re committing limited resources to specific bets while explicitly choosing not to pursue alternatives that might also work. The discomfort of that commitment is what separates real strategy from strategic theater.
3. Setting Strategic Goals That Actually Work
With a clear understanding of what strategy is (and isn’t), we can now explore the first fundamental question every strategy must answer:
What are we trying to achieve?
This section covers how to define goals that genuinely motivate your team and guide meaningful decisions.
1) How to Define Goals That Motivate Teams
The goal articulates your organization’s purpose and the ambitious future state you’re working toward. It’s not a vague feel-good statement; it’s a concrete description of what success looks like that can guide real decisions.
(1) What makes the goal?
Your goal shouldn’t be about mere participation or survival. It should describe a state where you’ve created something meaningful and valuable, where you’ve achieved a position that matters.
Consider the difference:
| Weak Goal | Winning Goal |
|---|---|
| “Be a successful project management tool” | “Become the default way distributed teams coordinate complex work” |
| “Grow our user base” | “Enable 10 million creators to earn a living from their craft” |
| “Be profitable and sustainable” | “Transform how small businesses access financial services, reaching 1 million underserved entrepreneurs” |
Notice that winning goals:
- Describe a specific impact, not just business metrics
- Are ambitious enough to require years of focused effort
- Provide clear guidance on what matters (and what doesn’t)
- Can genuinely inspire people to commit their energy
(2) The motivation test:
A useful litmus test for your goal: Would talented people choose to work on this rather than countless other opportunities?
Your goal should help your team understand why their work matters. When engineers are debugging at midnight or designers are iterating on their fifteenth concept, the goal reminds them what they’re building toward.
(3) Connecting goal to strategy:
Your goal sits at the top of your strategic framework. Every subsequent strategic choice should connect back to it:
Setting the Goal
↓
Picking the Market (markets, customers, geographies)
↓
Standing Out in the Market (value proposition, competitive advantage)
↓
Building the Right Strengths (what we must be great at)
↓
Measuring Progress (how we track and adapt)2) 10 Principles for a Strong Vision
Your vision is the specific expression of how your product will contribute to your goal.
| Vision Principle | Key Question to Ask |
|---|---|
| Start with Why | Why should this product exist in the world? |
| Love the Problem | What problem are we obsessed with solving? |
| Think Big | Would achieving this genuinely change how people live/work? |
| Embrace Self-Disruption | Are we willing to make our current product obsolete? |
| Inspire | Does this make talented people want to join us? |
| Leverage Trends | What shifts create new opportunities for us? |
| Anticipate the Future | Where is our market heading, not just where is it now? |
| Stubborn Vision, Flexible Details | What’s our fixed destination vs. adaptable route? |
| Leap of Faith | Are we comfortable with some uncertainty in our ambition? |
| Communicate Relentlessly | Have we shared this enough? (Probably not) |
(1) Start with “Why”
Before describing what your product will do, articulate why it should exist. What fundamental problem or opportunity justifies its existence?
The “why” grounds your vision in something meaningful. It’s the difference between “We’re building a calendar app” and “We believe people’s time is their most precious resource, yet most tools treat scheduling as an administrative task rather than a life design decision.”
Starting with purpose helps you:
- Make better trade-off decisions when features conflict
- Attract team members who genuinely care about the problem
- Stay motivated when progress is difficult
(2) Fall in Love with the Problem, Not the Solution
It’s tempting to become attached to your product as it exists today. But products are just vehicles for solving problems. The problems endure; the solutions evolve.
When you fall in love with your current solution, you become blind to better approaches. You defend features instead of outcomes. You optimize what exists instead of imagining what could be.
Teams that stay obsessed with the underlying problem remain open to radical improvements. They’re willing to cannibalize their own products if a better solution emerges.
(3) Think Big
Your vision should describe something that takes years to achieve, not quarters. If you can accomplish your vision in a single year, it’s probably not ambitious enough to inspire sustained effort or create lasting competitive advantage.
This doesn’t mean being unrealistic. It means setting your sights on something that genuinely matters and will require your best work over an extended period.
A helpful question: “If we fully achieved this vision, would it meaningfully change how people live or work?”
(4) Don’t Fear Self-Disruption
Many organizations become prisoners of their past success. They protect existing products and business models even when better approaches emerge, leaving the disruption to competitors.
Your vision should embrace the possibility that the best future version of your product might look very different from today’s version. If someone is going to disrupt your current product, it might as well be you.
This requires courage from leadership. It means being willing to cannibalize revenue streams, retire beloved features, and make existing expertise obsolete in service of a better future.
(5) Make the Vision Inspiring
Remember that you’re building a team of people who have countless options for where to spend their professional energy. Your vision should make them want to be part of this journey.
The best product teams aren’t mercenaries executing tasks. They’re missionaries who believe in what they’re building. An inspiring vision is what transforms hired hands into committed contributors.
Ask yourself: “Does our vision make talented people excited to join us? Does it make current team members proud to describe what they’re working on?”
(6) Leverage Meaningful Trends
Technology, society, and markets evolve constantly. Effective visions identify relevant trends and articulate how they create new opportunities to solve problems in fundamentally better ways.
This isn’t about chasing every new technology. It’s about recognizing when shifts in the landscape create openings that didn’t previously exist.
Examples of trend-informed vision thinking:
- “The shift to remote work means coordination tools need to be redesigned for async-first collaboration”
- “Advances in AI make it possible to personalize education in ways that were previously impossible at scale”
- “Growing privacy awareness creates demand for products that give users control of their data”
(7) Skate to Where the Puck is Going
Hockey great Wayne Gretzky famously said he skates to where the puck is going to be, not where it has been. The same principle applies to vision.
Your vision should anticipate where your market and customers are heading, not just address their current state. By the time you’ve built your product, the world will have moved. Build for that future world.
This requires ongoing effort to understand how customer needs, competitive dynamics, and technology capabilities are evolving, and then placing bets on where those trends lead.
(8) Be Stubborn on Vision, Flexible on Details
This principle, often attributed to Jeff Bezos, captures a crucial balance. Your destination (vision) should remain relatively stable. Your route to get there (strategy, tactics, specific features) should adapt as you learn.
Weak product organizations pivot their vision frequently, chasing whatever seems promising this quarter. Strong organizations maintain a consistent vision while continuously improving their approach to achieving it.
When things get difficult (and they will), the vision is what you hold onto. The specific implementation is what you’re willing to change.
(9) Vision is a Leap of Faith
Here’s an uncomfortable truth: if your vision is truly ambitious, you can’t fully validate it in advance. A vision that’s “proven” before you start is probably not ambitious enough to create meaningful differentiation.
This doesn’t mean being reckless. You should have evidence that the underlying problem is real and that your general approach is sound. But the full vision requires a leap of faith that you’ll figure out the details along the way.
Great visions are acts of imagination grounded in insight, not conclusions derived purely from data.
(10) Communicate Relentlessly
A vision only works if people know it, understand it, and believe it. This requires far more communication than most leaders expect.
You cannot over-communicate your vision. When you’re tired of talking about it, your team is just starting to internalize it. When you think everyone gets it, new team members are joining who’ve never heard it.
Uncertainty about product direction spreads quickly through an organization. Proactively reinforcing the vision creates confidence that enables autonomous decision-making at all levels.
3) Goal-Setting Mistakes and How to Avoid Them
Even with a compelling aspiration and vision, organizations frequently stumble in how they translate these into operational goals. Here are the most common pitfalls to avoid.
(1) Changing Goals Too Frequently
When goals shift every quarter (or worse, every month), teams never build momentum. They’re constantly context-switching, abandoning partially-completed work, and losing faith that any direction will stick.
Some adaptation is necessary as you learn. But there’s a difference between thoughtful adjustment and reactive chaos. If your goals change dramatically more than once or twice a year, something is wrong with either your goal-setting process or your commitment to seeing things through.
