EVERY SPOKEN WORD
70 min read · 14,035 words- 0:00 – 5:17
Why AI makes output cheap—and strategy more expensive
- TITim
You might accelerate output by one hundred, but sooner or later you will realize, "Does any of the things we're doing make a difference for customers or the business?" But then it comes back to, what do we want to achieve? Which is essentially strategy and metrics. The fundamental questions you answer in product strategy do not change. You need to be careful where you use AI and how you differentiate with AI.
- AGAakash Gupta
Meet Tim Herbig, product strategy expert. A PM for eight years turned advisor, coach, and author of Real Progress. He's worked with hundreds of PMs to make sure their product strategy actually makes an impact.
- TITim
AI by itself in your strategy is not a value proposition. Everyone has access to the same frontier models. You can't compete on that technology alone.
- AGAakash Gupta
Would there be some companies where AI could be the value proposition?
- TITim
Companies get easily lost in very machine-centric metrics. They tell me about, you know, tokens used, language, model efficiency. Point is, tokens used is not a value exchange for your customers. It's a value exchange for Anthropic.
- AGAakash Gupta
So then you haven't really made a strategic choice.
- TITim
Yeah, but that's the thing. One of my favorite things that I look at to pressure test whatever people put in front of me is this quote from Roger Martin. And honestly, this quote, it's one of those light bulb moments that whoever I'm showing it to, you will never look at strategy the same. So here's this great quote where he says...
- AGAakash Gupta
Before we get into today's show, please take a second to check that you're subscribed on YouTube and following on Apple and Spotify podcasts. If you want access to all of my favorite AI tools, I've gotten them to give you an entire year of their paid plans. Check out bundle.aakashg.com for an entire year of Bolt.new, Airtable, Speechify, Descript, Magic Patterns, Linear, Dovetail, Arise, and Mobbin. And now, into today's show. In the era of builder PMs and cloud code, everybody is focused on how do you build AI. But for my money, a much more effective use of a product manager's time than trying to become an engineer is to actually influence the strategy, to make leaps on what problems we should be solving, how those impact the business, how we do things at the edge of what's technologically possible. And all of that comes back to building a great strategy. That's why I've brought in my friend for over five years, Tim Herbig. I've been following his work in product practice on LinkedIn, and he has consistently been putting out the most thoughtful stuff on how you actually do product strategy in the age of AI. So today we are giving you a master class filled with anecdotes from his real work with real PMs so that you can do better with your strategy work. This is one of those areas we keep hearing about. PMs don't focus too much on execution, focus on strategy. But how do you concretely do that? Today we're going to walk you through everything you need to know. And if you stay to the end, you'll learn how you can get one of five free copies of Tim's book that I'm giving away. Tim, thanks for being on the podcast.
- TITim
Thank you so much for having me.
- AGAakash Gupta
We've been trading emails online for a year, so it is my pleasure. And I want to get right into it. What do PMs need to know about strategy in the AI era?
- TITim
I love that question, and I love even more that I'm just going to show you what I think the real deal has to be these days. So I think the problem is, how did we get here? Why do we even debate this question? And I think what we really have to understand is what happened over the last couple of years. So years ago, limiting factor for most of product managers' work was, well, it takes too long to do this, and we have to be really ruthlessly prioritize what we're working on to spend all those precious engineering resources. These days, as everyone probably know, like producing features got kinda cheap, especially for greenfield products, but even established companies can get stuff out the door much, much faster. But the problem, downside of that is when features get cheap, not having chosen the right feature, funnily enough, gets more expensive. Because suddenly you're flooding your product with all this output, all this fluffy stuff, all these great vibe-coded, lovable things, and everything you do to circumvent the complex engineering work or even accelerated your engineering department. But this can come as a cost, because you still have to make people use the features you produced. So that's where the expensiveness comes in. And so what we're currently seeing, what I'm observing in the work that I'm doing, is that companies are excited about amping up the output a hundred times. But somewhere down the line, they have to ask themselves, "Did any of that make a difference?" And you have to look at it from two, two sides, of course. You have to look at it from the side of, did it make a difference for customers? And even more importantly, did it make a difference for the business? And so essentially, when we talk about product strategy, and especially strategy and AI, these two terms people love so much, I believe we have to actually take a step back to really think about, well, what is the essence? What do we mean when we talk about that? What we really have to come down to is, do we have something in place that actually helps us say no to things? And do we have something in place that allows us to measure if we succeed? And you might recognize that, but these fundamental practices and core questions get buried under all the shiny object stuff we see these days. And upon preparing for this podcast, I stumbled upon this quote from our mutual
- 5:17 – 9:06
A practical definition of product strategy: it must help teams say ‘no’
- TITim
friend, Ravi Mehta, who has this brilliant quote where he says, "Difficulty prioritizing is often a strategy issue and not an execution issue." And I think these days, more and more people are actually feeling the pain of that. And I love that because this is like four or five years old, it is as timeless and valuable as ever, that it's not about execution. Execution never was the issue. So if we dive into that, what is actually the point of strategy? Why do we believe strategy is important? I believe that we have to think about product strategy like we think about a product. We have to be clear about for whom is this trying to solve a problem, and how would we know it has worked. We're told to do this for the product work that we do. We rarely do it for our way of working. And I believe if you really break it down, your product strategy has to help teams and stakeholders to intentionally say yes or no to opportunities over the, let's say, six to eighteen months, three to six, doesn't matter, whatever time horizon works for you. And you basically know if your strategy makes sense if the majority of your team's effort and energy is spent on work connected to strategy. And this sounds so painfully simple, but believe me, I've seen so many companies where first of all, this understanding is not in place, and second, they definitely operate like that. So whatever you're thinking your strategy is, whatever shiny deck it is, whatever one-pager it is, whatever framework, think about does it help me say no to things? That's all that matters. Doesn't matter if it's like in the book, if it looks pretty, or how much time you spent working on it. The point is, did it help you say no to things?
