In this guide, we’ll explain the difference between strategy and tactics and explore how each impacts the other.
Table of contents
What’s the difference between strategy and tactics?
A strategy describes the long-term vision of what a product or service will look like and how it will serve customers’ needs. Tactics are short-term actions that are designed and prioritized to help the product development team achieve the product strategy.
Let’s take a closer look at what a product strategy and tactics entail and how they impact each other.
What is strategy?
Strategy is the overarching, guiding direction and set of principles that steer the direction for the product and product organization. It is closely tied to the vision of the product and the overall business.
Put simply, the product strategy helps establish a plan for achieving the product vision, which levels up to business objectives.
The product vision can be for a single product or a portfolio of products. The product strategy for each product derives from the overall product vision.
Strategy is established as a high-level guidance. It is set at the leadership/executive level and is long-term. The strategy helps establish the purpose of the product and therefore provides the direction for the teams and all the stakeholders involved.
What are tactics?
Tactics are obtained by breaking down the product strategy into more actionable steps and establishing a sequence in which to execute these steps to accomplish the product strategy and vision.
The word “tactics” is derived from the Greek word “taktos,” meaning “ordered, arranged.”
Tactics are focused on short-term goals and are more tangible than strategies. In the simplest terms, tactics are the execution steps needed to accomplish the product strategy.
Examples of product strategies
To show what a product strategy looks like in practice, let’s take a look at three notable real-world examples:
- Google — Bet on technical insights that help solve a big problem in a novel way
- Amazon — To be as integrated into the lives of consumers and business owners as possible
- Netflix — To be a movie subscription service that delivers fast, easy entertainment in a friendly, straightforward way
These three tech giants are the leaders among internet-age companies. What makes their respective product strategies so successful?
For one, the three strategies described above are primarily driven by customer needs. These companies are heavily customer-centric, meaning they are driven by their customers’ goals and pain points and focused on solving the problems and/or adding value for the customer
For example, note the key phrases “…big problem…,” “…consumers and business owners…,” and “…in friendly, straightforward way…” from the product strategy statement examples above.
Secondly, these strategies are driven by simple, yet innovative goals and themes — e.g., “…in a novel way…,” “…fast, easy entertainment in a friendly straightforward way…,” etc.
These product strategies look quite similar on the surface, but it’s important to note a few key differences:
Google leverages, prioritizes, and invests heavily in its research to back its strategy, as well as in product development at the core. Therefore, the reference to “technical insights” in Google’s strategy theme is powered by this research focus. Comparatively, Amazon and Netflix are not as heavily invested in research to power their respective strategies.
Netflix has a very niche focus segment of the movie subscription business; it basically developed its business strategy on the back of being a game-changer. Netflix started off in the space of DVD rentals before pivoting to an electronic media streaming platform.
Meanwhile, Google and Amazon have a very large footprint in terms of their business presence. Google business ranges all the way from online advertising, to search engine technology, to cloud computing, computer software, quantum computing, ecommerce, artificial intelligence, consumer electronics, and more. Amazon’s business presence is equally diverse, ranging from ecommerce, cloud computing, online advertising, digital streaming, and artificial intelligence.
The bottom line is that while Amazon is a customer-first company, Netflix and Google are technology-first companies.
Examples of product tactics
Now let’s look at examples of product tactics associated with the aforementioned companies’ respective strategies:
- Google — To prioritize the product usage even before the product monetization _
- Amazon — To focus on a customer centric attitude, providing a positive customer experience and emphasizing technological experience.
- Netflix — Delight customers in hard-to-copy, margin-enhancing ways; to go digital
How do strategy and tactics impact each other?
Strategy and tactics are closely looped together. Tactics cannot exist without a strategy.
Strategy is the high-level umbrella and guiding direction from which the tactics are derived.
By breaking down the strategy into actionable format and steps, you can formulate the tactics or tactical plan.
Lets refer back to the examples referenced in the previous section and explore how the high-level strategy impacts the tactics and vice versa:
Google’s strategy emphasizes using the tech behemoth’s research and technical prowess to solve customer problems innovatively. In line with this, Google’s tactic to achieve this strategy is to prioritize the product usage over generating revenue from their products — i.e., monetization.
The more the customers use Google products, the more research and insights Google is able to generate into customer behavior, customer needs, and customer usage patterns. This helps product teams glean valuable technical insights and enrich their products.