Signs you’re changing goals too often:
- Teams express cynicism about new initiatives (“This too shall pass”)
- Work is frequently abandoned before completion
- People wait to invest fully in new directions, expecting them to change
(2) Goals That Are Too Vague to Guide Decisions
“Improve customer satisfaction” is not a goal that helps teams make daily decisions. What level of improvement? By when? For which customer segment? Through what means?
Vague goals feel safe because they’re hard to miss. But they provide no actual guidance, leaving teams to interpret them however they want (or to feel paralyzed by ambiguity).
(3) Goals That Are Disconnected from Strategy
Sometimes organizations set goals through a purely bottom-up process: each team proposes what they want to achieve, and these get aggregated into a company “strategy.” This often produces a collection of disconnected objectives that don’t add up to a coherent competitive position.
Goals should cascade from strategy, not the reverse. First, define your strategic choices. Then, ask: “What goals would indicate we’re successfully executing this strategy?”
4. Choosing the Right Market and Customers
Once you’ve defined your goal, the next strategic question is: Where will you compete? This isn’t just about choosing a market. It’s about deliberately selecting the terrain where your specific strengths can create the most value.
This section explores how to define your playing field, size your opportunity, understand your competition, and deeply know your target customers.
1) How to Define the Market You’ll Compete In
Choosing the right market and customers encompasses multiple dimensions of choice. It’s not simply picking an industry; it’s making integrated decisions about exactly where you’ll focus your limited resources.
(1) The dimensions of choosing the right market and customers
| Dimension | Questions to Answer |
|---|---|
| Industry | Which industry or industries will you operate in? |
| Market segments | Which specific segments within those industries? |
| Geographies | Which regions, countries, or localities? |
| Product/service categories | What types of offerings will you provide? |
| Customer segments | Which specific customer types will you serve? |
| Channels | How will you reach and serve customers? |
| Value chain position | Where in the production/delivery process will you operate? |
Each dimension represents a choice that narrows your focus. The combination of choices defines your unique playing field.
(2) Two mistakes to avoid
| Too Broad | More Strategic |
|---|---|
| “Small businesses” | “Service-based small businesses with 5-20 employees in their first 3 years of operation” |
| “Healthcare” | “Outpatient specialty clinics struggling with patient scheduling and no-shows” |
| “E-commerce” | “Direct-to-consumer brands selling products over $100 that require customer education” |
- Mistake 1: Defining “the market” too broadly
- When your target market is “businesses that need software” or “anyone who uses mobile apps,” you haven’t actually made a strategic choice. You’re trying to keep all options open, which means you can’t optimize for anyone.
- Broad definitions feel safe because they suggest large opportunities. But they provide no guidance for product decisions, marketing focus, or capability building. You end up spreading resources thin across too many fronts.
- Mistake 2: Choosing the same playing field as everyone else
- If your market description sounds identical to your competitors’ descriptions, you’ve defined a battlefield rather than a strategic position. You’ll be fighting head-to-head on dimensions where others may have advantages.
- The goal is to find playing fields where your specific capabilities create disproportionate value. This often means being more specific than feels comfortable.
2) Market Sizing: Understanding Your Opportunity
Once you’ve defined where you want to play, you need to understand the size of that opportunity. Market sizing helps you assess whether a market is worth pursuing and how to think about realistic growth potential.
There are two primary approaches to market sizing, each with different strengths and limitations.
| Item | Top-Down Approach | Bottom-Up Approach |
|---|---|---|
| Starting point | Total market size | Reachable customers |
| Key question | How big is this market overall? | How much can we realistically sell? |
| Typical steps | Total market → target segment → assumed market share | Target customers → reachable users → conversion rate → revenue |
| Example logic | $7B market → 15% segment → 3% share | 25k customers → 8k reachable → 4% conversion |
| Resulting output | Long-term revenue potential | Near-term realistic revenue |
| Primary use | Market framing, investor conversations | Product and GTM planning |
| Main strength | Fast and intuitive | Grounded in execution reality |
| Main weakness | Highly assumption-driven | Requires more detailed research |
(1) Top-Down Approach
The top-down approach starts with the total market and works down to your potential share.
How it works:
- Identify the total market size (usually from industry reports or analyst estimates)
- Estimate what percentage of that market you could realistically capture
- Calculate your potential revenue
Example:
- Total project management software market: $7 billion
- Segment focused on creative agencies: ~15% = $1.05 billion
- Realistic market share for a new entrant after 5 years: 3% = $31.5 million
Strengths:
- Quick to calculate
- Good for initial sanity checks
- Useful for communicating with investors who think in market terms
Weaknesses:
- Heavily dependent on assumptions about market share
- Often produces optimistic estimates
- Doesn’t reflect your actual go-to-market capabilities
(2) Bottom-Up Approach
The bottom-up approach starts with your actual ability to reach and convert customers.
How it works:
- Estimate the number of potential customers you can realistically reach
- Estimate conversion rates based on similar products or early data
- Estimate revenue per customer
- Calculate total potential revenue
Example:
- Target customers (creative agencies with 10-50 employees): 25,000 in your target geography
- Realistic customers reachable through your channels: 8,000
- Estimated conversion rate: 4% = 320 customers
- Average annual contract value: $12,000
- Year 1 realistic revenue: $3.84 million
Strengths:
- More grounded in operational reality
- Forces you to think about actual go-to-market mechanics
- Typically more conservative and accurate
Weaknesses:
- Requires more detailed research
- May underestimate potential if your channels expand
- Doesn’t capture the “big picture” opportunity
(3) TAM, SAM, and SOM Explained
These three acronyms provide a useful framework for thinking about market size at different levels:
| Term | Definition | What It Represents |
|---|---|---|
| TAM (Total Addressable Market) | The entire revenue opportunity if you had 100% market share | The theoretical ceiling; useful for understanding industry scale |
| SAM (Serviceable Addressable Market) | The portion of TAM that your product could actually serve | Your relevant market given your product’s current capabilities and geographic focus |
| SOM (Serviceable Obtainable Market) | The portion of SAM you can realistically capture | Your realistic near-term opportunity given competition and go-to-market constraints |
Visual relationship:
┌─────────────────────────────────────────────┐
│ TAM │
│ ┌─────────────────────────────────────┐ │
│ │ SAM │ │
│ │ ┌─────────────────────────────┐ │ │
│ │ │ SOM │ │ │
│ │ └─────────────────────────────┘ │ │
│ └─────────────────────────────────────┘ │
└─────────────────────────────────────────────┘How to use TAM/SAM/SOM:
- TAM answers: “How big could this get if everything goes perfectly?”
- SAM answers: “What’s the realistic market for our specific product?”
- SOM answers: “What can we actually achieve in the next 2-3 years?”
Investors often want to see TAM (to assess upside potential), but your operational planning should focus on SOM (what you can realistically achieve).
3) Tips for Gathering Market Information
Market sizing requires data. Here are practical approaches to gathering the information you need:
(1) Industry reports and analyst research
- Look for reports from firms like Gartner, Forrester, IBISWorld, or industry-specific analysts
- Search for “[your industry] market size report” or “[your industry] market trends”
- Check if your target industry has trade associations that publish data
(2) Traffic and usage estimation tools
- Tools like SimilarWeb or SEMrush can estimate competitor web traffic
- App analytics platforms provide download and usage estimates for mobile apps
- These give rough indicators of competitor scale and market activity
(3) Keyword research
- Search volume for relevant terms indicates market interest
- Tools like Google Keyword Planner, Ahrefs, or SEMrush provide this data
- Track how search interest changes over time to identify growing or shrinking markets
(4) Customer development conversations
- Talk to potential customers about their current spending in your category
- Ask about alternatives they’ve considered and their budgets
- This provides ground-truth data that complements top-down estimates
4) How to Find and Analyze Competitors
Understanding your competitive landscape is essential for strategic positioning. But many teams have a blind spot here: they either don’t know who their real competitors are, or they focus only on the obvious direct competitors.