- AGAakash Gupta
So it sounds like you can't come up with a list of fourteen priorities, which was a strategy I was actually once handed when I was a product leader. You need to come up with things that allow you to say no to a lot of things.
- TITim
Exactly. And that's kind of the hard point because this removes all the fluff. You know, all the fluff, the shiny object thing, how it looks like, what the process is. In the end, it has to withstand the test. Does whatever we're calling strategy help the teams say no to something?
- AGAakash Gupta
Mm-hmm.
- TITim
If it doesn't, it's not a strategy.
- AGAakash Gupta
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- 9:06 – 12:43
Three core questions every strategy must answer (narrative, playing field, winning moves)
- TITim
The way I would summarize it is essentially, I think you have to-- what we're going to get to in a second is you have to make somewhat informed choices around, I would call the core key questions of your product strategy. Like the core questions the strategy has to answer. And your answers to these questions have to be opinionated enough so that you can actually enforce the no. And that's what we're going to look at next. Because the problem is, most of the time you look at strategy as this big monolith. You say, "This is the strategy, this is the deck, this is the one-pager." And I believe if you really boil it down, if you look at all the smart stuff out there that from different strategic thinkers, it all comes down to the same core movements. You want to have some kind of narrative in place. You want to have a narrative in place that allows you to express why should we do this? Why should we act on this now? Then you want to use some kind of playing field definition, which is a product strategy fancy term for basically the market. So for whom are you trying to solve what problems, and who else is solving these problems, your alternatives, your competition? And then you have to decide, okay, in this narrative and this playing field, well, how do we win? What-- how do we plan to win on this playing field? So what value do we provide, and how will we differentiate? And especially these last two bits are most affected by AI, in my experience. And we're going to look at this closer, um, later on. So if we take this to heart and we say that these are the core dimensions every strategy should answer, it hopefully clicks a bit more for you because that means that it doesn't matter what form or visual you use to answer these questions. It is that you answer them, and then you can rearrange them in whatever shape you actually enjoy it. Because then you have those dimensions, and then you can pick whatever component you need. You can then say, "How do I want to describe my strategic narrative? How do I want to describe the playing field? How do I want to describe the winning moves?" It doesn't matter. It matters that you answer them in a way, and we just talked about, you need to answer these in a way that allow you to say no to things. So that's the important test we have to, uh, things have to, um, have to pass. So if we take this to heart, it gets a bit more clear to say, if you look at all these fancy things, the business model canvas, the lean canvas, the strategy kernel, whatever, uh, pitch deck or glorified PowerPoint, structure your boss lots, all of these are basically just, all of these are basically just windows. All of these are windows into the actual work of strategy. The actual work of strategy, and that's the difference. Everyone who has worked on strategy will tell you it's basically, it's a messed up chaos. It's messed up chaos, and it's supposed to be. Because the pretty structured, neat kind of stuff you see at the end, that's just a, a very curated snapshot towards the, uh, into the actual world. That has to be clear. Like don't start with a polished structure. Like embrace the messiness. Like work through these questions, whatever way you have to work through them. And in the end, I will promise you, you are always able to assemble the actual strategy work into whatever shape your strategy, your boss, or your ca-- your frameworks require. So the fundamental questions don't change, right? Strategy creation, you say it's non-linear, it's messy, and these canvases allow you to look at them, but they are not the strategy itself. So make sure that when you are asked about product strategy, don't fall for the trap to start with the framework, start with the template, start with the core questions that every strategy needs to answer in a way that they enforce a no, and then it's just painting by the numbers you assemble.
- AGAakash Gupta
So let's see those core questions.
- 12:43 – 13:45
AI is not a value proposition: where differentiation actually comes from
- TITim
You can look at it in, in more detail, right? So you can take everyone's favorite thing, the business model canvas, and I love this post from David Bland, who wanted this great post because the question is now, "Okay, Tim, with all these dimensions, we have these things, how to answer things, how does AI fit in there? Like, where does AI influence things the most?" And I talked about parts of value proposition differentiation are most affected by it. So what I love here is that AI by itself in your strategy is not a value proposition, and almost no technology in history has been a value proposition on its own. Instead, technology or something like AI becomes a resource you can use. It becomes a new resource you can leverage to really hopefully amplify the core value why your customers come to you. They don't come to you to see the fifteenth glorified ChatGPT embedded window.
- AGAakash Gupta
[laughs]
- TITim
That's not why they come to you. Because everyone can spin this up. Like, it's not a differentiator. Everyone has access to the same frontier models or open source models. You can't compete on that technology alone. You have to make sure that what other things remain, which we're gonna look at later, which differentiators actually remain.
- 13:45 – 16:20
Can AI ever be ‘the product’? Case discussion: Photo AI & ChatPRD
- AGAakash Gupta
So if I just try to play devil's advocate here, would there be-
- TITim
Yeah
- AGAakash Gupta
... some companies where AI could be the value proposition like, uh, Levels.io has this company called Photo AI that does eighty-three K revenue per month for him as a solo operator, and I guess it's just about generating photos that look like you or maybe like ChatPRD, Claire Vo has like that.
- TITim
Yeah.
- AGAakash Gupta
Would you say AI is the value proposition for those tools?
- TITim
I think I would challenge that in a way to say like I think what's important is what is layered on top of AI as technology. For example, the Levels.io product, I mean, I think his name is Peter, right? The, the operator-
- AGAakash Gupta
Yeah
- TITim
... who runs this, like he has this incredible personal branding. Like he's this incredibly branded solopreneur operator. I think people love rooting for him. People love the products he's building. And I think if you are above a certain quality threshold, then your brand can carry you all the way. And I think by that, by being this solopreneur thing, he has created his own blue ocean, that he's not compared with like the big companies, um, in, in that space. So I think that's the-- that's how I would see that.
- AGAakash Gupta
Mm.
