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25.2 Business Strategy

Have a company in mind? Great. Now it's time to dive in. In this stage of the process, you'll analyze your chosen company's business model and strategy, then investigate their competition, market sizing, and product market fit. Many of these topics were covered earlier on in the program. This checkpoint will give you a quick refresher, but go back to earlier lessons if you need to.

Remember, no training wheels this time! Not all the questions listed in this checkpoint will necessarily be relevant to your particular chosen product, and there are probably additional questions you should consider. Use this as a starting point to practice your product skills!




Business model​

Working in product means understanding a company's mission and how they pay the bills. If you can't understand a company's business model and revenue sources, you won't be able to align your product vision with what is in the best interest of the company.

The way companies generate revenue might not always be straightforward. Facebook wants to be highly engaging to users so that they can capture user data and provide targeted ad capabilities to their revenue generating customers (advertisers). And a company selling marketing data might offer products for creating digital marketing campaigns, but their core product is actually the data they are selling to B2B clients so that those clients can segment and target their email and social media campaigns.

You don't want to interview for a product role at a company and present ideas that reveal a lack of understanding of their revenue sources. So take the time now to understand the business model and strategy of the company you selected, and make sure you do the same for any company you interview with.

Consider the following questions before every interview:

  • What is the company's business model?
  • What are the influencing factors on their means of generating revenue?
  • What are the influencing factors on their costs?
  • What is the product's value proposition?
  • Is revenue recurring or transactional?
  • How do they price their product or products? Is there little flexibility in price? (For example, due to a customer perception of easy substitution.)
  • Is the company operating at a loss to establish a foothold in the market?
  • Are there any unique factors influencing price and profit models? (For example, is there a high level of customer support required?)
  • Is the product dependent on an existing business ecosystem or offering a new one? Are there opportunities for it to develop a platform? Are there platforms/ecosystems that it would be advantageous for the product to participate in?

If you are devoting this capstone to your own startup idea, answer the same questions for your fictional company. What revenue model should you use? Can you calculate some of your costs? What proof can you find that this business model will eventually result in revenue?

Business metrics​

Don't stop with a general understanding of the company's business model. Break it down into measurable outcomes the audience cares about. This gives them tangible reference points to judge how and why your suggested product enhancements are the right investment. Here are some ideas for breaking the business model down.

  • What are likely to be the key business metrics for this product? In addition to your own observations, this can be researched using news articles about the company, interviews with executives, and even some employees' LinkedIn profiles.
  • What are the common KPIs that are most relevant for this product? Brainstorm what KPIs might be most valuable to the company. Remember to consider what data they can capture about user behavior. If you can't track it, it can't be a KPI.
  • Can you find any published information about their business metrics? From the outside, it can be tricky to access significant business data about a company you are interested in, but that doesn't mean it's impossible. Explore resources like SimilarWeb or AHrefs to dig into audience interests, see where the product is discussed, or understand the sources of traffic a website receives. Consider how this data will help tell the story of the product's business strategy, challenges, and opportunities. You'll also want to show off your data visualization skills, and this is great content to showcase with a graph or other data visualization in your presentation deck.

Again, if you are focusing this project on your own business idea that doesn't yet exist, adapt the questions above to fit your scenario. You might not be able to learn about the traffic sources of an existing website, but could you dig into search trends to establish your business metrics? Are there competitors or similar websites thatHave a company in mind? Great. Now it's time to dive in. In this stage of the process, you'll analyze your chosen company's business model and strategy, then investigate their competition, market sizing, and product market fit. Many of these topics were covered earlier on in the program. This checkpoint will give you a quick refresher, but go back to earlier lessons if you need to.

Remember, no training wheels this time! Not all the questions listed in this checkpoint will necessarily be relevant to your particular chosen product, and there are probably additional questions you should consider. Use this as a starting point to practice your product skills!

Strategic vision​

In addition to understanding how a company's business functions, you must also consider their long-term plans, risks, and opportunities. Some things to consider include the following points:

  • Where is the product in its lifecycle?
  • What is the company's strategy for growth?
  • How does the product you're examining fit into the company's overall product offering?
  • What are the four Ps of marketing for your product?
  • How would you interpret your company's strategy using Porter's Five Forces framework?
  • How would you work through a Lean Canvas for your product?
  • How can you use the findings from these strategic analysis tools (four Ps, Porter's Five Forces framwork, and the Lean Canvas) to inform the enhancements you'll propose for the product?
  • Is the product using a hooked loop?
  • What areas of growth opportunities do you see? Are any currently overlooked?

Answering these questions is also a great opportunity to review material from earlier in the program, and refresh your memory of some of the business terms and methods discussed early on in preparation for your graduation and job search.

Market and competition​

Having a solid grasp on the overall market is inextricably linked with understanding your competition. It is your responsibility as a product manager to be able to effectively communicate about your market, assess your competition, and ensure your product's current and future success within the market. Your final presentation must include a summary of the market and competition. Consider the following questions for each of the related topics.

Understanding the market​

Getting access to relevant data is challenging, but depending on your topic, you might find some of the datasets recommended by Tableau to be relevant. Any data you can find to base your assumptions off of will give your presentation more credibility. And if you can find data to create visualizations from, such visualizations will be a very effective addition to both your presentation deck and your later portfolio piece describing this project.

Consider the following questions about the market:

  • What is the total market sizing for your product of focus?
  • Who makes up the customer base? How are you defining segments within the market?
  • What is the market fit for this product?
  • What are the challenges and opportunities?

Competitive analysis​

Knowing your product means knowing the competition. Perform a competitive analysis using the following questions and steps.

  • Who are the most relevant competitors to your product?
  • Are there any unexpected competitiors that you might not consider at first glance?
  • Conduct a SWOT analysis of the market.
  • Conduct a feature breakdown comparing the product to competitors' products.
  • Prioritize the value of your product's strengths and opportunities.
  • Prioritize the urgency of your product's vulnerabilities and risks.

Looking at the market this way, do you find any opportunities that you hadn't noticed before?

Assignment​

Review the questions listed in this checkpoint, and think about additional ones relevant to your specific product of choice. You don't have to answer every single question, but your final presentation should communicate that you carefully considered all of the subsection topics.

Create a document with your notes and research. At the top of this document, or for each section in it, include an executive summary of the most important points. This will help you build toward your final presentation.

You don't have to submit anything here, you will submit in the end.