(1) The “No Competitors” Delusion
When someone says “We don’t have any competitors,” one of two things is true:
- You’re a genuine innovator creating a completely new category (rare)
- You don’t understand how customers currently solve the problem (common)
Usually, it’s the second. Before your product existed, customers were addressing their needs somehow. That “somehow” is your competition, even if it doesn’t look like your product.
The spreadsheet is a competitor to countless SaaS tools. Hiring an employee is a competitor to automation software. Doing nothing is a competitor to everything.
(2) How to Find Known Competitors
For competitors you know might exist, these approaches help identify them:
Search “[your product] alternatives” or “[competitor] vs”: This reveals how customers compare options and which products they consider substitutable.
Check product review sites: G2, Capterra, Product Hunt, and similar sites categorize products and show competitive sets from the customer’s perspective.
Ask customers what else they considered: In discovery interviews, always ask what alternatives they evaluated. You’ll often discover competitors you weren’t aware of.
(3) How to Find Hidden Competitors
The most dangerous competitors are often the ones you don’t know about. Here’s a process for uncovering them:
- Articulate the problem you solve Not your product features, but the fundamental problem or “job” your customer is trying to accomplish.
- Identify how customers describe this problem What language do they use? How do they express frustration? What do they search for?
- Search for that language Look for companies using similar language in their marketing. Check forums, Q&A sites, and communities where your customers discuss these problems.
- Follow the complaints Customer complaints about existing solutions point directly to competitive alternatives. Search “[problem] frustrating” or “[category] problems” on Reddit, Twitter, or industry forums.
(4) The Four Types of Competitors
Not all competitors are equal. Understanding the different types helps you prioritize your response:
| Competitor Type | Description | Strategic Response |
|---|---|---|
| Direct | Same target customer, same problem, similar solution | Must compete head-to-head; need clear differentiation |
| Indirect | Same problem, different approach or different target | Monitor for customer migration; understand why customers choose them |
| Potential | Different problem today, but similar capabilities or customer base | Build barriers; watch for expansion into your space |
| Substitute | Same underlying need, completely different solution | Ensure you’re significantly better on the dimensions that matter |
Direct competitors are the obvious ones. If you’re building a video conferencing tool, other video conferencing tools are direct competitors. You’ll be compared feature-by-feature, and customers will actively evaluate you against them.
Indirect competitors solve the same underlying problem differently. For a video conferencing tool, this might be phone calls, in-person meetings, or async video tools like Loom. Customers might not compare you directly, but they’re choosing between approaches.
Potential competitors don’t compete with you today but could easily enter your space. A company with similar technology serving an adjacent market, or a large platform that could add your functionality as a feature. These require vigilance and potentially defensive strategy.
Substitute competitors address the same fundamental need through entirely different means. If the “job” is “make remote teams feel connected,” a video tool competes with team retreats, chat apps, or collaborative games. You need to be meaningfully better than these alternatives on the dimensions your customers care about.
5) Understanding Target Customers Beyond Personas
Knowing who you’re serving is as important as knowing what you’re building. But “understanding your customer” means more than creating a persona document that sits in a shared drive.
(1) Beyond Personas
Traditional personas (like “Marketing Mary, 34, lives in Austin, manages a team of 5”) can be useful for creating empathy, but they have limitations:
- They often emphasize demographics over motivations
- They create a fictional “average” customer who may not actually exist
- They can become stale as markets evolve
- Different team members interpret them differently
A more robust approach is to understand customer segments as groups with similar needs, behaviors, and decision criteria, rather than as fictional individuals.
(2) Three Questions for Defining Target Customers
When evaluating whether a customer segment is right for your product, work through these questions:
Is segment worth targeting?
- Size: Is the segment large enough to support your business goals?
- Accessibility: Can you reach them through available channels?
- Need intensity: Do they have a strong, urgent need for your solution?
- Ability to pay: Do they have budget for your product?
- Fit with capabilities: Can you serve them well with your current or planned capabilities?
How can we deeply understand this segment?
- Direct customer conversations (not just surveys)
- Observation of how they currently work
- Understanding their decision-making process and criteria
- Learning what “success” means in their context
- Identifying the emotional and social dimensions of their choices
Does this segment connect to our strategy?
- Do they have problems that your “how to stand out in the market” approach solves?
- Can you serve them in ways competitors can’t easily match?
- Does success with this segment create advantages for future expansion?
6) Jobs-to-be-Done: A Better Way to Understand Customer Needs
The Jobs-to-be-Done (JTBD) framework offers a powerful alternative to traditional demographic-based customer understanding. Instead of asking “Who is our customer?”, JTBD asks “What job is our customer trying to accomplish?”
(1) Why Jobs Matter More Than Demographics
Two people with identical demographics might have completely different needs. A 35-year-old marketing manager in San Francisco might use your product to impress their boss, while another 35-year-old marketing manager in San Francisco uses it to save time for family. Same demographics, different jobs, different product needs.
JTBD focuses on the motivation behind customer behavior. What progress are they trying to make? What’s driving them to seek a solution?
This reframes your competitive landscape too. You’re not competing against products with similar features; you’re competing against anything that helps customers accomplish the same job.
(2) The Three Types of Jobs
| Job Type | Focuses On | Customer Thinking | Example |
|---|---|---|---|
| Functional | Practical outcome | “What will this help me accomplish?” | “I need to finish project timelines without chasing updates.” |
| Personal | Emotional experience | “How will this make me feel?” | “I want to feel in control instead of stressed about deadlines.” |
| Social | External perception | “How will others see me?” | “I want my team to see me as organized and reliable.” |
JTBD identifies three dimensions of every customer job:
- Functional Job: The Practical Outcome This is the tangible, practical result the customer wants to achieve. It’s often what they’ll explicitly tell you they need. Functional jobs are relatively easy to identify and measure. They’re often the focus of feature requests and competitive comparisons.
- Personal Job: The Emotional Dimension This is how the customer wants to feel while using your product and after accomplishing the functional job. Personal jobs are rarely stated explicitly but strongly influence satisfaction and loyalty. A product that accomplishes the functional job but makes users feel frustrated or stupid will lose to one that makes them feel capable and empowered.
- Social Job: The Perception Dimension This is how the customer wants to be perceived by others as a result of using your product. Social jobs connect to identity, status, and relationships. They explain why people sometimes choose products that aren’t “objectively” the best functional solution.
(3) Applying JTBD to Product Decisions
| Job Type | The Job | Product Implication |
|---|---|---|
| Functional | Quickly get answers from teammates without scheduling meetings | Enable async communication with fast response expectations |
| Personal | Feel connected to the team despite working remotely | Include presence indicators, casual channels, emoji reactions |
| Social | Be seen as responsive and collaborative by colleagues | Make it easy to show engagement; visible participation signals |
Understanding all three job dimensions transforms product decisions:
- Feature prioritization: Instead of just asking “What features do customers request?”, ask “What functional, personal, and social jobs are underserved?”
- Messaging and positioning: Speak to all three dimensions. Don’t just list capabilities; address how customers will feel and how they’ll be perceived.
- Competitive differentiation: You might not win on functional features but could dominate on personal or social dimensions.
5. Standing Out in the Market
Knowing the market is only half the battle. The next strategic question is: How will you win in your chosen arena? This section explores how to define your value proposition, sequence your product releases, and make smart decisions about what to build.
| Element | Question It Answers |
|---|---|
| Value proposition | What unique value do we provide to customers? |
| Competitive advantage | Why can’t competitors easily replicate this value? |
| Market entry approach | How will we initially reach and win customers? |
| Delivery method | How will we produce and deliver our product? |
| Pricing strategy | How will we capture value from the value we create? |
1) How to Create a Differentiated Value Proposition
Your value proposition is the bridge between customer needs and your product’s capabilities. It answers the question:
“Why should customers choose us over alternatives?”