- TITim
Or you mentioned, uh, Claire with, uh, what's it called? The, um-
- AGAakash Gupta
ChatPRD.
- TITim
Chat, ChatPRD.
- AGAakash Gupta
I was just talking to the president of HP, and I was asking him, "Hey, what AI tools do you guys use for your PM team?" He said, "ChatPRD."
- TITim
Yeah.
- AGAakash Gupta
I was like, "Wow."
- TITim
My bet is I think that would be the part like, why do people choose ChatPRD? My bet is they choose it because of Claire's product experience that is leveraged through AI. Because in theory, you can write PRDs everywhere, but like Claire adds her pr- CPO background value to that to really amplify, um, AI as a, as a technical resource.
- AGAakash Gupta
So it's still really a resource that those people are tapping into, and the strategy or the business model canvas they're filling around it is their brand, their alpha, their distribution. Those are the-
- TITim
Yeah
- AGAakash Gupta
... things that allow it to succeed.
- TITim
I think, uh, there was a great podcast, I don't know, it was a year ago or so, from Brian Balfour from Reforge, and he chatted to, I think to Ravi Mehta, and they talked about what are remaining differentiators in this wild, wild west. And they were like, "Look, essentially it's the o- it's the same differentiators that have always been the only ones. It's brand and it's data."
- AGAakash Gupta
[laughs]
- TITim
And they just get, they just get so amplified right now because nothing else is a moat anymore. Nothing else is a moat anymore. And I think that shows even more and more. Like you can be incredibly well-branded company like Notion or all these other favorite tools we have out there. The brand is amazing. They have a gazillion data history about you to leverage AI into a fantastic product experience.
- AGAakash Gupta
Very interesting. So where do we go from here?
- 16:20 – 18:32
Using AI to build strategy vs. putting AI inside strategy
- TITim
We go from here to take a closer look. It's like, okay, so we talk about AI as a fundamental thing. Before we dive into the case study for today, I want to lay out a few things for people to understand. What are the impact point, what are the connection points for AI and strategy? And I think it's important to say, on the one end, of course, you can use AI to create a product strategy as a tool for resource, for operation. But of course, the other part is where does AI appear in your product strategy? So what we talked about. So just to point out some of the obvious things, like for example, when we talk about using AI to create a product strategy, there are obvious things like researching markets and competitors. Uh, that's an obvious one. Or we can talk about synthesizing customer evidence. We can talk about generating, comparing scenarios. We can talk about how do you pressure test strategic scenarios. So we can, we can use these things, and they, they should be part of your workflow. It would be, it would be stupid not to do it, right? So don't, uh, put on your blinders and be aware of these tools being available to you for strategy creation. The thing that you can't replace, that people oftentimes, um, might fall for is you will still be held accountable for the consequences of your strategy. You can't say, "No, ChatGPT told me this is a great strategic bet. It's not my f- problem that we lost ten million in the market." Like you can't do that these days. If you have that, and of course, the, the thing is when we look at AI as part of your product strategy, as we talked about before, you have to come to these core realizations. AI as a technical resource on its own, it's not a moat. The resource is widely available, it's not, it's not differentiable. You have to understand how you can use AI as a resource to amplify existing value propositions and become appealing to new audiences, if that's what you want to do. And you have to understand that th- as easy it is to spin up AI as part of a product strategy and to use it 'cause it's so, it's so widely available, the only sustainable differentiators in product strategy are the ones that take the longest to build. We just talked about brand and data, and these things you cannot speed up. Like you cannot speed up brand or reputation. You can destroy it incredibly quickly-
- AGAakash Gupta
[laughs]
- 18:32 – 23:28
The ‘stupidity flip’: pressure-testing whether you made a real strategic choice
- TITim
... but you cannot build it up overnight. If you look at these things like that's what we can do, like that's what we, uh, what's available to us. Um, we can, we can continue to work from here and dive deeper into how do we work through for product strategy. The fa- one of my favorite things that I look at to pressure test whatever people put in front of me is this quote from Roger Martin. And honestly, this quote, it's one of those light bulb moments that whoever I'm showing it to, you will never look at strategy the same afterwards. You, you just can't. So here's this great quote where he says, "Well, the question is, is the opposite of your choice, of your strategy choice, stupid on its face? If the opposite is stupid, it's you haven't made a real choice." And he uses things like, if you say, "Our strategy is to make our salespeople more efficient." Well, what's the opposite of that? It's like, to make salespeople slower.
- AGAakash Gupta
[laughs]
- TITim
That's pretty stupid. That's a pretty stupid idea.
- AGAakash Gupta
[laughs]
- TITim
That's a pretty stupid idea.
- AGAakash Gupta
So then you haven't really made a strategic choice because-
- TITim
Exactly
- AGAakash Gupta
... anything could fall in the bucket of making salespeople more efficient. So you need to-
- TITim
Exactly
- AGAakash Gupta
... find something where the opposite might be stupid, like we are trying to make salespeople spend less time in software and more time with people. I guess the opposite-
- TITim
Exactly
- AGAakash Gupta
... of that too is stupid though. [laughs] Spend more time in software and less time with people. So it's not easy to generate off the top of your head.
- TITim
Yeah, but that's the thing. If it would be easy, then strategy would be easy, and we all know that strategy is not easy. So, um, I, I get what you're saying. The thing is, you could, the, you can easily tweak this. You can say, "We want to make salespeople more efficient," but then the question is how? Like that's what strategy should answer. And you could say, "We want to make salespeople more efficient by shortening the preparation time for meetings." Right? For example, this could be something if you believe this is the best bet you have. You could also say an opposite would be, "We want to make salespeople more efficient by sending more AI bots to sales calls." It's, uh, it's an alternative, right? Who knows if it's the right one, but it's one you could do. Or you could even say, "We want to make salespeople more efficient by having every sales rep focus on fewer accounts." How do you do this? So that's the part that strategy should, should, should be able to answer. Now-
- AGAakash Gupta
So it's almost like having a point of view about not just what your product is going to accomplish, but how you're gonna accomplish it.
