Getting better at product strategy

*Hello, I’m [Lenny](https://twitter.com/lennysan) and welcome to a**🔒 subscriber-only edition 🔒**of my newsletter. Each week I tackle reader questions about product, growth, working with humans, and anything else that’s stressing you out at the office. Send me your questions and in return I’ll humbly offer actionable real-talk advice*🤜🤛

# Q: How do I get better at product strategy?

![Image from Getting better at product strategy](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/ee01028f-17de-40e3-8171-32dfb21a3c3f_490x367.gif)

A few years into my time at Airbnb, the founders were becoming increasingly alarmed that a large percentage of booking requests were being rejected (or worse ignored) by hosts. Guests across all demographics, geographies, and languages were putting in their credit card information, ready to book, but instead of a happy confirmation message — were rejected. The reasons for the rejections were generally reasonable (hosts forgot to update their calendar, they didn’t want pets in the home, they needed more lead time, etc.) but for a guest trying out Airbnb for the first time — not a great experience. My team was tasked with addressing this.

We spent many months optimizing the booking flow, focusing on increasing the host acceptance rate — sending more reminders, incentivizing hosts to accept more often and more quickly, and making it easier to complete a booking on both sides. But this only helped a bit.

Eventually, we took a step back and went through a thought exercise: what would the *ideal* guest experience look like? If we were to start over, how would we design the Airbnb booking experience? It was pretty obvious: the experience would be instant! If you could see it, you could book it 🙌 This phrase quickly became our team’s vision.

With this in mind, we crafted a strategy that would transition the Airbnb marketplace from a “request to book” model to an “instant book” model. A world where guests could book available homes instantly.

We already had a feature called “Instant Book”, which when enabled allowed qualified guests to book instantly, so we doubled-down on growing the adoption of this feature. Though only 5% of bookings were “instant” that point, we set an ambitious north-star goal: 100% Instant Book.

To make a long story short, two and a half years later over 80% of bookings were instant. It was a wild success.

Below I’ll share some of the things that I learned from my experience crafting and executing this strategy, along with a ton of pointers to resources and advice to level up your strategic thinking.

Let’s get into it.

### ✨ Strategy

Crafting a strategy is the most fun part of product management. At least for me. You get to be creative, to think long-term, and to flex all of the nooks and crannies in your brain. Being good at strategy is also one of the defining characteristics of a senior Product Manager. For good reason — a well-crafted strategy can change the trajectory of a business, while a bad strategy is a huge waste of time and money.

To develop a winning strategy, you have to get three things right:

1. ☝️ **The actual strategy**
2. 👏 **Articulating the strategy**
3. 🤝 **Acting on the strategy**

Below, I’ll explore each of these steps and share examples from my work on the Instant Book strategy. First, though, let’s take a step back and make sure we’re all on the same page about *strategy.*

#### **What is a strategy?**

A strategy is your plan to win.

#### **Win what?**

Whatever you’re trying to achieve. Normally your company, or team, mission. This could anything from getting humans to Mars to getting more people to tweet.

#### Why do you need a strategy?

1. To create alignment
2. To create clarity
3. To create focus

#### **Where does strategy fit into the planning cycle?**

Once you align on your Mission and Vision you can focus on your Strategy — which then informs the Goals and Roadmap:

Mission → Vision → ***Strategy*** → Goals → Roadmap

1. Mission: What are we trying to achieve?
2. Vision: What does the world look like when we’ve achieved it?
3. **Strategy: How will we achieve it?**
4. Goals: How will we measure our progress towards it?
5. Roadmap: What do we need to build to get there?

It’s not always this sequential, as the Goals often lead to tweaks in the strategy, but this is generally how planning goes. Both your company, and each initiative within your company, should have a clear Mission, Vision, Strategy, and set of Goals. Your Mission and Vision will normally stay stable, while your Strategy, Goals, and Roadmap will likely evolve every planning cycle.

#### **What are some quick examples?**

Here’s how Tesla thinks about it:

- **Company Mission**: Accelerate the world’s transition to sustainable energy
- **Company Vision**: Create the most compelling car company of the 21st century by driving the world's transition to electric vehicles
- **Company Strategy:** (1) Build a sports car, (2) Use that money to build an affordable car, (3) Use that money to build an even more affordable car, (4) While doing above, also provide zero-emission electric power generation options.