Each element should reinforce the others. A premium price only works with a differentiated value proposition. A self-serve market entry requires a product that delivers value without extensive onboarding.
(1) The differentiation imperative
The most common “how to stand out in the market” mistake is offering value that isn’t meaningfully different from competitors. If your value proposition could be copy-pasted onto a competitor’s website without anyone noticing, you don’t have a competitive advantage.
Differentiation can come from multiple sources:
| Source of Differentiation | Example |
|---|---|
| Superior functionality | Features that competitors don’t have and can’t easily build |
| Better experience | Same outcomes, but faster, easier, or more pleasant to achieve |
| Lower cost | Similar value at meaningfully lower price point |
| Specialized focus | Deep expertise in a specific segment that generalists can’t match |
| Integration ecosystem | Connections to other tools that create switching costs |
| Brand and trust | Reputation that reduces perceived risk of choosing you |
| Network effects | Value that increases as more users join |
The key question: “If a well-funded competitor decided to copy our approach, what would prevent them from succeeding?” Your answer reveals whether you have a genuine competitive advantage or just a temporary lead.
2) How to Sequence Product Releases for Maximum Impact
Strategy isn’t just about what to build; it’s about the order in which you build it. The sequence of your releases creates a path from your current state to your vision.
(1) Why sequencing matters:
- Each release should create value that funds and enables the next
- Early releases build capabilities and learning that later releases depend on
- The right sequence creates momentum; the wrong sequence creates dead ends
- You can’t do everything at once, so the order of doing things is itself a strategic choice
(2) Frameworks for sequencing:
There are several lenses through which you might determine release sequence:
| Sequencing Approach | How It Works | When to Use |
|---|---|---|
| By vertical market | Dominate one industry, then expand to adjacent ones | When industries have distinct needs but transferable solutions |
| By customer segment | Win one customer type, then expand to others | When segments have different needs but overlapping solutions |
| By geography | Establish one region, then expand territorially | When localization or market presence matters |
| By capability milestone | Build foundational capabilities, then advanced ones | When later capabilities depend on earlier ones |
Example: Sequencing by vertical market
A B2B analytics platform might sequence like this:
- Phase 1: E-commerce analytics (high data volume, clear ROI metrics)
- Phase 2: SaaS analytics (similar data patterns, adjacent market)
- Phase 3: Financial services analytics (higher compliance needs, uses capabilities built in phases 1-2)
Each phase builds on the previous one, and success in one market creates credibility and capabilities for the next.
Example: Sequencing by customer segment
A learning platform might sequence like this:
- Phase 1: Individual learners (prove content quality, build catalog)
- Phase 2: Small teams (add collaboration features, team pricing)
- Phase 3: Enterprise organizations (add admin tools, SSO, compliance features)
The early phases create content and product foundations that enterprise customers require, while generating revenue along the way.
Example: Sequencing by capability milestone
A data platform might sequence like this:
- Phase 1: Data collection and storage (foundational capability)
- Phase 2: Reporting and visualization (requires phase 1 data)
- Phase 3: Predictive analytics (requires historical data from phases 1-2)
- Phase 4: Automated actions (requires predictions from phase 3)
Each milestone is valuable on its own but also enables the next level of capability.
3) Roof-Shot vs. Moon-Shot: A Smarter Way to Plan
Many product teams are attracted to “moon-shot” ideas: ambitious, transformative initiatives that could reshape their market. But moon-shots carry significant risks that are often underestimated.
(1) The Problem with Moon-Shots
Moon-shot initiatives appear inspiring on the surface. Who doesn’t want to pursue a transformative vision? But they have structural problems:
- Uncertainty compounds over time. The further out you plan, the more assumptions you stack on each other. A 3-year moon-shot has hundreds of embedded assumptions, any of which could prove wrong.
- Obstacles are invisible from a distance. When you aim directly at a distant goal, you can’t see the barriers that will emerge along the way. You won’t know they’re there until you hit them.
- Costs are difficult to estimate. Long-term, ambitious projects almost always cost more in time, money, and organizational energy than initially expected.
- Feedback comes too late. If you spend two years building toward a moon-shot before getting real market feedback, you may discover your assumptions were wrong after investing massive resources.
(2) The Roof-Shot Alternative
A “roof-shot” approach breaks the journey to your ambitious vision into smaller, achievable milestones. Instead of leaping directly toward the moon, you aim for nearer targets that move you in the right direction.
| Benefit | Explanation |
|---|---|
| Faster feedback | Each roof-shot delivers value and generates learning |
| Reduced risk | Smaller bets with clearer outcomes |
| Maintained momentum | Regular wins keep the team motivated |
| Adaptability | Easier to adjust direction based on learning |
| Funded progress | Early value can fund later development |
Visual comparison:
Moon-shot approach:
Start ─────────────────────────────────────────────→ Moon (3-5 year vision)
(Long journey, unclear obstacles, late feedback)
Roof-shot approach:
Start → Roof 1 → Roof 2 → Roof 3 → Roof 4 → Moon
(3-6mo) (3-6mo) (3-6mo) (3-6mo) (achieved through steps)(3) Designing Your Roof-Shots
To apply the roof-shot approach:
- Define your moon (3-5 year vision): Where are you ultimately trying to go?
- Identify roof-shots (3-6 month milestones): What intermediate achievements would move you toward the moon while delivering value along the way?
- Ensure each roof-shot is valuable alone: If you stopped after any roof-shot, would you have created something worthwhile?
- Build capabilities progressively: Each roof-shot should develop skills, technology, or market position that enables the next one.
- Plan the next roof-shot in detail, others in outline: Don’t over-invest in planning distant milestones that may change.
Example:
Moon (3-year vision): Become the default platform for AI-powered customer service
Roof-shots:
- Roof 1 (6 months): Launch AI-assisted response suggestions for human agents
- Roof 2 (6 months): Add automated handling of simple, repetitive inquiries
- Roof 3 (6 months): Expand to multi-channel support (chat, email, social)
- Roof 4 (6 months): Introduce predictive support (proactive outreach before issues arise)
Each roof-shot delivers customer value, generates revenue, and builds toward the larger vision.
5) Feature Prioritization: 3 Questions to Ask
Even with a clear strategy and sequenced releases, you’ll face constant pressure to add features. Feature triage provides a framework for evaluating what deserves a place in your roadmap.
(1) Question 1: Does this help us acquire more users/customers?
Features in this category expand your reach. They might address needs of a new segment, remove barriers to adoption, or create reasons for new customers to choose you.
Examples:
- A free tier that attracts users who later convert to paid
- An integration with a popular platform where your target users already work
- A mobile app that makes your product accessible in new contexts
(2) Question 2: Does this make existing users/customers more successful?
Features in this category increase retention and expansion. They help current customers get more value from your product, reducing churn and increasing likelihood of upgrades or referrals.
Examples:
- Advanced capabilities that power users have requested
- Performance improvements that make common workflows faster
- Automation that reduces manual effort for frequent tasks
(3) Question 3: Does this strengthen our brand or strategic position?
Features in this category might not directly drive near-term metrics but build long-term competitive advantage. They could reinforce your differentiation, create switching costs, or establish technical foundations for future capabilities.
Examples:
- Industry-specific compliance certifications
- A distinctive design language that becomes associated with your brand
- Platform APIs that enable an ecosystem of integrations
(4) Applying the Filter
When evaluating a feature request:
| Filter Result | Implication |
|---|---|
| Passes all three questions | Strong candidate for prioritization |
| Passes two questions | Worth serious consideration; evaluate against alternatives |
| Passes one question | Probably not a priority unless it passes that one question very strongly |
| Passes zero questions | Why are we discussing this? |
Features that don’t clearly contribute to acquisition, retention, or strategic position are distractions, even if stakeholders are requesting them loudly.
