Great Products Start with Strategy



“A strategy delineates a territory in which a company seeks to be unique.” —  Michael Porter

Strategy guides your tactics.  One of the most effective tools I’ve used for designing a strategy is a Strategy Diamond, which outlines the five key components of your strategy: arenas, vehicles, differentiation, staging, and economic value.

Why care about strategy?

To put it simply, your strategy can help you compete more effectively or find a sustainable way to stay in business.  If nothing else, it’s about being mindful and deliberate about where you are spending your time, energy, and resources.

In today’s world, strategy is more important than ever, where strategies are battle-tested in a world-wide market and it’s survival of the fittest and the most flexible.

You can think about strategy whether you are a one-man band, a team, an organization, or a company, and beyond.  You can use strategy to your advantage to better guide your actions and investments.  Even the most effective bloggers have a knack for strategy.

In the book, Managing the Design Factory, Donald G. Reinerstsen writes about how your product has to start with strategy, and that it can’t be an after-thought.

Key Takeaways

Here are my key takeaways:

  • Good strategies make money.  You can measure your strategy, by measuring whether it makes money.  It’s a cut and dry way to get market feedback and to tell whether your strategy is sustainable.
  • Product choices must fit with the strategy.    If your strategy is the market segment you’ll compete in, who you’ll compete with, and how you’ll compete, then you need to check whether your product is going to work for your strategy.  For example, is your strategy about price or quality or a unique difference?  Will that work in the market segment you chose, and does your product deliver?
  • Your customer or channel has to value the difference.  The market might not value what you bring to the table.  If you have unique value, but your customer or channel doesn’t value the difference, then you have a mismatch.   A very cutting question is does your customer value what you do?

In my experience, if you don’t have a way to measure the economics, because you’re playing the game to win mind-share, then you can measure success against your mission.  One additional point I’ll add is that if your strategy is easy to copy, then you aren’t taking advantage of your unique strength.

Which Segments, Who to Compete with, and How to Compete

The key point here is that the market will give you feedback on whether your strategy is working.  Either it’s making money or it’s not.  If you’re not making money, you might need to change your strategy.

Reinertsen writes:
”Our company strategy is a key context in which we do product development.  Strategy determines which market segments we will compete in, who we will compete with, and how we will compete. 

The single yard-stick by which we measure our strategy is an economic one.  Good strategies make money, bad strategies do not. 

We need to understand our internal economics, those of our distribution channels, and those of our competitors to do a good job setting strategy.”

Our Products Need to Fit Our Strategy

The key point here is that you have to match your product to your strategy, and your differentiator has to match what your channel and customers can value or appreciate.

Reinertsen writes:

“The products we choose to develop are a critical piece of our strategy, but our product choices must fit with the rest of the strategy.  For example, one computer peripheral company tried to differentiate their product on the basis of its performance advantages. 

Unfortunately, the channel of distribution they used were order takers who had little technical knowledge and no ability to explain these benefits to the customer. 

This channel sold products on the basis of price alone, which means the company achieved no premium for is superior technical performance.  It is quite common to see such misfits between the product and the distribution channel. 

The important thing to remember is that good products cannot fix bad strategies.  We need to start with a well-crafted strategy to make money-developing products.”

You Might Also Like

Selecting the Customer
Strategy Diamond
Energized Differentiation Separates Brands from the Pack
Measure of Success


  1. All true. On line though (I’m a blogger) it’s a little hard to know what/where/how big the arena is. What I am saying is that Porter’s stuff works in mature markets where there is lots of information available. And for those with money to spend on market research.

    For the little guys, like yours truly, not so much.

  2. […] This post was mentioned on Twitter by gumbafeeds, kurio's resource. kurio's resource said: It Starts with Strategy […]

  3. J.D. I really found this valuable…I’m all about strategy. I first began learning and researching strategy after I read a book called “The Art of War” back in 2005. I was so attracted to the book because by nature, I’ve always been some what strategic, but I never really put a title or concept to how I approached things. After I read that, I was hooked.