- TITim
Exactly. How do you wanna do this? And the beauty is that the problem is we all know that strategy is not just this one sentence. Strategy is never make salespeople more efficient. It's much more complex, and we look at the individual building blocks of strategy. So invite people to do it. Like don't get frustrated about your product strategy being stupid on its face, um, fully. Like pick out what is a part of your strategy. What is a part, what is an individual component you can do? And one person I work with in one company, I showed this to her. She call- she started calling this the stupidity flip. And I love this. It's one of my favorite exercises. So she basically says, "If you decompose your strategy," for example, a part of your strategy is you talk, you want to make choices about your audience, or you want to make choices about how you're wanting to win the playing field we talked about. And so she worked on a meal kits product. And she said, "Okay, I can make a choice by saying the audience I focus on are people who regularly cook at home, but they struggle with inspiration." I could flip this into I'm could also focus on people who never cook at home or people who are extremely proficient home cooks. Legitimate alternatives. No one knows if it's right, but I have, I have made a choice that makes sense. I could also say for the winning moves, well, my value prop will be end-to-end home cooking from inspiration to inventory. You could also say, "I'm going down the HelloFresh route. I'm gonna be a meal delivery service," or I'm gonna be super high-end and gonna say, "I deliver complex recipes with specialty ingredients." And that's it. So you can pick individual parts of a strategy and flip them and think about can I make one part more tangible? Can I make one part of my strategy more know and aidly, so to speak, that I can then work with it?
- AGAakash Gupta
So just to clarify, 'cause I didn't totally follow, where is the flipping happening here?
- TITim
The flip happens like some-- You'd say one part of your strategy would be, um, you have to make a choice about what's the audience I'm focusing on. That's part of your strategy, right? You wanna say, for whom am I solving a problem? Like that's part of your strat- it's a strategy component you would focus on. And so you would make this choice by saying, "Oh, I'm gonna focus on people who regularly cook at home." What could be flips of that, right? So I could flip it into people who never cook or who are extremely proficient.
- AGAakash Gupta
Hmm.
- TITim
And in this case, the stupi- the, the stupidity flip worked, right? We could say, "Yeah, these are actual choices. Like these are not stupid choices. You could focus on these, but you chose to focus on these people."
- AGAakash Gupta
Hmm.
- TITim
So that's the part of a strategy that you're flipping. You're picking an individual component, and you're flipping that.
- 23:28 – 30:59
Focus vs. neglect: segment choices must fit the strategic narrative
- AGAakash Gupta
And g- just to play devil's advocate on this now, isn't there... Like I also felt this sometimes when I was a product leader implementing a strategy that I would get. Like one strategy I had when I was at Apollo.io from the CEO was, "Hey, let's only focus on paid users." And I think he was kind of going off of a similar sort of reasoning here, which is like-
- TITim
Yeah
- AGAakash Gupta
... there needs to be a f- stupidity flip example. But then the strategy kind of ignored free users, right?
- TITim
Mm-hmm.
- AGAakash Gupta
But actually, as a product leader, I can't just ignore [laughs] free users.
- TITim
[laughs]
- AGAakash Gupta
And so I would have to make-
- TITim
Yeah
- AGAakash Gupta
... decisions like that don't just nerf the free users. So is there a-
- TITim
Right
- AGAakash Gupta
... component where strategy should be giving you myopic focus on certain segments of users, and is that good?
- TITim
I would say it's two things. Like the first thing that people have to understand about strategy is that I strongly believe that strategy does not have to cover everything that you're doing, right? I think it's okay that, as you said, the focus might be paid users. That does not mean that you're turning off the product for free users, right? It's like, okay, it's, that, that's the first thing people have to understand. And for me, the second part is that it has to fit what we, we talked about the strategic narrative before. Like it has to fit the narrative. Like why, what is the reasoning for focusing so strongly on paid users? Is it because you want to-- because the company has a retention problem with paid users? Is like increasing retention the, um, the biggest bet to improving revenue? Or is it... Like what is it? Like what's, what's the, the bigger thinking behind it? So I think the choice of a segment has to match the narrative. That's what I mentioned before. These components you have here, they have to form a coherent
- AGAakash Gupta
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- TITim
uh, net essentially. They have to make sense towards each other. They have to reinforce each other. They don't have to be right because no one knows what's right anyways, but they have to make sense in a way. So if you were to tell me, "Well, the company's biggest strategic priority is to grow revenue by improving retention for paid users, therefore, we're gonna focus on acquiring more free users," would be like, "Well, I don't know how the math on that checks out."
- AGAakash Gupta
A hundred percent. Makes sense. Okay. And that was actually the reasoning, was they wanted to focus on retention as the biggest lever. So it's interesting that just by knowing paid users as the focus, you were actually able to figure out what the larger narrative was.
- TITim
Yeah. Exactly. And that's the beauty of strategy is like, it's not a top-down thing. You can start anywhere. Someone could throw at you, "Let's focus on this segment," and all you have to do is, "Well, why? Why this segment?" Or you could say, someone might tell you, "Oh, we're really trying to differentiate through, uh, in-store experiences." It's like, "Okay, great. Who do we-- How will we reach through in-store experiences? And is this the segment we want to focus on right now?" So because all of these things are, are a web of things, you, you can start anywhere.
- AGAakash Gupta
Mm.
- TITim
So to make this all a bit more tangible, right? So we, we already ran through some stuff, so I don't have to, don't have to repeat it. But essentially, what you would do is, okay, so the choice might be make salespeople more efficient. The opposite would be make salespeople more inefficient.
- AGAakash Gupta
[laughs]
- TITim
So, right, make salespeople more efficient. Doesn't make sense. Opposite, uh, people who are inefficient salespeople are more inefficient. Obviously stupid idea. We say make salespeople more efficient by being in person with clients, right? This could be one thing. And you could say, well, the opposite would be make salespeople more efficient by being in virtual contact with clients.