(5) Connecting Features to Strategy
The three questions above are necessary but not sufficient. A feature might help acquire users, but if those users aren’t in your target segment, it’s not aligned with your strategy.
The complete evaluation asks:
- Does this feature support our market choices? (right customers, right market)
- Does this feature reinforce our how to stand out approach? (differentiation, value proposition)
- Does this feature build our core capabilities?
A feature that passes the three-question filter AND aligns with your strategic choices is a strong roadmap candidate.
6. Building the Capabilities That Matter
Strategy is only as good as your ability to execute it. This section explores how to assess your current capabilities, identify what’s missing, allocate resources wisely, and structure your organization for strategic success.
1) How to Audit Organizational Capabilities
Before you can build new capabilities, you need an honest assessment of what you already have. This analysis grounds your strategy in reality rather than aspiration.
(1) What counts as a capability?
Capabilities are the activities and competencies your organization can perform well. They include:
| Capability Type | Examples |
|---|---|
| Technical capabilities | Machine learning expertise, scalable infrastructure, mobile development |
| Operational capabilities | Fast product iteration, efficient customer onboarding, reliable support |
| Market capabilities | Brand recognition, distribution channels, customer relationships |
| Organizational capabilities | Cross-functional collaboration, rapid decision-making, talent acquisition |
(2) Conducting a capability audit:
To assess your current capabilities honestly:
- List capabilities required by your strategy What would an organization need to be good at to execute your “market” and “how to stand out in the market” choices?
- Rate your current proficiency For each capability, assess: Are we world-class? Competent? Developing? Lacking entirely?
- Identify evidence What proof do you have for each rating? Customer feedback? Competitive comparisons? Performance metrics?
- Note trajectory Is each capability improving, stable, or declining? Capabilities require ongoing investment to maintain.
(3) Common mistakes in capability analysis:
| Mistake | Why It’s Dangerous |
|---|---|
| Overestimating capabilities | Leads to strategies you can’t actually execute |
| Ignoring decay | Capabilities erode without continued investment |
| Focusing only on technical skills | Market and organizational capabilities matter equally |
| Confusing individual talent with organizational capability | What happens if key people leave? |
The ultimate test of capabilities is whether they translate into customer value. A capability you think you have but customers don’t experience isn’t really a capability.
Include customer perspectives in your audit. Do customers cite your speed, quality, support, or expertise as reasons they chose you? Their perception reveals your actual capabilities, not your aspirational ones.
2) Build, Buy, or Partner: Closing Capability Gaps
Once you understand your current capabilities, compare them to what your strategy requires. The gaps represent work that must be done before your strategy can succeed.
(1) Mapping the gaps
For each capability your strategy requires:
| Current State | Strategic Requirement | Gap Size | Priority |
|---|---|---|---|
| What can we do today? | What must we be able to do? | How far apart? | How critical to strategy? |
Gaps aren’t inherently bad. Every ambitious strategy requires building new capabilities. The danger is pursuing a strategy without acknowledging the capability gaps it implies.
(2) Three ways to close capability gaps
When you’ve identified a gap, you have three fundamental options:
| Factor | Favors Build | Favors Buy | Favors Partner |
|---|---|---|---|
| Strategic importance | Core differentiator | Important but not unique | Commodity or supporting |
| Time pressure | Can wait | Urgent | Very urgent |
| Available resources | Strong team, time | Capital available | Limited resources |
| Long-term control | Critical | Important | Less important |
| Risk tolerance | Can absorb failure | Moderate | Low tolerance |
- Build Building means developing the capability internally through hiring, training, and sustained investment. It is often chosen when teams believe that outsourcing or buying would introduce unacceptable dependencies, or when the way the capability evolves is as important as the capability itself.
- Buy Buying means acquiring the capability through acquisition, acqui-hiring, or licensing existing technology. It can be effective if a mature solution already exists and integration risks are manageable. However, success depends as much on organizational fit as on technical compatibility.
- Partner Partnering means accessing the capability through vendors, platforms, or strategic alliances rather than owning it outright. Partnering allows teams to move quickly and stay flexible, especially in uncertain or fast-moving markets. The tradeoff is reduced control and increased dependency.
3) Resource Allocation and the Three Horizons Model
Your strategy requires investment, but resources are finite. How you allocate resources across different types of initiatives reveals your true strategic priorities.
Think of your product investments as a portfolio with different risk/reward profiles. Just as a financial portfolio balances growth stocks and stable bonds, your product portfolio should balance different types of bets.
Value/Growth
↑
│ ★ Horizon 3
│ (Future options)
│ ★ Horizon 2
│ (Emerging opportunities)
│ ★ Horizon 1
│ (Core optimization)
└───────────────────────→ Time
The Three Horizons model provides a framework for balancing investment across different time frames and risk levels:
(1) Horizon 1: Optimize and Extend the Core
Investments that improve and extend your current business. These are relatively low-risk and generate near-term returns.
Examples:
- Feature improvements to existing products
- Performance optimization
- Expanding to adjacent customer segments
- Incremental pricing or packaging changes
Typical characteristics:
- 6-18 month payback
- High confidence in outcomes
- Builds on existing capabilities
- Lower risk, lower upside
(2) Horizon 2: Build Emerging Opportunities
Investments that extend your capabilities into new areas with meaningful growth potential. These carry more risk but could become your next core business.
Examples:
- New product lines serving existing customers
- Expansion into new market segments
- Major new capabilities that enable new use cases
- Geographic expansion requiring meaningful adaptation
Typical characteristics:
- 1-3 year payback
- Medium confidence in outcomes
- Requires building new capabilities
- Medium risk, medium upside
(3) Horizon 3: Create Future Options
Investments in exploratory work that could create transformational opportunities. These are higher risk and may not pay off, but successful bets could reshape your business.
Examples:
- Research into emerging technologies
- Experiments in new business models
- Early exploration of potentially disruptive markets
- Foundational work that enables future capabilities
Typical characteristics:
- 3+ year payback (if any)
- Low confidence in outcomes
- Requires new capabilities and learning
- High risk, high potential upside
(4) Portfolio Allocation Guidelines
There’s no universal “right” allocation across horizons. The appropriate balance depends on your company’s situation:
| Company Stage | Typical H1:H2:H3 Allocation | Rationale |
|---|---|---|
| Early startup | 70:20:10 | Must prove core business viability first |
| Growth stage | 50:35:15 | Expanding while exploring adjacent opportunities |
| Mature company | 40:40:20 | Defending core while building future growth |
| Company facing disruption | 30:40:30 | Accelerating transformation while maintaining cash flow |
The right allocation also depends on your competitive situation, available resources, and risk tolerance. The key is making the allocation deliberately rather than by default.
Common allocation mistakes:
- Over-investing in H1: Feels safe because returns are predictable, but leaves you vulnerable to disruption and limits growth potential.
- Under-investing in H1: Chasing shiny new opportunities while your core business erodes. No amount of H3 success matters if H1 collapses.
- Skipping H2: Jumping from core optimization to moonshots without building the emerging businesses that bridge them. This creates a “growth gap” in your future.