Amazon’s strategy focuses on becoming an integral part of consumers’ lives. The company’s tactics are derived from this strategy and endeavor to be customer-obsessed.
The goal of these tactics is to provide a superior customer and technological experience, which will ensure that Amazon is embedded seamlessly into the daily lives and actions of its target customers.
Netflix’s niche product strategy was initially to be a movie subscription business that enables customers to acquire content in a fast, easy, and user-friendly manner. Its product tactics focused on going digital by providing an online streaming service, which Netflix determined is the fastest and most efficient way to delight users.
This tactic has helped Netflix to achieve its strategy, enhance its margins, and make it a profitable business model.
What makes an effective strategy?
An effective product strategy is one that, along with the product vision, helps you define:
- What is/are the end goal(s) of the product?
- Which users does the product serve
- How does the product serve end users’ needs
Furthermore, your product strategy should:
Be clear-cut and well-defined
The product strategy should be clear in what it is trying to achieve and well-rounded. It should set a clear direction for the product and product organization.
Help establish the product roadmap
The product strategy should help you establish the product roadmap. In other words, the product roadmap should be inspired by the product strategy and the product vision coupled together.
Help define the target customer base
The product strategy should be defined in such a manner that it encapsulates the target customers and therefore helps you define and identify the target customer base for the product(s).
Align with the product vision
As mentioned previously, the product vision and product strategy go hand in hand. So the product strategy should be aligned with and extend the product vision.
It would not be wrong to say that, in some instances the product strategy is derived from the product vision.
Break down seamlessly into product tactics
Last but not the least, the product strategy should lay the foundation for the product tactics. The product tactics are derived from the product vision.
Therefore, the product strategy should be defined so that it can clearly flow into defining the product tactics. Summing up the product tactics at a high level should yield the product strategy.
How to create good tactics
They key to creating good tactics, also called tactical steps, are as follows:
- Break down the strategy into actionable steps — The strategy should be distilled into clear next steps. This can be done with a strategic project plan that lists tactics to be executed in phases toward achieving the high-level strategy
- Keep the tactics and actionable steps specific
- Define a time box for each tactic — i.e,. a deadline by when the tactics need to be completed
- All the tactics, when brought together, should roll up to the product strategy
Guiding your team in the right direction
The product strategy, as mentioned, provides a guiding direction to the entire product organization and all the stakeholders who are involved in the product development lifecycle.
Let’s quickly summarize some of the benefits of establishing a strong product strategy with clear, impactful tactics. A product strategy should:
- Define the direction and goals for all teams involved (e.g, sales, marketing, engineering, UX design, etc.
- Help teams understand the intent of the product — what problem it aims to solve and for whom — and thereby help them develop a strong product roadmap and prioritize features
- Clearly delineate when product goals are met
How to measure the effectiveness of your strategy and tactics
An important step is to establish metrics to measure how they contribute to the product’s success:
Metrics to evaluate product strategy
There are numerous categories of metrics and key performance indicators (KPIs) you can use to measure the effectiveness of your product strategy, but the most relevant are the metrics impacting customer engagement and return on investment (ROI), such as:
- Net promoter score (NPS) — NPS helps measure the customer experience and indicates how your product is faring in the market. It is calculated by considering the overall responses and subtracting the percentage of detractors from the percentage of promoters
- Customer satisfaction (CSAT) — CSAT is a key metric for gauging how happy your customers are with the product and product quality. It is measured on a rated scale and usually in percentage terms
- Lifetime value (LTV) — Customer lifetime value is a measure of the average revenue the customer will generate throughout the lifetime of being associated with the product
Metrics to evaluate tactics
Define and measure the performance of your key performance indicators (KPIs) that matter most when it comes to evaluating your product or business. Assessing your KPIs can help you measure the impact and effectiveness of your product tactics.
Let’s refer again to some real-world examples to demonstrate how KPIs can help measure the impact of product tactics on the overall strategy:
- Netflix would likely consider ratio of new customers to churned customers an important KPI
- Instagram might track the number of active users, average hours spent on the platform per day, etc.
It’s essential to have both a clear, concise product strategy and well-defined product tactics to achieve success with a product in the market. While product strategy is the umbrella and enabler, tactics help you derive a focused plan for implementation and execution.
Defining the strategy and tactics and regularly measuring the performance using metrics and KPIs helps you achieve product differentiation in the market and drive value to the end customer.
Featured image source: IconScout
The post Strategy vs. tactics: What’s the difference and how to measure appeared first on LogRocket Blog.
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