sean.horgan.net

Practice of Product

On Strategy Frameworks

Sean Horgan

General Principles

There is no shortage of strategy frameworks so I focused on identifying those I have found to be the most useful to Product Managers. I’m going to keep building and refining this list so it goes beyond a simple index into ways to incorporate them into your practice.

Market-oriented moves

Create a new market with a new product

Enter an existing market

Enter an adjacent market with an existing product

Expand position in an existing market

Exit a market

General Purpose Theories & Frames

Aggregation Theory

Ben Thompson’s

Aggregation Theory⁠

Good Strategy / Bad Strategy - Rumelt

I believe Rumelt’s Good Strategy/Bad Strategy provides a useful and accessible framework for crafting strategy. Here’s his book, it’s worth reading:

Good Strategy Bad Strategy: The Difference and Why It Matters⁠

- Richard Rumelt

The kernel of strategy:

Diagnosis of the challenge

Guiding Policy to overcome the challenges in the diagnosis

7 sources of power: leverage, proximate objectives, chain-link systems, design, focus, growth, advantage, dynamics, and inertia/entropy. Subset of note:

leverage

proximate objectives

chain-link systems - Can we focus on a weak link in the system?

Coherent Actions to implement the policy

References

⁠

A summary of “Good Strategy / Bad Strategy” by Richard P. Rumelt — Part 1⁠

⁠

Notes from “Good Strategy / Bad Strategy” by Jeff Zych⁠

⁠

1. Market Analysis

Competitive Forces

Porter’s 5 forces from his 1979 paper:

How Competitive Forces Shape Strategy⁠

and

On Competition, Updated and Expanded Edition ^ 2696⁠

Here’s a nice visual from

Porter's Five Forces EXPLAINED with EXAMPLES | B2U⁠

⁠

Summary of Porter’s 5 forces:

Competitive Rivalry: This force analyzes the intensity of competition among existing firms in the industry. Intense competition can lead to price wars, advertising battles, and other costly tactics that can reduce industry profitability.

Who are the major competitors?

What is the intensity of price wars, product innovation, or marketing battles?

Is the industry growing or stagnant?

Are there signs of consolidations, M&As, breakups?

Are there high fixed costs leading to competitive pressures?

Threat of New Entrants: This force assesses the ease with which new competitors can enter the market. If it's easy for new entrants to enter, the competitive intensity will increase.

Barriers to entry: economies of scale, capital requirements, brand loyalty, regulatory hurdles.

Reaction of incumbents: Are they likely to retaliate aggressively?

How technology or trends lower barriers over time.

Bargaining Power of Buyers: This force examines the power that customers have over the industry. If buyers have strong bargaining power, they can demand lower prices or better quality, which can reduce industry profitability.

How concentrated is the buyer base?

Can buyers easily switch to competitors or substitutes?

How price-sensitive are buyers?

Do buyers have strong negotiating leverage?

Bargaining Power of Suppliers: This force evaluates the power that suppliers have over the industry. If suppliers have strong bargaining power, they can demand higher prices or better terms, which can reduce industry profitability.

Number of suppliers relative to demand.

Switching costs for firms to move to alternative suppliers.

The uniqueness or criticality of supplier offerings.

Integration threats: Can suppliers forward-integrate into your industry?

Threat of Substitute Products or Services: This force assesses the threat of alternative products or services that can satisfy customer needs. If there are strong substitutes available, it can reduce the demand for the industry's products or services.

Availability of substitutes and their attractiveness (price, quality, ease of use).

Switching costs for buyers to move to substitutes.

Trends that might increase substitute adoption (e.g., sustainability, technology).

Barriers to Entry

Porter’s 6 major sources of entry barriers: economies of scale, product differentiation, capital requirements, cost disadvantages, access to distribution channels, government policy.

Gateways to Entry⁠

⁠

Understands major barriers to entry: switching costs, regulatory.