2) How to Structure Teams for Strategic Execution
Even the best strategy fails without an organization capable of executing it. This section explores principles for structuring teams to enable strategic success.
| Principle | What It Means | Why It Matters | Key Practices |
|---|---|---|---|
| Minimize Dependencies | Reduce situations where one team must wait on another to make progress | Dependencies create bottlenecks, increase coordination overhead, and reduce throughput | End-to-end team ownership, cross-functional teams, independent deployment, clear team interfaces |
| Enable Ownership & Autonomy | Teams own outcomes and can decide how to achieve them | Ownership increases accountability, motivation, and decision quality | Outcome-based goals, decision authority, customer understanding, leadership trust |
| Maximize Leverage with Shared Services | Centralize capabilities used by multiple teams while managing dependency risks | Prevents duplicated work without slowing product teams | Design systems, infra platforms, data platforms, auth services, clear SLAs, sufficient resourcing |
| Align Architecture with Organization | Structure systems to match team communication patterns | Misalignment creates constant friction (Conway’s Law) | Independent services for independent teams, tight coupling only where collaboration is required |
| Align Teams with Customers | Organize teams around customer segments or outcomes | Reduces coordination for customer-facing changes | Customer- or journey-oriented teams over pure component teams |
| Expect Structure to Evolve | Treat org structure as temporary, not fixed | Strategy changes faster than org charts | Periodic reviews, adjust for new capabilities, accept restructuring costs |
(1) Minimize Dependencies
Dependencies between teams slow everyone down. When Team A can’t make progress without Team B completing something first, both teams suffer.
Why dependencies hurt:
- Create bottlenecks that limit overall throughput
- Generate coordination overhead
- Reduce team autonomy and ownership
- Make it harder to attribute success or failure
Ways to minimize dependencies:
- Give teams end-to-end ownership of customer outcomes
- Ensure teams have the cross-functional skills they need
- Design technical architecture to enable independent deployment
- Clarify interfaces between teams so they can work asynchronously
You can’t eliminate dependencies entirely in a complex organization. But you can minimize unnecessary dependencies and make necessary ones explicit and manageable.
(2) Enable Ownership and Autonomy
The best teams feel genuine ownership over their domain and have the autonomy to make meaningful decisions within it.
Ownership means:
- Accountability for outcomes, not just activities
- Authority to make decisions about how to achieve goals
- Responsibility for understanding customers and the problem space
- Long-term commitment to a domain (not just project-hopping)
Autonomy requires:
- Clear goals that define what to achieve, not how to achieve it
- Resources and capabilities to execute independently
- Permission to make mistakes and learn
- Trust from leadership
Teams with ownership and autonomy operate like missionaries with genuine belief in their mission. Teams without them operate like mercenaries executing tasks without deeper investment.
(3) Maximize Leverage Through Shared Services
As organizations grow, certain capabilities become valuable across multiple teams. Shared services (or platforms) provide these capabilities centrally, creating leverage.
Examples of shared services:
- Design systems that ensure consistent user experience
- Infrastructure platforms that handle deployment and scaling
- Data platforms that provide analytics across products
- Authentication and identity services used by all products
Benefits of shared services:
- Eliminate redundant work across teams
- Ensure consistency where it matters
- Allow specialized teams to build deep expertise
- Accelerate new product development
Risks of shared services:
- Create new dependencies that can slow teams down
- May not prioritize what any individual product team needs most
- Require coordination overhead to manage
- Can become bottlenecks if under-resourced
(4) Align Architecture with Organization
Your technical architecture and organizational structure should reinforce each other. Conway’s Law observes that systems tend to reflect the communication structures of the organizations that build them.
Use this deliberately. If you want independent product teams, design technical systems that can be developed and deployed independently. If you need tight integration between products, ensure the teams building them are structured to collaborate closely.
Misalignment between architecture and organization creates constant friction. Teams fight against both technical and organizational constraints to get work done.
(5) Align Teams with Customers
When possible, organize teams around customer segments or outcomes rather than technical components.
Component-oriented teams (mobile team, API team, database team) create dependencies for every customer-facing change. Multiple teams must coordinate to deliver anything users actually experience.
Customer-oriented teams (small business team, enterprise team, or teams owning specific user journeys) can deliver complete experiences with minimal coordination. They develop deeper understanding of their customers and can move faster.
This isn’t always perfectly achievable. Some technical components genuinely need dedicated expertise. But the principle is to minimize how often customer outcomes require coordinating multiple teams.
(6) Expect Structure to Evolve
No organizational structure is permanent. As your strategy evolves, your organization should evolve with it.
Plan to revisit your structure periodically (at least annually) to ask:
- Does our current structure support our current strategy?
- Where are we seeing friction or slow-down?
- What new capabilities are we building that might need different team structures?
- Are dependencies causing problems that restructuring could solve?
Restructuring has real costs (disruption, learning curves, relationship rebuilding), so don’t do it casually. But don’t preserve a structure that no longer fits your strategic needs either.
7. Measuring and Managing Strategic Progress
A strategy without measurement is just a wish. Management systems provide the infrastructure for tracking progress, learning from results, and adapting your approach. This section covers how to build systems that keep your strategy on track.
1) How to Build a Strategy Tracking System
Strategic execution requires visibility into whether you’re actually making progress toward your goals. Without tracking systems, you’re flying blind.
(1) What management systems should enable
| Function | What It Means |
|---|---|
| Progress visibility | Can you see whether you’re moving toward strategic goals? |
| Early warning | Will you know if something is going wrong before it’s too late? |
| Decision support | Does data help you make better resource allocation decisions? |
| Accountability | Is it clear who owns what outcomes? |
| Learning | Are you capturing insights that improve future execution? |
(2) Components of an effective tracking system:
- Goals and targets: Clear articulation of what you’re trying to achieve, with specific success criteria.
- Metrics and KPIs: Quantitative measures that indicate progress toward goals.
- Dashboards and reporting: Regular visibility into metric performance, accessible to relevant stakeholders.
- Review cadence: Structured times to examine progress, discuss blockers, and make decisions.
- Escalation paths: Clear processes for raising issues that need broader attention.
(3) What to avoid
| Mistake | Consequence |
|---|---|
| Tracking too many metrics | Dilutes focus; nobody knows what matters |
| Tracking only what’s easy to measure | Optimizes for measurable but unimportant outcomes |
| Infrequent reviews | Problems fester; course corrections come too late |
| No clear ownership | Accountability diffused; nobody responsible for results |
| Metrics without context | Numbers without narrative; data without decisions |
The goal isn’t to create an elaborate tracking bureaucracy. It’s to ensure you can answer the question: “Are we making progress on our strategy?” If you can’t answer confidently, your management systems need work.
2) Choosing the Right KPIs: Leading vs. Lagging Indicators
Not all metrics are created equal. Effective strategy tracking requires choosing the right measures and understanding what they tell you.
(1) Leading vs. Lagging Indicators
A critical distinction in metric selection is between leading and lagging indicators.
| Indicator Type | Strengths | Limitations |
|---|---|---|
| Lagging | Definitive measure of success; hard to game | Slow feedback; too late to change outcomes |
| Leading | Early warning; actionable | May not perfectly predict lagging outcomes |
Lagging indicators measure outcomes that have already happened. They’re the ultimate measures of success but tell you about the past, not the future.
Examples:
- Revenue
- Customer churn rate
- Market share
- Net Promoter Score
Leading indicators measure activities or conditions that predict future lagging indicators. They give you earlier visibility into whether you’re on track.
Examples:
- Feature adoption rates (predicts retention)
- Sales pipeline volume (predicts revenue)
- Customer engagement scores (predicts churn)
- Time to first value (predicts conversion)
(2) The power of leading indicators:
Imagine you’re tracking customer retention (a lagging indicator). By the time you see churn numbers, customers have already left. You can analyze why they left, but you can’t get them back.
Now imagine you also track weekly active usage (a leading indicator that correlates with retention). When usage drops, you have a warning signal before customers churn. You can intervene while there’s still time to change the outcome.
Effective management systems track both types:
- Lagging indicators to confirm strategic success
- Leading indicators to enable timely intervention
(3) Characteristics of Good Metrics
When selecting metrics, evaluate them against these criteria:
| Criterion | Question to Ask |
|---|---|
| Relevant | Does this metric connect to strategic goals? |
| Actionable | Can teams influence this metric through their work? |
| Timely | Will we see changes fast enough to respond? |
| Understandable | Do stakeholders know what this metric means? |
| Reliable | Is the measurement consistent and trustworthy? |
| Resistant to gaming | Will optimizing this metric produce genuinely good outcomes? |
(4) The OKR Framework
Objectives and Key Results (OKRs) provide a popular framework for connecting metrics to strategic goals:
- Objectives: Qualitative descriptions of what you want to achieve. They should be inspiring, ambitious, and aligned with strategy.