- AGAakash Gupta
Mm.
- TITim
It's not obviously stupid, so it could be a legitimate alternative. We could focus on that.
- AGAakash Gupta
Yeah. So now you've made a real choice. So what you wanna do is-
- TITim
Yeah
- AGAakash Gupta
... you wanna flip it, and then you wanna say, "Is it stupid?" That's the simple-
- TITim
Exactly
- AGAakash Gupta
... way to validate.
- 30:59 – 35:43
Fictional case study setup: ‘Fairmile’ used-car marketplace and the ‘all-yes’ trap
- TITim
That's the simple... Yeah. That's the stupidity flip. And so I want to make this a bit more tangible, and what we're gonna do is we're gonna work through a fictional case that represents lots of the clients I'm working with. And so it's a fictional marketplace product. We're gonna use it a bit as a, as a run-through here. So I'm calling it Fairmile, and it's essentially... it's a used car marketplace. What we have here is your traditional marketplace kind of situation. You have sellers and dealers. You have Fairmile as the company in between. You have buyers. And of course, sellers and dealers want what everyone want. They want qualified buyers. They want to sell the car quickly, and they need low-friction listings and verification of the products, of the whatever they're putting up there. We, as Fairmile, we have to facilitate all this inspection. We have to create this trust. We have to connect supply and demand. And on the buyer side, we have people who come through for search, for Google or different... or, or AI search. They might be first-time buyers who are very uncertain. And of course, it might be difficult to purchase a car sight unseen online. So, and they don't really trust the quality of your car enough to commit remotely. So these are some of the... It's a bit of a landscape. And of course, they have a few interesting challenges ahead. Of course, they could do everything what everyone says, like just throw AI everywhere through the product, expand to all the countries, all the categories, accelerate growth, trying to build everything, right? And we talked about this before, but this is basically... this is an all-yes strategy. It doesn't say... It doesn't let you say no to anything. It's just like, do whatever you have to do it. [laughs] What... If there's a, if there's a suggestion, do it.
- AGAakash Gupta
You just say no to sleep. [laughs]
- TITim
So you could do more. Yeah, exactly. Just say no to sleep. Say no to capital. Say no to margin. Say no to quality.
- AGAakash Gupta
[laughs]
- TITim
[laughs] And of course, then you could say, "Okay, we could also make a, we could make a specific focus," right? We could say, "Hey, we could pick first-time buyers. We could focus on that." You could. And this would be another example of the stupidity flip working. You could say, "We focus on first-time buyers." You could also say, we flip it, and we focus on second, uh, and more time buyers. So we focus on experienced-
- AGAakash Gupta
Mm-hmm
- TITim
... uh, car buyers. It's a, it's a choice. So the question will be for Fairmile, okay, what do we do? Like, how... what, what do we do, and what do we choose not to do, um, if we would choose trust to make sure we actually focus on these first-time buyers? So that's the thing, um, I want to use as a bit of an example for us to work through things. And so you could... You, you talked a little bit about what are the questions we, we could work through, right? So if you take some of the choices that Fairmile has already done, uh, they might say, "Okay, the strategy is to become Europe's most trusted used car marketplace by using [laughs] AI to deliver a seamless buying experience, delighting buyers, blah, blah, blah, blah, blah." And you could say like, well, again, like you, you could flip all of that, and it's obviously stupid, right? Because you don't want to be mistrusted. You don't want to... Well, AI or not doesn't really matter. Uh, you don't want to create a hard-to-use buying experience. You don't want to not delight buyers. Everything is there. It's like, well, this, it's nothing. It's not, it's not a strategy, right? It doesn't give you things. So we talked about this before. Uh, Europe's most trusted car marketplace. Flip it. It's like the world's m-most not trusted used car marketplace. Well, you shouldn't do that. So we don't want to be Europe's least trusted car marketplace. Um, so obviously stupid. [keyboard clacking] Um, right, buyers and sellers alike. Well, of course, without buyers or sellers, it doesn't make sense. So, uh, no buyers, no sellers. Also obviously stupid.
- AGAakash Gupta
Obviously stupid. [laughs]
- TITim
Yeah, exactly. That, that's not a marketplace. And I think you could look at some of these things, right? You could say, okay, accelerating buyer growth through automated AI verification. Well, you could say taking our time on buyer verification through human-led call center verification. You could do it, right? Not-
- AGAakash Gupta
Seems reasonable
- TITim
... super stupid. Yeah, it could be, right? So it's not, not obviously stupid. [keyboard clacking] 'Cause it could be, it could be a play. If you really want to become trusted, it could might... it might help you with your trust play, right? So it's okay. This, this might be actually a bet we could, we could try out. Um, yeah, improving recommendation algorithm through AI [laughs] enhanced start page feed for first-time AI visitors. Well, pfft, I don't know. Make the first time start page feed experience worse for SEO visitors could be one flip. Of course, you could flip more. But it's also not, it's not super. Of course, uh, maybe that's a bit much, too much devil's ad-advocate. You could also say, um, provide a static start page feed experience for first-time SEO visitors compared to an AI-optimized one. You could say like, well, somewhat possible. [keyboard clacking]
- AGAakash Gupta
Mm-hmm.
- 35:43 – 42:25
Audience Trees: narrowing from broad to actionable segments (and where AI helps)
- TITim
So I think it's something in there, and we're gonna take a look at some of these parts of, uh, components of your product strategy of what you can, what you can do to break things down. So one of my favorite ways to do it, um, because we talked about audiences a lot. We talked about audiences and segments. And an important part that I love is, uh, it's an exercise called audience trees. And so audience trees borrows from this idea. There's Andy Jones, who's a former head of growth at Facebook, and he says, basically, your, uh, your target audience has to be comically narrow. Like it has to be almost ridiculous how narrow you are. And I think you have to be between very broad and very comically narrow. So if we were to take the Fairmile example, let's just say, uh, all buyers in all co- say all potential car buyers in Europe That's very broad. That's probably a bit too broad, right? And we could narrow this down to say first-time buyers of vintage Mercedes cars in Southern Germany. Like, okay, that's oddly specific, right? So that's probably comically narrow.
