Business strategy and Product vision

A story on the importance of business strategy towards constructing product vision and strategy. 

Jeff joined Webaan, an early-stage startup from an MNC, to lead Webaan’s product agenda. Webaan was a B2B SaaS startup focused on web analytics. Since this was a big role transition, he decided to approach this with an open mind. 

As one of his first tasks, he set out to define the product vision for the next 2 years. He had discussions with the founders, marketing, sales, and technology teams to craft his vision for the product. He found that the sales had targets but they have not defined a customer segment to focus on. In essence, there were only targets but no business strategy. 

The founders said – “We are a market-driven startup. The sales teams can sell to whichever customer segment (proprietors or SMEs or enterprises) that finds value in our product. We cannot put artificial constraints on the sales teams”. Jeff assumed that this is how startups work (remember open-mindedness) and accepted this hypothesis. 

Results… 

In the months that followed, the sales team brought in a lot of requests from prospective customers who wanted this and that feature. In the absence of a business strategy, Jeff and his PMs evaluated the features purely based on the incremental sales generated from adding a feature. This approach kept everyone within the company happy. 

A year and a half had passed. While Webaan’s competitors continued their growth momentum, Webaan struggled as sales numbers began to flatten. 

RCA

Market research pointed to two major buckets of problems –  

1. All the segments of customers (SME, enterprise & proprietors) felt that the product only met their partial needs. However, this was not the case with competitor products. The top competitors had their own focus areas and there were clear leaders in each of the market segments. 
2. Webaan’s customers felt that the product was a mess. For example, the product had many features but the users didn’t comprehend some of the features or did not know what to do with some of them.  

On RCA, the team identified the following – 

1. Since the product roadmap tried to accommodate feature requests from all segments purely based on the sales pipeline, the product ended up not satisfying any of the target segments fully (proprietors or SMEs, or enterprises). It ended up as an average product for each of the segments without emerging as a winner in any of the segments
2. The team did not consider the trade-offs in building a new feature thereby creating a mess of the product. For example, the central dashboard had graphs for SME users (where the users were typically business owners) as well as graphs for enterprise users (where the users were finance and operations team members). SME users got confused by the features meant for enterprise users and vice versa.  

All of these were traced back to the lack of business strategy and thereby product strategy. While some of the fixes were straightforward, there were issues that needed broader alignment, changes to product positioning, and also the product architecture. It took more than 9 months to clean this mess and by that time Webaan’s competitors got way ahead and Webaan had to settle for 4th position in terms of the market share. 

Learnings: 

Product vision (and strategy) cannot exist in a vacuum. It needs to be always tied up with a sound business strategy. 

In the absence of a clear product vision, a product can end up as an average product losing to the competitors. 

In products/firms where the business strategy answer is either “we are still figuring out” or “let us be open-minded and experiment”, product leaders need to develop a strong understanding of when the needs of different customer segments start to diverge and when those differences would start messing up the product. In addition, product leaders need to call out trade-offs in the product/value/positioning at the very early stages. 

Prioritization just based on “impact” can cover up for the lack of an effective strategy for some time but cannot work forever. 

While many successful products have catered to multiple segments in the long run, they invariably focused on one segment at a time (or a few segments that didn’t have conflicting requirements) and later expanded to other segments. This ensures not only building a great product but also creating a positioning that has the maximum ROI on the marketing efforts.