- Key Results: Quantitative measures that indicate whether you’ve achieved the objective. They should be specific, measurable, and time-bound.
Example OKR:
Objective: Become the go-to solution for remote team collaboration
Key Results:
- Increase weekly active teams from 5,000 to 12,000
- Improve team activation rate (3+ members active) from 40% to 65%
- Achieve Net Promoter Score of 50+ among team admins
- Reduce time to first collaboration from 3 days to 4 hours
OKR best practices:
| Practice | Why It Matters |
|---|---|
| Limit quantity | 3-5 objectives with 3-5 key results each; more dilutes focus |
| Set ambitious targets | OKRs should stretch capability; 70% achievement is often considered success |
| Separate from compensation | If OKRs determine bonuses, people set safe targets |
| Review regularly | Weekly or bi-weekly check-ins keep OKRs relevant |
| Cascade thoughtfully | Company OKRs inform team OKRs, which inform individual OKRs |
OKRs aren’t the only valid framework. What matters is having a clear connection between your strategic goals and the metrics you track.
If you want to know OKRs in detail, read this article:
👉 https://productwithmustache.com/okr/
3) Why Strategy Should Be Iterative, Not Static
Strategy isn’t a document you write once and execute mechanically. It’s a hypothesis that you test and refine through action and learning.
(1) Strategy as a living process:
Think of strategy as a continuous loop:
┌──────────────────────────────────────────────┐
│ │
▼ │
Define Strategy ──→ Execute ──→ Measure ──→ Learn ─┘
│
▼
Adapt Strategy
Each cycle through the loop improves your strategic understanding:
- Define: Articulate your strategic choices and hypotheses
- Execute: Take action based on your strategy
- Measure: Track results using your management systems
- Learn: Analyze what worked, what didn’t, and why
- Adapt: Refine your strategy based on learning
(2) What makes this different from “no strategy”:
Iterative strategy is not the same as being reactive or having no direction. The difference:
| Reactive Approach | Iterative Strategy |
|---|---|
| Responds to whatever happens | Pursues a direction while learning |
| No coherent hypothesis | Tests strategic hypotheses deliberately |
| Changes direction constantly | Maintains direction; adjusts approach |
| Random learning | Structured learning from execution |
Iterative strategy maintains strategic coherence while acknowledging that you’ll learn things that change your approach.
(3) Building learning into your process:
To make strategy truly iterative, build explicit learning mechanisms.
- Regular strategy reviews: Schedule times (quarterly or semi-annually) to examine strategic assumptions. What have you learned? What needs to change?
- Post-mortems and retrospectives: After major initiatives, analyze what happened and why. Capture insights that inform future strategy.
- Customer feedback loops: Continuously gather input from customers about whether your value proposition resonates and where it falls short.
- Competitive monitoring: Track how the competitive landscape is evolving and whether your positioning remains differentiated.
4) How Strategy Flows Through an Organization
Strategy exists at multiple levels of an organization, from company-wide direction to individual team priorities. Understanding how these levels connect is essential for coherent execution.
(1) The cascade concept
Strategy flows from broader to more specific levels:
Company Strategy
↓
Business Unit / Division Strategy
↓
Product Line Strategy
↓
Team / Feature Strategy
↓
Individual GoalsAt each level, strategy becomes more specific and actionable while remaining connected to the level above.
Example cascade:
| Level | Strategic Choice |
|---|---|
| Company | Become the leading platform for small business operations |
| Product line | Our invoicing product will be the easiest way for freelancers to get paid |
| Team | Reduce payment friction by enabling one-click invoice sending |
| Individual | Design and test three payment reminder flow variations |
Each level answers “how will we contribute to the level above?” while providing direction for the level below.
(2) Upward flow: Strategy is refined from the front lines
While strategy cascades downward, learning flows upward. People closest to customers and execution often see things that leadership misses:
- Market realities that challenge strategic assumptions
- Customer needs that current strategy doesn’t address
- Competitive threats or opportunities emerging in real-time
- Tactical innovations that could inform broader strategy
Effective organizations create channels for this upward flow. Strategy improves when frontline insights inform leadership thinking.
(3) Signs of healthy cascade
| Healthy Signs | Unhealthy Signs |
|---|---|
| Teams can explain how their work connects to company strategy | Teams don’t know the company strategy or don’t see connection |
| Strategic choices at each level reinforce each other | Conflicting priorities across teams |
| Frontline learning influences strategy evolution | Strategy feels disconnected from market reality |
| Reasonable autonomy within clear boundaries | Either micromanagement or no direction |
Making the cascade work:
- Clarity at the top: Company strategy must be clear enough to guide decisions at lower levels. Vague strategy creates vague cascades.
- Translation at each level: Leaders at each level must translate broader strategy into specific choices relevant to their domain.
- Two-way communication: Regular opportunities for upward and downward information flow, not just annual planning cycles.
- Coherence checks: Periodic review to ensure strategies at different levels remain aligned as each evolves.
8. The Power of Strategic Focus
Everything we’ve discussed about strategy ultimately requires one thing: the discipline to focus. This section explores why focus is so difficult, what happens when it’s absent, and how to cultivate it as an organizational capability.
1) What Happens When Teams Lack Focus
Adding work is easy. Saying yes feels good. Building more features seems productive. But the absence of focus creates a slow-motion tragedy that many organizations don’t recognize until it’s too late.
(1) How unfocused organizations operate
The pattern is familiar. Leadership identifies many potential opportunities. Each seems valuable. Rather than choosing among them, the organization pursues all of them simultaneously. Resources spread thin. Progress slows everywhere. Nothing reaches the quality or impact that would create real competitive advantage.
Meanwhile, a focused competitor picks one thing and executes it exceptionally well. They win the customers, build the reputation, and establish the position that the unfocused organization was pursuing across many fronts.
(2) The feature factory trap
In product organizations, lack of focus often manifests as the “feature factory” pattern:
- Leadership treats the product team like an order-taking service
- Features are requested and built without clear strategic connection
- Shipping velocity is high, but meaningful outcomes are rare
- Teams don’t have time to understand whether features actually work
- The product becomes bloated and incoherent
The feature factory feels productive. Lots of things are being built. But strategic progress is minimal because effort is scattered rather than concentrated.
(3) The human cost
Lack of focus doesn’t just hurt strategic outcomes. It damages the people doing the work:
| Impact | How It Manifests |
|---|---|
| Exhaustion | Constant context-switching depletes cognitive resources |
| Disengagement | People stop caring when their work doesn’t seem to matter |
| Cynicism | “This too shall pass” becomes the default reaction to new priorities |
| Learned helplessness | Why invest deeply when direction will change again soon? |
Teams in unfocused organizations often work extremely hard while accomplishing very little that matters. The effort is real; the impact is not.
2) Why Saying “No” Is So Hard for Leaders
If focus is so important, why is it so rare? Understanding the psychological and organizational forces that work against focus helps explain why this discipline is so difficult.
(1) The Desire to Appear Capable
Leaders are constantly evaluated by stakeholders, boards, customers, and employees. In meetings and presentations, committing to ambitious and varied initiatives signals competence. Saying “we’re going to do fewer things” can feel like admitting limitations.
This creates a dynamic where leaders promise more than the organization can deliver. Once commitments are made publicly, walking them back feels like failure. So organizations try to do everything, doing nothing particularly well.
The irony is that focused leaders who deliver exceptional results on fewer initiatives ultimately appear far more capable than those who spread themselves thin.