Here’s how we thought about it on the Instant Book team:

- **Team Mission**: Make it easy and fun to book a home on Airbnb
- **Team Vision**: If you see it, you can book it
- **Team Strategy**: Transition the Airbnb marketplace from a “Request to Book” model to an “Instant Book” model, by (1) giving hosts all of the tools they need to be successful with Instant Book, (2) incentivizing hosts to enable Instant Book, and (3) encouraging guests to choose Instant Book.

### 🤔 Step 1. Determining your strategy

> “Good strategy … does not pop out of some strategic management tool, matrix, chart, triangle, or fill-in-the-blanks scheme.
>
> Instead, a talented leader identifies the one or two critical issues in the situation—the pivot points that can multiply the effectiveness of effort—and then focuses and concentrates action and resources on them.”
>
> — [Richard Rumelt](https://goodbadstrategy.com/), *Good Strategy Bad Strategy*

#### **Qualities of great strategy**

1. **Problem-oriented**: Clearly identifies the problem
2. **Insight-driven**: Rooted in insights, both quantitative and qualitative
3. **Actionable**: Outlines concrete actions/investments that will solve this problem
4. **Focused**: Has a small number of high-leverage bets
5. **Cohesive**: Create a clear path from the problem to the solution

In the case of Instant Book, the first thing we did was to think about carving a path from the problem (i.e. guests are often being rejected) towards our vision (i.e. if you could see it, you could book it). What would it take for us to get from A to B?

Well, for guests to be able to book any home they find, that would mean that every host and every guest was using Instant Book. This formed the first part of our strategy:

1. Increase host adoption of Instant Book
2. Increase guest adoption of Instant Book

We then spent a couple of weeks looking at data, talking to hosts and guests, and having team discussions around how we could best go about increasing adoption on both sides of the marketplace. Based on these insights, we landed on three tracks of work, which became the kernel of our strategy.

1. Give hosts all of the essential tools they needed to be successful with Instant Book
2. Incentivizing hosts to enable Instant Book
3. Encouraging guests to choose Instant Book

Our team then dove into each of these tracks — developing hypotheses, ideating on solutions, and launching dozens of experiments to make steady progress towards our goal. Every quarter or so, we re-evaluated the opportunities, shifted our strategy, and got to work. In the next step, I’ll share how we articulated this strategy.

#### Guides to developing your own strategy

When developing your own product strategy, these are the best three guides I’ve come across:

1. [How to Become a Strategic Leader](https://sloanreview.mit.edu/article/how-to-become-a-strategic-leader/) by Julie Zhuo
2. [Product Strategy – Insights](https://svpg.com/product-strategy-insights/) by Marty Cagan
3. [How to define your product strategy](https://medium.com/@gibsonbiddle/2-the-dhm-model-6ea5dfd80792) by Gibson Biddle

#### Five essential reads that will level up your strategic thinking:

Reading these will be an investment, it’ll pay off. Pick two and read them.

1. [Good Strategy Bad Strategy](https://www.amazon.com/dp/0307886239) by Richard Rumelt
2. [Divinations newsletter](https://divinations.substack.com/) by Nathan Baschez
3. [The Innovator's Dilemma](https://www.amazon.com/Innovators-Dilemma-Revolutionary-Change-Business/dp/0062060244) by Clayton M. Christensen
4. [7 Powers](https://www.amazon.com/7-Powers-Foundations-Business-Strategy/dp/0998116319) by Hamilton Helmer
5. [Good to Great](https://www.amazon.com/Good-Great-Some-Companies-Others/dp/0066620996) by Jim Collins

#### **Broadly, the best way to get better at developing strategy:**

1. Spend time understanding your market (including your competition)
2. Spend time understanding your customers and their needs
3. Spend time crafting and executing strategies — and learn from those experiences
4. Study colleagues who are great strategic thinkers
5. Read about strategy