- AGAakash Gupta
[laughs]
- TITim
So what you want to do with an audience tree is you want to figure out, well, what are the things by which I could break things down? An obvious one is, of course, is region. Uh, you could do something like by, by income to say people are for cars. It might be important. It might be, um, car value, like, uh, people looking for high-end cars or low-end cars, where they wanna go. We already established it's about, um, first time versus repeat buying. This is another category.
- AGAakash Gupta
Yeah.
- TITim
So we have, we have these... What I recommend companies do is they, they take the broadest one and maybe a comically narrow one. Then you, you think about by which aspects could I slice my audiences. And then you can rearrange things. You could say, okay, let's say Europe. Europe is great, but maybe we're gonna go for we love, we love Germany because they're crazy about cars. So we're gonna have Germany, and maybe you have, uh, UK, and then you have rest of Europe, right? This could be a segmentation you might play. So we have region out of the way. Put this up here and you say, "Look, we're gonna go for Germany." Okay. So within Germany, what could I do? Within Germany, I could say, well, I wanna make sure between first time buying and repeat buying, because Germans love cars, they often buy new cars. So first time, repeat buyer. This could be a segmentation question I'm using as well to break things down. I might say, "Well, I don't want to deal with the hassle or the inexperience of first time buyers. I wanna go for repeat buyers. They might be easier to, to convince to buy online." Then you might say, "Okay, I don't-- I also want to make a big margin on what I'm making per transaction. I don't want to play the volume game. I want about quant-- qual- uh, quality." So the higher the car value, [keyboard clicking] let's say car value above 100K and car value below 100K, you might say, "Well, we're gonna focus on, uh, above 100K because then every transaction makes us... It's, it's real fun to make, facilitate each transaction."
- AGAakash Gupta
Mm.
- TITim
And so you could, you could do-- The funny, the beauty is of this, you could rearrange these things as you want. You could start with car value and then the region. It doesn't really matter. It leads you to the same thing. But in the end then what you land on is, okay, for Fairmile, we could say we focus on repeat buyers of cars worth more than 100K in Germany. And then you have something that is something you can say no to, something that gives you focus, and if it fits a narrative, you can have a-- hopefully you have a narrative why you made these choices. This is, for example, the beauty of where AI would be really helpful to really assess these criteria. Like which thing, like how big is the market? What is the difference in, uh, in trust issues for repeat versus first time buyers? How many cars exist in competitors more than less than 100K? Like you can do all, you can speed up all this research. And so-
- AGAakash Gupta
Mm.
- TITim
You can create... But in the end, you, you will then land on a segment that you can actually work with.
- AGAakash Gupta
And how do you know that that segment's big enough, it's not comically narrow?
- TITim
Yeah. So that's what I'm saying. Of course, you have to like do this, I don't want to say sanity check sounds too easy, but of course, you still have to say, well, is like, is Germany a good market? Or would you say, oh, let's say, let's say Luxembourg. It was like, well, look, this is like, I don't know. I don't want to do injustice to Luxembourg. It's like, I don't know, there's like ten thousand people. It doesn't make sense.
- AGAakash Gupta
[laughs]
- TITim
So of course, you still have to go through it like, okay, what does it mean? So, and that's why I'm saying this is where the acceleration of this breakdown can happen. You can easily get access to saying how many car owners in Germany, how often does a German buy a new car, what is the average value of the cars they're buying. Like you can get the data on that very quickly. You can run this decision through some AI assisted, uh, progress here to back up the data and make sure, well, okay, this is a market of, I don't know, fifty thousand people we could reach every year. At this expected transaction size at the margin we're taking, then you can just see, well, do, do the numbers make sense? Is this a business model or do, do we need to broaden it? Do we need to say it can't just be Germany, it has to be Germany, Austria, Switzerland. So you can then tweak the dial, so to speak, to make the choice here.
- AGAakash Gupta
So AI really helps in the market sizing component.
