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How to Build Effective Web Product Strategy

2009 August 20

As media companies struggle with their changing environment, they inevitably get bogged down on developing web product strategy.  A flash of inspiration leads to intense research, the hiring of consultants and endless meetings with often very little to show for it.  If legacy media companies are going to be successful in Digital Media, they will have to learn to change the way they think about strategy.

An effective web development effort looks something like this:

  1. Develop an internally consistent product insight based on various sources of market intelligence.
  2. Produce a working, clickable model exploiting the identified opportunity.
  3. Test internally and revise.
  4. Produce a development version of the product.
  5. Test internally and revise.
  6. Test externally and revise.
  7. Launch beta version and bug-fix.
  8. Marketing launch.
  9. Collect data in real time and continue usability testing.
  10. Repeat.

The above process highlights a major difference between web strategy and conventional strategy.  In web strategy, you are constantly testing and revising which means that, to a certain extent, you are always getting something wrong that you have to go back to and correct.  The beauty of the “new economy” is that you can do it relatively quickly and cheaply.

Unfortunately, most “old economy” companies have enormous problems adapting because they put enormous time, expense and effort into strategy, which usually ends up having serious problems and needs to be revised anyway.  Most probably, this is because strategy is a high status, high paid function.  Senior executives like to set the strategic direction because:

  1. It is fun and intellectually rewarding
  2. It reinforces their importance in the organization.

Even more problematic is the fact that media companies often outsource their web strategy to highly paid consultants, which makes the whole process slower, more expensive and more divorced from operational reality.  The added expense is significant because it often creates a failure to scale the business to the opportunity, leading to unmanageable economics and irate CFO’s.

So here’s an outline of a more effective strategic process.

–          Truncated strategic process: You’re probably going to be wrong anyway, so do it quickly and cheaply!

–          Bring ideas from the bottom up: People who are closest to the data are most likely to achieve valuable insights.  They can be approved and augmented from above to ensure that they are consistent with overall company strategy and resources.

–          Direct Traffic: A valuable function that senior management can and should perform is to ensure that everybody works together effectively.  Inevitably, some important voices won’t be heard and some people will have to be reined in.  A top manager can play a powerful role if they are seen to be an honest broker.

–          Start small and simple and then build in complexity: Developing in smaller iterations is faster, more economical and allows you to spot and correct problems more effectively and cheaply.

–          Flexible metrics: You will often find that a new product or feature is very effective at doing a job that you hadn’t thought of and not very good at performing the task for which it was intended.  Rather than be disappointed, you should be happy that you’ve developed a product that is good at something (most aren’t).

One of the great things about Digital Media is that you are developing and changing all of the time, so you are always doing something new and exciting.  Mistakes can be made, corrected and then improved upon.  In order to be successful, this needs to be done cheaply and effectively, with a minimum of process.  A minimum amount of process and approval from the top is essential if you’re going to innovate and implement as quickly as you need to.

If legacy media companies are going to learn how to build successful digital brands, they will have to stop trying to bring stone tablets down from Mount Olympus and learn how to pull their product strategy up from the masses quickly and cheaply.

–          Greg

See also:  5 Crucial Aspects of a Digital Media Transition

6 Responses
  1. Olga S permalink
    August 20, 2009

    I think this works good for smaller companies whereas in the bigger international companies that I’m experiencing lately the approach of Start simple – Test – Change is almost impossible. The scale, the amount of people involved, the need to stay compliant throughout countries and manage local initiatives makes it a really complicated world to live in. Which should probably have its own tricks to survive. Would be helpful to hear your opinion on this.

    Greg Reply:

    Olga,
    Wow! That’s a tough question!

    It seems to me that there are actually three separate issues here.

    1. Global vs. Local: Global companies must set some sort of global strategy, core principles, etc. The tone must be set for resources, company values and general direction. Finding the right balance between having a cohesive global strategy without stifling both local initiatives and adaptation to local markets is something all global companies struggle with. Some industries, for instance the auto industry, require a great deal of standardization. Others, such as food businesses, must be intensely localized.

    Some global companies find that they can turn a local initiative into an itnernational success. Proctor & Gamble and McDonald’s are both extremely good at pulling products and practices from the local level and sharing them throughout the world.

    Infrastructure vs. product strategy: Diversified Global companies have a distinct advantage in that they can spread infrastucture and R&D costs over not only a global market, but also over several product categories. Basic research, procurement and distribution all benefit from economies of scale and scope. However, significant innovation can still be done at the product level and it’s somewhat of a judgement call. Some companies are very good at innovating at the product level while profiting from the benefits of centralization. Others become over-centralized and suffer strategic rigidity while still other don’t centralize enough and suffer unnecessary costs as well as a loss of continuity.

    3. Atoms vs. Bits: Another distinction that is important to make is between atoms and bits. Companies that make things with atoms have large changeover costs. For every new product expensive testing needs to be done, factories need to be re-tooled and, in some cases, regulatory agencies need to be dealt with. One of the advantages internet companies have is that product mistakes can be corrected rather cheaply.

    That’s why strategic principles vary drastically in conventional and web product strategy and why so many big companies have trouble adapting to the digital world. The controls inherent in conventional strategy results in too much strategic rigidity for web businesses. In effect, it is often the cases that a company’s best practices in a conventional business can become the worst practices for a web business.

    Centralization vs. Decentralization is a very basic issue for all major enterprises. The best ones are able to effectively communicate a set of core principles and push decisionmaking as close to the front lines as possible.

    I hope I answered you queston helpfully:-)

    – Greg

  2. Henry Curo permalink
    September 18, 2009

    Very helpful work Greg… thanks for sharing.

    Greg Reply:

    Henry,

    Thanks for saying so.

    – Greg

  3. January 1, 2010

    Greg

    I found your article very comforting in that it was the process we recently followed without realizing we were following it – according to your outline we are at the end of Step 7 just getting ready for Stage 8.

    Along with your other article on Pay Pal starting it’s nice to know that our general development cycle was in fact the norm, that confusion is actually part of the process and that being able to quickly change direction is a very important part of the process as well.

    Greg Reply:

    Robert,

    Thanks for your comment. I can assure you that if you’re innovating on the web and you’re not confused, you don’t really know what’s going on:-))

    Best of luck in the New Year!

    – Greg

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