  4. @ Evan — Good point on how market maturity and market research make a big deal. That said, there is hope for the little guy.

    In an online world, SEO and keyword analysis help us do some amazing market research as a one-man band. There’s never been a better time for niche analysis. The challenge here though is figuring out how to do this effectively. I’m still learning, but it pays off.

    Another approach to get you in the game is to figure out your “personal hedgehog”, by using Jim Collins book, Good to Great.

  5. JD – yes, I have taken the strengthsFinder. When I started a new job last year I was given the book and asked to complete the test during my first two weeks at the company. Here were my top 5:
    responsibility, strategic, achiever, adaptability and maximizer. Not sure if there was an order, but I saved the strengths in my email (I have a pdf somewhere too).


  6. Hi JD, Strategy really helps you make decisions, narrow choices in a meaningful way. Moving without a cohesive strategy is kind of like starting out on a trip with no destination in mind. Doesn’t matter how fast you go cause there’s no real way to tell when you get there…:)

  7. I used to think that “strategy” was an empty term used by people trying to impress. But now I know that strategy can actually have real meaning and bring real value to a business.

  8. @ Fred — Your example perfectly illustrates how slowing down, can actually speed you up, by making smarter, more mindful choices. I’ve seen a lot of people going nowhere fast, or going down non-sustainable paths. A little strategy can go a long way.

    @ Vered — I know what you mean. I’ve seen too many people talk strategy, but they weren’t actually strategic. But doing strategy with skill is a game changer.

  9. Hi JD .. There’s no point in rushing piecemeal at things .. it ends up a mess .. it’s better to be prepared, work out which and what to do .. test the results and work forwards learning all the time ..

    I’m on my way .. the snail route – but I’m getting there .. have a good week .. Hilary

  10. Hi J.D.! Great approach to strategy and wonderful tips. This seems like an interesting book.
    Thanks for presenting these ideas in an easy to digest manner. Loving blessings!

  11. Hi:
    My new book, Total Customer Value Management is due out sooon, and dwells on the importance of Customer strategy.
    In fact 38% of all CEO’s said lack of a Customer Strategy prevents good Customer Experience

  12. @ Hilary — I learned to focus more on strategy by doing projects. When I didn’t think through the plan, it showed. Then not just me, but the whole team felt the pain, so I learned early on to focus on the end in mind and to step into the future.

    One of my favorite questions is, “What do you want to accomplish?” It cuts right to the chase, to the end in mind, and then it helps you figure out what to optimize, where to focus, and what to let go.

    @ Andrea — Thank you. It’s a wonderful book. It’s really about product success by design. The whole book is geared towards creating an effective system of people, processes, and product with a sharp customer focus. It’s a gem.

    @ Gautam — Choosing a customer is very much a strategic question. I find that most successful businesses have clarity on their customer and empathy — they truly know what their customers want and they can truly relate.

  13. Hi JD,
    Indeed this is sound, pragmatic thinking. I have too often seen people take on a new endeavor thinking that the world owes them a favor. They essentially go into business with positive thinking but NO strategy. This is always a recipe for disaster. There is an underlying simplicity to a great strategy… the trick is to find it and stay on target.

  14. Practical and focused JD, you know your subject. I have a two pronged approach – strategy and intention. I have intentions (some exact some more freer) and I develop a stratgey to move towards them. They are intentions not goals as I often have to change course to respond to an emerging situation that would not represent a goal as it could be in a polar opposite direction. But I have to agree no strategy no results or taking an awful lot to chance. Stay the course by charting one!

  15. @ Rob — I know what you mean. In my earlier days, I would have fallen into the same trap of depending on positive thinking. Luckily, at work, I’ve had some great business mentors to learn from and some amazing strategic thinkers. I learned to feel the impact of my plans and that helped me value having a smart plan over lucking into success 😉

    @ John — Thank you. It sounds like you have a reliable recipe for moving towards what you want to accomplish. I think that’s the key. Even just trending in the right direction is a good thing.

    I agree with your point on staying flexible and responding to emerging situations.

Comments are closed.