At first glance, it might seem like business strategy and product strategy are two terms that ultimately mean the same thing. Surely the strategy behind the products a company invests in building is the same as the strategy of the company itself?
Both strategies should be aligned. However, there are some key differences between what goes into shaping business strategy vs product strategy. Each one has to be planned out separately, while at the same time ensuring they don’t contradict each other.
Read on and we’ll explain more about the differences between these two strategies, as well as breaking down what each means on their own.
Business Strategy vs Product Strategy: The Key Differences
The main thing to understand about the difference between business and product strategies is in their scopes.
Business strategies are broad. They describe the goals of the whole company, the company's vision, and how to achieve their goals.
In comparison, product strategies are more refined. This comes after business strategy, and is focused specifically on a certain product or feature. The idea is to plan out how to make the product successful (as well as what success looks like), without contradicting the overall business strategy.
The two are clearly linked. Business strategy may put limitations on what the product strategy can look like - for example limits in budget, resources, or time. But as important as it is to align both strategies, it’s just as important to craft each one on their own, to avoid getting too broad with product strategy or too narrow-minded in the overall business strategy.
What is Business Strategy?
Business strategy describes the overall plan and vision of the business as a whole.
This includes the goals or objectives of the business, a plan for how they’re going to achieve these goals, and any boundaries or restrictions they’re working with. It’s essentially the business model, which is what the entire company is built upon.
While there are certainly specifics that go into a business strategy, it also answers the “why”. It lets all facets of the business understand the overall purpose of the business, why the company exists, and why everyone should have an interest in working towards this common goal.
What Effective Business Strategy Looks Like
The business strategy should be focused on high-level goals and objectives, but that’s not to say it should be vague. It should include clear details on the desired direction of the company.
Here are some points or questions that the business strategy should address:
- What is the overall vision of the company? Why are they in business?
- Will the company be funded, or self-financed?
- How fast do they need to achieve profitability? How long is the runway?
- What are the key performance indicators (KPIs) that the business will focus on?
- How does the business plan to make sales, get clients or grow awareness? For example, are they going to build a sales team in-house, paid ads, or a combination of multiple channels?
- What will the company’s brand and image look like?
- Will the company focus on growing its brand, or be more product-driven?
- Will the company look to address existing markets, or a new market?
- What will be their competitive advantage that allows them to take market share? Is it by offering lower prices, higher quality or unique products or services, or by being the first to an underserved market?
Business strategy could also include details about company culture, whether the company is remote or in-house, or what the structure of the company looks like.
The above is a lot to think about. But it’s important for the business strategy to be presented in a way that’s clear and understandable, so that the product strategy (or marketing strategy, or any other aspect of the business) can create their own plan that falls in line with the company strategy.
Who Owns Business Strategy?
Senior leadership should take ownership of the business strategy. It should come from the very top, which will empower department heads and others lower down the ladder to make decisions, knowing the overall vision of the business as a whole.
Depending on the size of the company, this could be the C-level executive team, a board of directors, or for smaller businesses, just the founder/co-founders.
What is Product Strategy?
Product strategy pertains only to a part of the business (albeit a large part). This could be the entire product portfolio, individual products, or in some cases even individual features within a product.
The product strategy describes how the product will succeed, and what success means. It’s focused a lot more on the “what”, as opposed to the “why”, as the business strategy is.
The product strategy should also touch on how the product, and the product strategy itself, fits into the vision or strategy of the whole company.
What Effective Product Strategy Looks Like
A clear and effective product strategy should use strategic thinking to provide a plan for how the product is going to get made, how it will benefit the business, how you’re going to promote it and find a market for the product, and what metrics you’ll use to decide whether or not the product is successful.
Here are some questions or points to include in your product strategy:
- Who are our target users or buyers?
- What pain points or value propositions is our product made for?
- How does this product line up with the business objectives?
- Are there any competing or existing products that we’re trying to replicate, or improve on?
- Which features make our product stand out? How will it achieve product-market fit?
- What is the time frame or roadmap for launching this product, or features of the product?
- What’s the monetization strategy for the product? How are we going to sell it? How will it be priced?
- How do we define success for the product?
When creating a strategy for an individual product within a portfolio of individual products, or a specific feature within a product, the strategy should also explain how these products or features work together (or alternatively, if they’re supposed to act as standalone products).
Who Owns Product Strategy?
This again depends on the size and the state of the company.
Generally, whoever is the head of product will be responsible for shaping the company’s overall product strategy. This could be the Chief Product Officer or VP of Product in larger organizations, or in a smaller startup, it could be the job of product managers, or in some cases the founder.
When a company is first starting out, the product strategy is usually laid out by the executive and/or founding team. Then going forward, the company may establish a dedicated product team, and they will be responsible for the product strategy from then on.
Example of Business Strategy vs Product Strategy
Let’s say we have a small software startup. We'll write a quick example of the strategic objectives of the business, first, and then of the product team.
The business strategy could be that the company will be lean and bootstrapped - meaning they won’t seek outside funding or investors. The aim of the business is to be profitable within 1 year, and they will do that by generating SEO traffic, as well as running paid ads.
The business will focus on building an authoritative brand that their target market trusts. They’ll use this brand image to launch solutions to various pain points in the target market, with their competitive advantage being superior customer service.
The product strategy is to launch a product centered around a specific high-volume search term that describes a pain point for their target market. The product will be presented as a better solution to this pain point than anything that already exists on the market, which they will explain primarily via content marketing.
Their product strategy lays out specific metrics in terms of conversion rate, sales and profitability that will make the product a success. It also plots the roadmap for when they plan to launch it, and an ongoing plan to collect customer feedback and work this into improving the product after its initial launch.
In reality, the business and product strategies are likely to be more in-depth than the examples above, but this should give you an idea of the difference between each one.
Why It’s Important for Business Strategy and Product Strategy to Work Together
It’s more important for business and product strategy to align than arguably any other areas of the business.
In most cases, product drives the business. It’s how the business is going to reach their KPIs, achieve profitability, and take market share.
So the product strategy has to ultimately work towards the goals and vision outlined in the business strategy.
It also has to work within the confines set out in the business strategy. For example, if the business strategy states that they need to be profitable within 3 months, the product strategy can’t be to do several months’ worth of market research before launching a free product that will eventually, but not immediately, be monetized.
That’s why the executive team, or the founders in a smaller-scale startup, are often strongly involved in product management. At the very least, they’re likely to have an input on the product strategy, in order to make sure it’s working towards, and within, the wider-reaching business model.
Summing Up: Business Strategy vs Product Strategy
The business strategy of a company is one of the first, and most important things to decide on. Product strategy comes later, but is just as important. And despite a common misconception, the two are quite different, though aligned towards the same overall vision.
The easy way to differentiate the two is to see business strategy as the overall, big-picture strategy of the business, while product strategy is more detail and process-oriented, focused specifically on the company’s product(s), and how they’ll fit together.
If you’re a product manager, or aspire to have a career in product management, you’ll want to know precisely how to craft an effective product strategy. You should also have a good knowledge of tools that can help you plot out elements of product strategy, such as which features to prioritize, and a product roadmap to visualize it.
FeedBear’s customer feedback collection and roadmapping tools are perfect for startups and product teams of all sizes. Try it free for 14 days to see how connecting with your customers can help you craft a winning product strategy.