Lack Of Alignment Between Functional Strategies Prevents Business Success

A product strategy outlines how one or more offerings will meet customer needs and fulfill business strategy. It’s easy to mistake new products, enhancements, and services for a product strategy. But many products miss goals because product leaders fail to define a product strategy that is connected to overall business goals. Going into operational planning without a strategy will result in the completion of a set of tasks without clear direction.

Product strategy, along with marketing and sales strategy, must be defined and aligned to ensure that business objectives are met. That alignment is critical to ensuring planned growth. Without it, aspirations on market share or how the organization will win can be short-sighted, and product teams may wonder what their role is in reaching business goals. In addition, without understanding the product function strategy, other product teams such as product development and user experience are left to figure out plans that they think will be in line. For example, trying to determine product investment decisions without understanding the target portfolio-level capabilities may leave product teams wondering whether they should invest more in existing products or new products to improve capability alignment.

Use A Set Of Cascading Decisions Across Three Levels To Align The Organization

Product leaders should foster alignment within their organization. Having a set of cascading decisions that begin at a common point and continually unite the organization can create and sustain a future market advantage. Organizations should reach three key levels of alignment:

  1. Align with the shared destination. Product leaders — along with C-level executives, including marketing — and sales leaders should collaboratively determine how and where the company will generate long-term business value. This is the starting point for product strategy and a core component of the organization’s overall revenue strategy. Product leaders should answer questions such as what categories of customer needs are in focus, what types of solutions are required (e.g., products, services), and whether new offerings are needed.
  2. Orient product. Product leaders are now ready to establish market-based decisions for the overall product function and confirm that the product operating model can deliver on the strategy. Orienting the product function at this level will drive specific product portfolio investment decisions and provide actionable inputs for product roadmaps. Product leaders should not dive deep into individual product requirements but should rather have an overall understanding of the types of offerings required. You should answer questions on how the current portfolio of offerings supports target needs and identify any gaps and remediation steps.
  3. Provide subfunction coordinates. Finally, product leaders should distill the product strategy into the guiding principles that each product team (e.g., product operations, product platform, product excellence) can use to make its own team-level strategy. These principles keep the whole product function aligned to the destination and orientation levels. Product leaders should outline the major strategic priorities cascading from prior decisions, clearly define necessary interlocks between teams and stakeholders, and define the critical success factors that will keep track of progress against strategic goals.

Align In-Market Offerings With Overall Business Goals For Key Benefits

When organizations complete the three levels in order, the decisions naturally cascade to inform the next set of decisions. This approach reduces the amount of debate and subjectivity that can stifle the strategy development process. Product leaders can then align portfolio investments with strategic priorities rather than making them in isolation from facts and the wider context. The three levels of alignment also provide a logical order of decisions that use relevant insight and feedback at the right moment. This approach cuts down on iterations and friction.

The output of all decision levels is a set of strategy components that can be codified on a single page to guide the cross-functional team and support interlock, ensuring that the strategy is complete and accessible. Organizations can thus improve adaptability and their chances of success.

Join me at this year’s B2B Summit North America, May 2–4, to learn more about how organizations can use a best-in-class process for fostering strategic alignment across the organization, as well as best practices for defining product function strategy and cascading team priorities. Register here.