How to Clarify Product Strategy and Operationalize Product Management in Technology Companies?

I want to suggest a ten steps model to clarify a differentiating product strategy and operationalize professional product portfolio management processes in midsize technology companies.

The suggested model is based on lean portfolio management principles of Scaled Agile Framework (SAFe 5.1) and my 25 years of experience from Oracle, SAP, and several startups. The model has enhancements to the standard SAFe framework in clarifying core product capabilities and measuring a strategic fit between company strategy and product strategy.

I have recently applied the model to midsize software companies that develop AI/ML software, digital supply chain and predictive maintenance IoT solutions. In addition to the software industry, the suggested model works in pretty much all product organizations starting from about 35 developers up to thousands of developers, or by SAFe terminology from a small company with a single Agile Release Train (ART) to largest companies with several Development Value Streams (DVS).

 Two Common Challenges in Startups

I want to address two common challenges in the startups by the model:

1. What is the differentiating product and how does it fit to an overall company strategy? This is the intellectual property that cannot be replaced by open-source software. This should have the highest priority in product investment and a clear future roadmap.
2. How to run an active two-way dialogue between board level and development teams, and manage product innovation, roadmaps, and the overall product portfolio professionally?

The ten steps model consists of two parts: first, clarify the product strategy and then, operationalize product portfolio management processes.

First, Clarify Product Strategy

Let’s start by five steps to synchronize company and product strategies and clarify the product portfolio.

Step one: Strategic Themes

The first step is to clarify the overall company strategy by condensing the strategy to a single page business canvas. Then, identify less than a handful of strategic themes to drive the product strategy.

Most midsize startups have already a clear understanding of these topics. However, an important objective here is to ensure that the strategy and strategic themes can be shared with the whole organization so that everyone understands her role in delivering the big picture. Also, the direct link between company strategy and product strategy through the strategic themes may not be clear in all organizations.

Step two: Solution Value Propositions

The second step is to clarify solution value propositions. I suggest condensing each value position to a one-page solution canvas with a strong focus on target audiences, measurable customer business value from the solution, competitive differentiation and technical architecture. This helps us to drill down to the really differentiating capabilities, the core of each solution that should have highest priority in future development funding.

 Step three: As-is Solution Portfolio

The third step is to compose a one-page solution portfolio canvas. This is a consolidated view of all solution value propositions and shared company level channels, key activities, and resources. An important objective here is to ensure that all value propositions use the shared company resources and channels effectively.

Step four: Portfolio SWOT and TOWS

The fourth step is to make SWOT and TOWS analysis of the portfolio. The good old SWOT analysis is an excellent simple tool to assess current portfolio from an internal perspective and the TOWS matrix gives an external view, how internal strengths can be used to address external opportunities and threats.

Step five: Portfolio Scenarios

The fifth step is to prepare alternative portfolio scenarios based on the analysis. I suggest documenting assumptions and rationales behind the alternative scenarios. This allows the whole organization and external stakeholders such as board members to understand and assess the alternative scenarios.

Then, Operationalize Product Management

Let’s talk about operationalization of product management processes next. This is where product management get professional in startups.

Step six: Epics and Kanban

The sixth step is to introduce Epics and a Kanban system to manage product innovation pipeline. The idea is to capture new ideas to an innovation funnel, pick up most valuable ideas, describe them as Epics and prepare a lean business case to each initiative.

I suggest validating anticipated customer value by developing and delivering most valuable product (MVP) features to couple of initial customers. The customers can confirm that the solution fulfills real requirements before making full-scale product development commitments and investments. Delivering the MVP to the initial customers gives also a first reference case and a real-life validation of value-based sales arguments to sell the solution.

I suggest managing the product innovation flow by a Kanban system that takes into account a realistic availability of management and expert resources needed to prepare the new initiatives. This helps us to focus on most valuable ideas that fit to the company strategy.

Step seven: Product Roadmaps

The seventh step is to compose time-bound product roadmaps that are synchronized with major business milestones. I suggest two roadmaps: an 18-month strategic roadmap to communicate a mid-term picture to internal stakeholders and a 6-month delivery roadmap covering next two quarterly product increments in more details. The Scaled Agile Framework gives tools to assess realistic lead time to deliver future Epics, business features and technical enablers.

Step eight: Budget Guardrails

The eight step is to set product development budget guardrails. I suggest four guardrails:

1. Capacity allocation. The idea is to tag each initiative by a type of development spendings: developing a new business feature, developing a new technical enabler or spending money to cover technical debt and maintenance.
2. Strategic fit. Remember the strategic themes from the first step. The idea is to tag each initiative by one or more strategic themes that the initiative supports. This makes a direct link between strategic company level goals and product development plans.
3. Investment horizons. The idea is to tag each Epic by an investment horizon: innovation to be realized within 2-3 years, prototyping or MVP to be realized within a year, mainstream product investment to deliver current commitments or money spent to maintenance of a retiring product.  
4. Portfolio threshold for significant initiatives. Many startups want to promote self-empowered teams, but a common challenge is when and what the teams can decide by themselves. The idea is to define a threshold in terms of development costs, lead time or strategic importance. Self-empowered teams can make an own decision when a new initiative is below the threshold. Above that, it needs an approval from a portfolio synch meeting.

Step nine: Portfolio Management Processes

The ninth step is to define processes to manage the product portfolio. These processes ensure that product development plans are synchronized across the organization, the product strategy meets stakeholder expectations, and the product strategy is in synch with the company strategy. This are an area of improvement in most growing technology companies.

First, I suggest dividing the product calendar year to quarterly product increments. This allows us to synchronize product planning and business planning schedules.

Then, I suggest filling the product year by four types of regular portfolio management events following the Scaled Agile Framework:

1. Bi-annual product portfolio budgeting to align investment funding
2. Quarterly strategic product portfolio reviews to align strategy
3. Monthly product portfolio sync meetings to monitor and align execution
4. Quarterly product increment planning sessions; these are core agile events to plan development execution with direct stakeholder validation

I focus on product strategy and product management processes in this paper. The Scaled Agile Framework provides widely used management tools for coordinating development operations, such as weekly solution/agile release train synch meetings to coordinate dependencies between development teams.

 Step ten: Key Performance Indicators

The tenth step is to set key performance indicators for the product business. I suggest strategic KPIs to monitor the budget guardrails: development capacity allocation, strategic fit with the overall company strategic themes and investment horizons. I suggest also operational KPIs to monitor overall progress in terms of outcomes, flow, and competency.

Next Steps

That’s it! Ten steps to clarify product strategy and manage the product portfolio.

I would like to suggest next a one-hour follow-up meeting where I would introduce best practice from the topics above and ask your leadership team to make a self-assessment of how well your organization matches with the best practices. This has been an eye-opening exercise in many companies and gives a direct guidance of areas of improvement.

This suggested ten steps model is based on Scaled Agile Framework (SAFe 5.1). I'm a Certified SAFe Lean Portfolio Manager. I believe SAFe is the best product development management framework for technology startups and large technology companies because the framework scales well from smallest startup teams to largest companies. There are already hundreds of thousands of developers and product management professionals that use agile terminology, roles and processes in their daily work. This suggests a low adoption barrier when enhancing existing agile setups by the suggested model.

Please borrow with pride! And contact me when you need someone to help in setting up the framework and processes. Meanwhile, all the best.