- TITim
Yeah, exactly. And again, what we what I've been banging the drum on, you have something that you can say no to, right? You can say, we can, we can flip this, and the opposite would still make sense. We could go for first time buyers for lower, uh, value cars, different markets. It, it allows us to say no to things. And I believe getting your audience in place is such a... Because having your audience in place, like, has so many downstream consequences. If you have your audience dialed in, the problem space you're focusing on will become very focused because you focus, you can only solve problems for the audience you've chosen. In this, obviously, in the marketplace scenario, we have another, um, interesting component because we could also have to say we have to focus on, um, on sellers of cars worth more than 100K. Maybe not Germany, we could sell across Europe. But then we have this link, you know, we have the, the buyer and the seller side clarified at the same time. So we have this lock of these two strat-strategy components we can now use for the team working on the buyer side and the team focusing on the seller side. So we know what we focus on in acquisition, how we will measure success. We have all these things in place. So that's why, uh, why I recommend so many people to, to actually get the audiences right. Don't get lost in the super comically narrow one. Like, don't, don't go for vintage Mercedes cars in Southern Germany. But, uh, do, do the run-through, do the slicing and focus. Another strategy part, and I, I, I teased this a bit. I teased this already that I believe that winning moves and differentiation is, um, is
- 42:25 – 46:31
Differentiation in the AI era: Hamilton Helmer’s ‘7 Powers’ and what still works
- TITim
the trickiest one that's the most influenced. And again, I'm someone, I love to go back to the original concepts that are out there. I don't believe anyone needs to reinvent strategy work. What we do have to reinvent is coming back to the fundamentals and staying true to things. And one of the most, um- Timeless concepts and differentiation of strategy is from Hamilton Helmer, Seven Powers. If you haven't heard of it, I recommend you go read it. Uh, timeless stuff, really good. And so he says there, essentially, if you boil it down, there are seven things you can do to, uh, differentiate from others, from your competition. And so you have to understand what each of these powers is doing in general, if it's feasible for your company to execute, and most importantly, does it even help you differentiate from your competition? And so to give you some color on what, what do some of these mean, right? For example, I mean, switching costs is probably the most painful one for everyone. You know, like the, the blue bubble problem. You c- you can't leave the iOS ecosystem. Like, you don't want to leave all the iOS data behind. You have that. Uh, that's a painful one. Um, or switching from Spotify to somewhere else, all the playlists, all the algorithm stuff. Um, process power. Process power, like how quickly, uh, what kind of internal efficiency do we actually have? Um, can you, can you have that in place? Counter-positioning one, it's a very interesting one. Uh, favorite example across history was from Netflix versus Blockbuster. But the funny thing was Blockbuster made a lot of money on the late fees of the rental of the rented movies. And when Netflix waived the late fees, Blockbuster couldn't compete on it because it was a st-- their, their business model relied on it. Uh, and of course, we have brand, we have network effects. And so what I said before comes true. It's the only sustainable differentiators these days are the ones that are the long-- take the longest to build. Which is, for example, on the one hand, we talked about it, right? We have, we have brand, right? Uh, hard to build. You have network effects because you can't copy and paste network effects, whether that's, uh, offline distribution, whether it is the number of people, the buyers and sellers on the marketplace. So this would really work for Fairmile. Um, switching costs, probably not a good one for, for a car marketplace. Process power. Uh, sorry, I lost you for a second. Are you still there?
- AGAakash Gupta
Yes.
- TITim
Yeah. Okay, good. Um, process power. How good, how, how easy do your internal, do your internal, uh, wheels churning? Well, it's, it's easy to copy to. Like, people can catch up. Like, companies, um, can catch up to that, right? It might take them a while, but it's, it's easy. Um, and other things like captured resource, which is an old-school way of using technology. Well, um, not sustainable. Um, we talked about this before. Everyone can tap into the same models, so this is difficult. Um, so some of these things, again, if we look at Fairmile, our pro- our product, again, it's the, the brand. I think the network effects, like getting the buyer and seller side really in place, get them really locked in. Um, switching costs, again, I don't see them. They shouldn't focus on building on switching costs for a car marketplace because it doesn't really make sense. Um, the final-- the good-- interesting for them, for economies of scale, I believe would be, um, in the case of, um, maybe working with dealerships in Europe. So can you get dealerships in place that have multiple offerings, uh, multiple, uh, locations that have-- that really blow up your inventory? This could be a really interesting one. Again, captured resource, so just, uh, getting crazy about you are the AI market-- you are the car marketplace with the AI search. It's probably not really sustainable. Um, yeah. So that's what I would say. Looking at the, the, the winning moves, the seven powers, I think really it's about brand. It's about network effects. Maybe getting the dealership in place. Um, don't get lo-- they shouldn't get lost in trying to build up a fancy AI search. I mean, you might do it. It's not painful, but it won't really help you differentiate. Like, no one will buy the car with you because you have an AI search on the marketplace.
- 46:31 – 52:48
No required sequence: strategy is messy, interlinked, and can start anywhere
- AGAakash Gupta
And does seven powers come after audience? Is there a sequencing to this that makes the most sense when you're building your strategy?
- TITim
I would say it does not. Uh, it's not a sequence because if you look at it, if you look at these core questions we, we talked about, um, essentially you can start anywhere, right? So, like, Joe from marketing might come in and tell you all about, um, we now differentiate on price, right? That might be a new statement. You're like, "Okay, thanks. A, that's a bit hard, but okay. We do not differentiate on price." The big question is, um, do we focus on the price-sensitive audience? Like, like, what's the link? Is that a link? Is that a strategic link? Is that a link in our strategy that actually makes sense? And probably that, that makes sen-- uh, points out like who is our audience? And even further so, once you understand that, what makes our audience choose a solution these days? And you can take this even further and say, "Why do people choose our competitors?" Is it not predators?
- AGAakash Gupta
[laughs]
- TITim
Why do customers choose our competitors, right? Uh, if it is a price, like are we in a price-- I would say if you-- if the people are choosing competitors for pricing, I would say get out of this market because price is one of those other things you cannot win. Like you can't win on pricing. You might can. There are these outliers. Of course, these days we see that, you know, like Google, Microsoft, Anthropic, and OpenAI, they can compete on price for a while by cutting down the cost and not charging you the real AI cost. They can-- because they can swallow it, because they subsidize it. But that's not-- no one else can do that. Like, no one else has a business to subsidize these incredible costs that you don't have to pay for. So to come back to your question, I don't think it, it doesn't have to be a sequence because, again, you might start on this wild differentiation guess, and you can link it back up to all these other strategy components you should be able to answer. Um, yeah. Does that make sense? I dived a bit deeper into the audience and the, the differentiation because, again, as said, on the one hand, audiences are as most impacted by the idea to, uh, it's most impacted by you can do a lot of AI-assisted work here to really get things down and nail things down. Differentiation is the one that is the most affected by can you actually use AI to differentiate your product anymore? And what does it mean for those other differentiation possibilities that you have as a fundamental layer? And we talked about Okay, how do you, how do you link all these things? And we can, we can link it, talk about this a bit more by saying, okay, if we take these things aside, like, what can you, what can you do to really articulate those things? So I think for your narrative, for example, you want to use things like your vision, your mission, uh, business model, uh, company strategy, if you have them, if you have it in place. Uh, we could do something like North Star metric. Like, these are all components you can utilize to really describe the strategic narrative you're going after. So this is, this is what you can use. You don't have to use all of these. Please don't use all of these, but you can use them. When we want to describe the playing field, we have to be clear on buyers, um, users, especially in B2B, buyers versus users. Um, of course, we have to say, what are the, the jobs, uh, the buyer jobs, the user jobs. We have to get clear on these, and we have to be really clear on the alternatives. Like be clear who are users and buyers using to get the job done today. So these are things we need to have in place to articulate our playing field. And for the winning moves, you can talk about things like value prop. You want to talk about distribution channels. You want to talk about, um, differentiators. So these are just some of the, let's say, um, these are things in your toolbox you should be able to pull out to articulate winning moves, to articulate playing field, to articulate the strategic narrative. As I mentioned before, all of these are linked inevitably. You can't make a choice about distribution channels without being clear on the users and buyers you're serving. You can't make a choice about differentiators without knowing who you're competing against. Like, all of these things are so incredibly interlinked. You might start anywhere, but be prepared for the messy work you have to do to figure all of this out together.