#### Mind-expanding strategic frameworks to get your brain juices flowing:

1. [Aggregation Theory](https://stratechery.com/concept/aggregation-theory/) by Ben Thompson
2. [Finding Power](https://divinations.substack.com/p/finding-power) by Clay Christensen
3. [Hierarchy of Engagement](https://medium.com/@sarahtavel/the-hierarchy-of-engagement-expanded-648329d60804) by Sarah Tavel
4. [Status as a Service](https://www.eugenewei.com/blog/2019/2/19/status-as-a-service) by Eugene Wei
5. [Four myths of bundling](https://coda.io/d/Four-Myths-of-Bundling_dHY6lD6jWOW/Intro_sup_3#_lufsJ) by Shishir Mehrotra

### 👏 Step 2: **Articulating your strategy**

> “To influence day-to-day activities, strategies need to be simple enough for leaders at every level of the organization to understand, communicate, and remember — a strategy that gathers dust on a shelf is nothing more than an expensive bookend.”
>
> — [MIT Sloan Review](https://sloanreview.mit.edu/article/turning-strategy-into-results/)

Once you have the kernel of a strategy, the next step is to make sure your team and stakeholders actually understand it and buy into it. Even the most genius of strategies will fail if communicated badly.

#### **Qualities of well-articulated strategy**

1. Short
2. Memorable
3. Is explained with framework or a metaphor
4. Leverages the [rule of three](https://en.wikipedia.org/wiki/Rule_of_three_(writing)#:~:text=The%20rule%20of%20three%20is,or%20effective%20than%20other%20numbers.&text=The%20Latin%20phrase%20%22omne%20trium,as%20the%20rule%20of%20three.)
5. Is easy to find (and share)

#### Examples of well-articulated strategies

These are the best public strategy docs I could find. If you’ve seen others, [hit me up](https://twitter.com/lennysan) and I’ll add them.

1. **[Gitlab](https://about.gitlab.com/company/strategy/)** — My favorite. Notice the clear Mission, Vision, and three-part Strategy.
2. **[Tesla](https://archive.is/ypo0q)** — A classic. Notice the narrative style, the detailed identification of the problems, and the very simple four-step ambitious yet clear strategy at the end.
3. **[Salesforce](https://www.salesforce.com/blog/2013/04/how-to-create-alignment-within-your-company.html)** — Simple, but tells you exactly what needs to be done.
4. **[Yahoo’s “Peanut Butter” memo](https://sriramk.com/memos/garlinghouse-peanut-butter.pdf) —** Notice how clearly this identifies the problem, and includes a three-part strategy. Also, it’s clearly memorable since it’s now known as the “peanut butter” memo.

#### Organizing your strategy

To write out a strategy, I usually start with this [company strategy template](https://docs.google.com/document/d/1JI73WrGplrhNE46aLyRD_B74gEynI77EPgXn1ic6WeQ/edit?usp=drive_web&ouid=111613335789441259753) or a [team strategy template](https://docs.google.com/document/d/1RQWuvWDgcAv1ylksFXtiwhuTbHLcL1byIcoXsbCQfic/edit#heading=h.b2dsyhbkdvd1), and then roughly follow [The Minto Pyramid Principle](https://www.lennysnewsletter.com/p/minto-pyramid-principle-scr):

1. What is the current situation?
2. What is the complication?
3. What is the solution?
4. How do we achieve this solution?

Let’s look at this through the lens of the Instant Book example:

1. **Current situation**: Guests are coming to Airbnb to book a place to stay, and hosts can accept or reject guests when they request to book their home.
2. **Complication**: A large percentage of guests are having a very bad time using Airbnb because they are being rejected or ignored by hosts.
3. **Solution**: Transition the marketplace to an “Instant Book’ model, by getting every host and guest to use Instant Book.
4. **How do we achieve it:** We invest in three areas:

1. Give hosts all of the essential tools they need to be successful with Instant Book
   2. Incentivize hosts to enable Instant Book
   3. Encourage guests to choose Instant Book

This becomes the root of the strategy document. I then try to develop an underlying framework or metaphor that makes the concept easy to understand. In our work on Instant Book, I initially used the metaphor of a *minefield* to convey the challenges that hosts had with guests instantly booking (“that day is already booked!” or “not another guest with a dog!”).