⁠

https://en.wikipedia.org/wiki/Barriers_to_entry⁠

⁠

Network effects

Same side & cross-side, multi-sided networks

⁠

https://www.sciencedirect.com/science/article/pii/S2666954422000242#bb0130⁠

⁠

https://en.wikipedia.org/wiki/Two-sided_market⁠

⁠

Building a Business from Data Is Hard—Here’s How the Winners Do It⁠

⁠

Powers

⁠

Helmer’s 7 Powers⁠

: Scale economics, network economics, counter-positioning, switching costs, branding, cornered resource, process power

Understanding the `environment

⁠

VUCA⁠

and

Cynefin⁠

are a couple of frameworks used to understand complex environments. VUCA is an acronym based on the leadership theories of

Warren Bennis⁠

and

Burt Nanus⁠

, to describe or to reflect on the

volatility⁠

uncertainty⁠

complexity⁠

and

ambiguity⁠

of general conditions and situations. VUCA emerged from the Army War College in 1987 as the Cold War was coming to an end and took off in management consultant circles.

From:

https://hbr.org/2014/01/what-vuca-really-means-for-you⁠

⁠

Cynefin draws from the Welsh word for habitat and defines 5 states that should be considered when thinking about org designs.

Clear: sense-categorize-respond. “known knowns”

In clear environments, organizations need to accurately sense the situation and quickly categorize and respond. Speed is really important as competitors are probably also tuned into the environment and operating at high frequency.

Complicated: sense-analyze-respond. “known unknowns”

Complex: probe-sense-respond. “unknown unknowns”

Chaotic: act-sense-respond

In chaotic environments, cause and effect are unclear. The only way forward is to act and avoid wasting time trying to discover patterns.

Confusion: separate-assign-[sense|probe|act]

As knowledge increases, there is a "clockwise drift" from chaotic through complex and complicated to clear.

⁠

You can learn more here:

https://connecteddale.com/releases/wesc/cynefin_framework.html⁠

⁠

Exploratory/conceptual or declarative/conceptual models

⁠

Five Models for Making Sense of Complex Systems⁠

⁠

3. Business Model Design

Lean Canvas

⁠

Lean Canvas - 1-Page Business Model⁠

⁠

Strategy Assessments

Ten Timeless Tests

⁠

https://www.mckinsey.com/capabilities/strategy-and-corporate-finance/our-insights/have-you-tested-your-strategy-lately⁠

⁠

have-you-tested-your-strategy-lately-v2.pdf⁠

⁠

Will your strategy beat the market?

Does your strategy tap a true source of advantage?

Is your strategy granular about where to compete?

Does your strategy put you ahead of trends?

Does your strategy rest on privileged insights?

Does your strategy embrace uncertainty?

Does your strategy balance commitment and flexibility?

Is your strategy contaminated by bias?

Is there conviction to act on your strategy?

Have you translated your strategy into an action plan?

Some more questions

Is your strategy coherent across businesses?

Is your strategy aligned with your company's capabilities?

Is your strategy communicated and understood throughout the organization?

Is your strategy realistic and achievable?

Is your strategy motivating and inspiring?

Is your strategy monitored and adjusted as needed?

Is your strategy embedded in the company's culture?

3C-4P

While a dated and simple framework, 3C-4P is useful when you are ad-hoc brainstorm sessions with execs as it helps provide a little bit of structure to a conversation.

⁠

https://www.slideshare.net/slideshow/3c-4p-analysisppt/255552914⁠

⁠

Appendix

1. Market Analysis and Opportunity Identification

These frameworks help assess market conditions, customer needs, and competitive landscape.

SWOT Analysis: Evaluates strengths, weaknesses, opportunities, and threats.

PESTLE Analysis: Analyzes political, economic, social, technological, legal, and environmental factors.

Porter’s Five Forces: Assesses competitive pressures within an industry.

Ansoff Matrix: Guides growth strategies by considering markets and products (e.g., market penetration, market development).

Jobs-to-be-Done Framework: Understands customer needs by focusing on the "job" customers hire a product to do.

Blue Ocean Strategy: Identifies uncontested market spaces to create new demand.

⁠

2. Vision and Goal Setting

These frameworks focus on defining clear, achievable goals and aligning the organization.

OKRs (Objectives and Key Results): Aligns teams around measurable objectives.

BHAG (Big Hairy Audacious Goal): Encourages ambitious, long-term goal setting.

Balanced Scorecard: Tracks performance from financial, customer, internal process, and learning perspectives.

Vision-Strategy-Execution (VSE): Bridges high-level vision to actionable strategies.

⁠

3. Business Model Design

These frameworks help develop or refine a company’s value creation and delivery model.

General Principles

General Purpose Theories & Frames

Aggregation Theory

Good Strategy / Bad Strategy - Rumelt

Understanding the `environment

Exploratory/conceptual or declarative/conceptual models

3. Business Model Design

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