(2) Psychological Insecurity
Several psychological forces push leaders away from focus:
- Fear of missing out (FOMO): What if that market opportunity we didn’t pursue turns out to be huge? What if a competitor wins because we weren’t there?
- Customer pressure: Every customer request feels urgent. Saying no to customers feels like abandoning them.
- Competitive anxiety: When competitors ship new features, the instinct is to respond in kind. Not matching them feels like falling behind.
- Desire for safety in numbers: If we pursue many options, surely some will work out. Betting on fewer options feels riskier (even though the opposite is often true).
These fears are understandable but counterproductive. The discomfort of focus is the price of strategic effectiveness.
(3) The Illusion That More Is Safer
Many leaders believe that pursuing more opportunities creates safety through diversification. If some bets fail, others will succeed.
This logic is flawed in practice:
- Each initiative requires resources, attention, and coordination
- Spreading resources thin often means all initiatives underperform
- The cognitive overhead of managing many priorities creates its own drag
- Focus enables breakthrough results; diversification often produces mediocrity across the board
A focused organization that dominates one area is typically better positioned than a scattered organization that’s mediocre in many areas.
3) What Real Strategic Focus Looks Like
If lack of focus is so damaging, what does genuine focus look like in practice?
(1) The characteristics of focused strategy
A truly focused organization exhibits several distinctive characteristics:
| Characteristic | What It Looks Like |
|---|---|
| Few priorities | 2-3 major strategic objectives, not 10-15 |
| Deep investment | Significant resources concentrated on priorities |
| Clear trade-offs | Explicit about what you’re choosing not to do |
| Sustained commitment | Priorities persist long enough to achieve results |
| Cascading alignment | Entire organization oriented around the same priorities |
(2) The cascade of favorable outcomes
Good strategy concentrates force on a few key objectives. When those objectives are achieved, they create cascading benefits that strengthen your position further.
Consider a company that focuses on becoming the fastest solution in their category:
- Speed becomes their reputation
- Customers who value speed seek them out
- Customer feedback reinforces speed-focused development
- Engineering culture optimizes for performance
- Speed-focused customers become advocates
- The speed advantage compounds over time
This cascade wouldn’t happen if speed were just one of fifteen priorities. Focus enables compounding.
(3) Focus is grounded in strategy and insight
Genuine focus isn’t arbitrary constraint. It emerges from:
- Strategic clarity: Understanding your market and how to stand out choices makes clear what deserves focus.
- Customer insight: Deep understanding of customer needs reveals which problems are most important to solve.
- Competitive awareness: Knowing the landscape shows where focused effort creates differentiation.
Focus without this grounding is just random limitation. Focus with this grounding is strategic discipline.
4) The Gardener Mindset: Less Control, Better Results
One final mental model helps sustain focus over time: the difference between a builder’s mindset and a gardener’s mindset.
(1) The Builder’s Illusion
Many leaders approach organizations like builders approach construction. They believe:
- If we design the right structure, everything will work
- Systems and processes will produce predictable outcomes
- With enough planning, we can control results
- Building more (features, teams, processes) creates more value
This mindset leads to over-engineering. When something doesn’t work, the builder adds more structure. The assumption is that the right system will solve the problem.
But organizations aren’t buildings. They’re living systems. And living systems don’t respond to engineering the way structures do.
(2) The Gardener’s Approach
| Situation | Builder Response | Gardener Response |
|---|---|---|
| Teams are misaligned | Add coordination processes | Clarify goals; let teams find their own coordination |
| Initiative is underperforming | Add resources and oversight | Understand why; remove obstacles; give it time |
| New opportunity emerges | Launch a new initiative | Evaluate whether existing efforts could address it |
| Something succeeds | Scale and systematize immediately | Understand why it worked; let the pattern spread organically |
A gardener has a different relationship with their domain:
- Gardens have their own nature that must be respected
- The gardener creates conditions for growth but doesn’t control it
- Too much intervention can be as harmful as too little
- Patience and observation matter as much as action
- Each garden is unique; generic solutions rarely work
Applied to organizations, the gardener’s mindset means:
- Minimal necessary intervention: Don’t add processes, structures, or features unless they’re genuinely needed. Every addition has costs.
- Creating conditions, not controlling outcomes: Your job is to provide clarity, resources, and support. How teams achieve goals is largely up to them.
- Patience for organic development: Good things often take time to grow. Constantly replanting because you don’t see immediate results prevents anything from maturing.
- Attention to the ecosystem: Watch how the organization actually functions, not how you think it should function. Adapt your approach to reality.
9. Putting It All Together: A Strategy Checklist
We’ve covered a lot of ground. This section distills everything into a practical checklist you can use to evaluate and strengthen your product strategy.
1) The Five Strategic Questions
Every complete strategy answers these five questions. Use them as a framework to audit your current strategy:
| Question | What It Addresses | Key Test |
|---|---|---|
| 1. What is our winning aspiration? | Purpose and ambitious goals | Can your team articulate it? Does it inspire them? |
| 2. Where will we play? | Markets, customers, geographies, channels | Is it specific enough to guide decisions about where NOT to play? |
| 3. How will we win? | Value proposition, competitive advantage | Would a competitor describe their approach differently? |
| 4. What capabilities do we need? | Skills, systems, resources required | Have you identified gaps and plans to close them? |
| 5. What management systems are required? | Metrics, processes, governance | Can you tell if you’re winning or losing? |
2) Strategy Health Check
Use this checklist to evaluate whether your strategy is genuinely guiding decisions:
(1) Clarity Check
- Our strategy can be explained in under 2 minutes
- Team members at all levels can articulate how their work connects to strategy
- We have written documentation of our strategic choices
- New team members can understand our strategy during onboarding
(2) Choice Check
- We can name specific opportunities we’ve declined because of our strategy
- The market is specific enough to exclude some customers/markets
- Our tactics to stand out in the market would not describe our competitors equally well
- We’ve made trade-offs that felt uncomfortable
(3) Alignment Check
- Product roadmap clearly connects to strategic priorities
- Resource allocation reflects stated strategic priorities
- Team goals cascade logically from company strategy
- Cross-functional teams share understanding of priorities
(4) Execution Check
- We have metrics that indicate strategic progress
- We review strategy execution regularly (at least quarterly)
- Learning from execution informs strategy refinement
- Teams have autonomy to execute within strategic boundaries
(5) Focus Check
- We have 3 or fewer major strategic priorities
- Priorities have remained stable long enough to achieve results
- We can say “no” to requests that don’t align with strategy
- Teams have capacity for deep work, not just reactive tasks
3) Warning Signs Your Strategy Needs Work
Watch for these indicators that your strategy may be weak or absent:
| Warning Sign | What It Suggests |
|---|---|
| Every opportunity seems equally important | Lack of clear market choices |
| Roadmap changes dramatically each quarter | Strategy isn’t guiding decisions |
| Teams are confused about priorities | Poor communication or unclear strategy |
| You’re losing to focused competitors | Strategy isn’t creating differentiation |
| Lots of activity but metrics don’t improve | Execution without strategic coherence |
| “Strategy” document hasn’t been referenced in months | Strategy is disconnected from operations |
10. Closing Thoughts
Strategy is not a document you write once and file away. It’s a discipline you practice continuously. The best product managers I’ve observed share a common trait: they hold their strategic direction firmly while remaining genuinely curious about what they might be getting wrong.
The frameworks and checklists in this guide are tools, not answers. Your strategy must emerge from your specific context: your customers, your capabilities, your competitive landscape, your organizational realities. No framework can substitute for the hard work of understanding these deeply and making difficult choices.
If there’s one thing I hope you take away, it’s this: strategy is fundamentally about focus. In a world of infinite possibilities and limited resources, the courage to choose, and to keep choosing consistently over time, is what separates organizations that achieve something meaningful from those that stay busy without making progress.
Start where you are. Use what you have. Do what you can. And keep refining as you learn.