![Image from Getting better at product strategy](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/19abad22-0a0a-4ead-b74f-8e2c4b348f91_800x395.jpeg)

Later, we shifted to a framework we called the CAN and WANT framework, which created two distinct tracks of work:

1. **Features**: I CAN use Instant Book if these existed
2. **Incentives**: I WANT to use Instant Book if I could

There isn’t anything revolutionary about any of this but the simple act connecting the work items into a framework or metaphor makes a strategy much easier to grok and remember.

[The recent flywheels post](https://www.lennyrachitsky.com/p/flywheels-flywheels-flywheels-issue) may be useful in helping you develop a framework. [This post by the CEO of Coda on diagrams](https://coda.io/@shishir/eigenquestions-the-art-of-framing-problems/great-diagrams-2) is also helpful.

### 🤝 Step 3: **Acting on your strategy**

> “A good strategy is, in the end, a hypothesis about what will work.”
>
> — Michael Porter

After a lot of hard work you now have a well-articulated strategy that your team buys into. Congrats! Now comes the most important part: using the strategy.

Since developing a strategy is normally part of the planning cycle it should automatically inform your immediate goals and roadmap. Great! What trips people up most is what happens to strategies down the road — they are often forgotten, unused, or become inflexible. Some advice:

1. **Remind people over and over**: Don’t expect anyone to remember any part of the strategy. Remind your team, and stakeholders, at every opportunity — every all-hands, every update email, every review meeting.
2. **All prioritization should go through your strategy**: One of the main goals of a strategy is to create focus — to know what NOT to do. Continue to return to it when making prioritization decisions.
3. **Be ready to evolve it:** Sometimes you’ll be wrong, or you’ll learn something new that requires adjusting your plans. Don’t be sad. Learn from it, adjust it, and keep moving forward.

Lastly, as you execute on your strategy, in the back of your mind, always be thinking about how you can refine and strengthen the strategy. What would make it better, stronger, and clearer? A good strategy is never static.

### 🧠 Further study

Hopefully, this post gave you enough to chew on to level up your strategic thinking. Here’s a quick summary, and ways to continue learning:

**The three things you need to get right:**

1. ☝️ The actual strategy
2. 👏 Articulating the strategy
3. 🤝 Acting on the strategy

**Additional recommended reading for those of you who can’t get enough:**

1. [WTF is Strategy?](https://hackernoon.com/wtf-is-a-strategy-bcaa3fda9a31) by Vince Law
2. [Applying Leverage as a Product Manager](https://blackboxofpm.com/applying-leverage-as-a-product-manager-ffad4a99db24) by Brandon Chu
3. [Mission, Strategy, and Tactics](https://boz.com/articles/strategy-tactics.html) by Boz
4. [Eigenquestions: The Art of Framing Problems](https://coda.io/@shishir/eigenquestions-the-art-of-framing-problems) by Shishir Mehrotra
5. [Product Strategy](https://www.reforge.com/product-strategy) by Reforge

**Three things you can do immediately:**

1. Find someone around you who is a great strategic thinker and ask them to help you level up
2. Ask for feedback on your existing (or past) strategies from smart people around you
3. Read at least three of the things I’ve linked to in this post

See you next week!

*Thank you [Sriram Krishnan](https://sriramk.com/) for providing early feedback on this post.*

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## **🧠 Inspiration for the week ahead**

1. **Find**: [A non-exhaustive list of Black women angel investors, for those who feel it's hard to find them](https://www.notion.so/A-non-exhaustive-list-of-Black-women-angel-investors-for-those-who-feel-it-s-hard-to-find-them-db2d71d72f444397a4498c24ef7b8e07)
2. **Read**: [Sriram’s list of strategy frameworks](https://sriramk.com/strategy)
3. **Learn**: [How to sell a B2B product](https://calv.info/how-to-sell-b2b) by Calvin French-Owen

**If you’re finding this newsletter valuable, consider [sharing it with friends](https://www.lennyrachitsky.com/), or subscribing if you aren’t already.**

Sincerely,

Lenny 👋