How to Be More Strategic
👋 Hey, I am Deepak and welcome to another edition of my newsletter. I deep dive into topics around building products and driving growth.
I will start this post with a couple of updates!
First, I recently started publishing videos on Youtube. Planning to do it on a regular basis this year!
The last week video was about Three Activities to Gain Excellent Technical Acumen
Second, Applications for the Product Sense and Strategy Program are open. The program starts in Feb’24. You can check the program and apply here — https://www.pmcurve.com/product-sense-for-pms-and-entrepreneurs
Let’s move on to the topic at hand,
Received this question recently from a PM—
I have been able to execute stuff with great speed and show impact so far. And now I have received the feedback that I need to think more strategic? So what should I do? Is it just optics and wordplay?
The feedback around being more strategic is not just optics and wordplay. That said, a plain, vanilla feedback such as this isn’t useful. The key problem being that it’s hard to interpret and act upon.
A good feedback will provide instances where you were not strategic. In absence of those instances, it may feel like a vague feedback and hard to act upon.
But imagine that you received this feedback. What should you do next? There are two steps to follow —
Understanding what Strategy means. There are numerous definitions of strategy, so how do you find one that you can apply in your day-to-day lives.
Improving upon strategic mindset. You can follow few steps to start with and then build upon that.
Let’s start with the definition of Strategy
What Strategy Means
You would often read definitions of strategy such as
“Strategy is the creation of a unique and valuable position, involving a different set of activities” — HBR
“Strategy is not a long planning document; it is a set of interrelated and powerful choices that positions the organization to win.” — Roger Martin, Playing to Win
They are all correct definitions. The problem is we don’t know how to apply them to our own jobs. So let me put out a definition that you can apply,
Strategy is making nested choices to achieve a complex goal.
There are two key terms in this definition, nested choices and complex goal:
Complex goal: A complex goal is the one that has no single clear, and certain path. For example, achieving financial freedom for oneself is a complex goal. One person can take the path of building a large business and make money in that process to achieve this goal. Another person can invest their savings to achieve it. Even in investing the savings, there are multiple choices — you can pick index funds which are risk-free and have lower returns, or you can go aggressive by picking stocks.
When it comes to products and businesses, winning against competition in a market is a complex goal.
Nested choices: As you would see above, there are multiple choices to make in order to achieve a complex goal. The choices are interdependent on each other, and that’s what we mean by nested choices.
For example, Indigo Airlines in India makes a set of choices to reduce the cost of operating an airline. They do it to achieve the goal of providing flights at competitive prices to consumers so that they can have a healthy market share. It seems to have worked out for them in Indian market which is price sensitive to a large extent.
Now that we are clear on the definition, how do we apply it to a product or company?
There are three steps in the process:
Understand the goal well
Be an Avid Reader
Improve Your Sensemaking
Make the right choices by understanding constraints and trade-offs
Understanding the Goal Well
The first thing we need to do is to understand the goal of the product and company. Being aware of the goal, and how what you are working helps in the goal is a necessary condition to become more strategic.
As an example, assume that the company is focussing on profitability as a goal for the year. You come up with an innovative product idea that is consumer-first. The idea requires significant investment and pay off in next 3 years. While the idea on it’s own maybe pretty good, it doesn’t fit to the goal of profitability for the company. Not addressing how it will/ won’t affect the profitability goal while sharing the idea will make you look like you don’t have a strategic mind.
Be an Avid Reader
In order to make the right choices, you need to come up with a good set of choices. In my opinion, coming up with good set of choices is the hardest part of being strategic. Once you have these, you can use an evaluation framework to pick the choice that helps you achieve the goal.
There are few habits that can help you in coming up and evaluating the choices.
The first one is being an avid reader. If you read and learn about how businesses got built, you can transfer that learning to your own product and come up with creative ideas by mixing-matching.
For example, look at the top investors of our generation at Berkshire Hathaway (Late Charlie Munger, or Warren Buffet) — both of whom are voracious readers.
Improve Your Sensemaking
The second habit is to deepen the understanding of the world through observation. Our sense-making ability of people, markets, competition, etc. plays a significant role in how accurate decisions can we make. While we also have a certain degree of natural skill when it comes to sense-making, you can hone this skill through these methods —
Root cause analysis: The 5 Whys technique developed by Sakichi Toyoda, founder of Toyota Industries, is a good start. The method suggests asking 5 Whys to get to the root of an issue. Here is an example below.
Systems thinking: Systems thinking helps interpret how different parts of one system affect each other. We can see in the diagram below on what all affects housing market. Movement in one part can affect the other parts. Sometimes, the effect aren’t direct, but few degrees away.
Behavioural psychology: Helps you understand why people do what they do. A beautiful concept from behavioural psychology is loss aversion where we feel 2x more bad about losing $100 than we feel good about gaining $100
Simulate to Make the Right Set of Choices
A person is considered strategic if they can present the diverse choices, and then provide a reasonable argument in favour of one or more of those.
To make the right set of choices, you can focus on
Constraints — helps you narrow down the choices.
Trade-offs — every choices has a trade-off. For example, the trade-off of picking a low-risk investment strategy is lower growth.
Beyond the consumer and market understanding, one of the best methods to make the right choices is to simulate the choices long into the future.
Simulation not only helps in predicting the outcomes, it also helps in figuring out the risks around a certain choice. You can mitigate most of the risks if you can anticipate them.
Doing all of the above will help you build a strategic mind. Don’t worry if it doesn’t happen in a month. It is not supposed to. Like all the things that matter, building a strategic mindset also takes effort and time. After all, if it were easy, everyone would have done it.
This would be all for the post :)