- AGAakash Gupta
And when you were talking about strategic narrative, you mentioned-
- TITim
Yeah
- AGAakash Gupta
... don't do all of vision, mission, business model-
- TITim
Yeah
- AGAakash Gupta
... North Star metric, company strategy. Why not?
- TITim
Well, I believe that you can so often get lost in them because the thing, the problem-- my problem is that people and companies especially, companies love these terms, but they are rarely used the way they are intended to use. They're int-- Like just a North Star metric. North Star metric is one of those things, like people put it on the wall, and they just say, "EBITA is a North Star metric." It's like, well, it's not. Um-
- AGAakash Gupta
It's an outcome, I guess. It's like a lagging metric, right?
- TITim
Yeah, exactly. That's the problem. Like, and I think the... You know, like the... Again, I love to go back to the, to the inventors of concepts. And Sean Ellis, who came up with the North Star metric, he had a very clear definition. Like he said, "A North Star metric is the metric that represents the experienced value your customers have from your product." Like that's what it is. And of course, an increase of this metric has to lead to an increase in the business metrics, of course. But the business metric itself is not the North Star metric, and I think that's so easy to forget. So coming back to your point, of all of this, people love to debate, "Oh, is this a vision? Is this a mission?" Like what is it exactly? Is this not written correctly? And, oh, this North Star metric, et cetera. I would just say, I don't really care what you use as long as you can really tell me why should we act now and why is it us who should act. If you-- Whatever you use up here, you can only use the North Star metric, only the vision, I don't care. Be- because the problem is your users don't care about your vision, uh, your strategy. Your colleagues, your teams care about your strategy. So if you can inspire them to think about, "Yeah, this is why we should act now," just with a vision, be my guest. I'm not gonna police your strategy framework.
- AGAakash Gupta
Makes sense.
- 52:48 – 58:33
Metrics that match strategy: plain-English outcomes, avoid machine-centric vanity metrics
- TITim
We talk a little bit about strategy, and we have to talk about has strategy worked. The beauty is I mentioned this honeymoon period, like many of my clients have it. It's like, yeah, let's have so much output and so much, you know, everything, everything is happening now and all the-- everyone's more efficient. But I have so many clients who told me a year ago they have issues with feature adoption. They have issues getting the customers to use the features. So tell me exactly how ten or a hundred times more features helps you with adoption from your customers. I haven't heard a good answer on that, to be honest. So you might throw more things out, but you don't really know what happens. Now, the problem is people then say, "Yeah, you know, let's write more OKRs," or, "Let's, let's get lost in the metrics frameworks," whatever. And just like with every framework, I think it's important to let's go back to the basics. And if we go back to the basics of saying, "Hey, explain to me if our strategy has worked, and how do we know the strategy has worked?" I don't tell people, "Let's write OKRs. Let's write North Star metrics." I don't do that because then people focus on the framework. What I have them do is, okay, plain, plain English. First, tell me what you want to do differently in the next quarter or six months. Just tell me what you will do differently, which is the essence of strategy. What will you do differently? Don't talk to me about business as usual. Don't talk to me about bug fixing. What will you do differently? And once-
- AGAakash Gupta
And differently from what you have been doing?
- TITim
Yeah. What will change? Like because you cannot expect an, an revenue increase of twenty percent by continuing to do this, do the thing you did before. Like you have to do something differently probably. So-- And this applies to B2C, to B2B, to customer facing, to internal teams. It doesn't matter. Everyone needs to have an answer to the question: what will I do differently in order to achieve the, the business results, the business goals that I, that I've been given? So once you're able to say that to me in plain English, then we can talk more. Then we can talk about, okay, now tell me how will you know it has worked? How will you measure that what you did differently has worked? Tell me how you did, how you will measure it. And once we have this conversation, then we can talk about, okay, now we can translate that into whatever metrics framework your boss wants you to fill out. Whether it's a, a dashboard, whether it's OKRs, whether it's balanced scorecard, I don't care. But it's like with a strategy template. Filling out the template doesn't make it a strategy unless you get the fundamentals right. And for metrics and OKRs, it's always what's differently, how will you measure it, and then translate it. And if you str-- if teams struggle with that, which especially in the AI concept, they are-- these days, companies get easily lost in very machine-centric metrics. They tell me about, you know, tokens used, language model efficiency, blah, blah, blah, blah, blah. The point is, that's no value exchange. Like tokens used is not a value exchange for your customers. It's a value exchange for Anthropic. Like they, they make more money off you using their tokens. So you still have to go back to the core question as well. We're building a product ultimately for now humans, maybe agents in the future. But still explain to me whose behavior do you want to change? Like whose behavior has to change to tell you that this idea you had has worked? Whose behavior do you want to change? By how much? Uh, and this should be at the core question. Like even if you tell me, you know, we want to increase, um, AI feature output by twenty X next quarter, it's like, okay, what should change for whom as a result of that? Like what-- why do you want twen-twenty times more? Is it about an internal metric? Do you want people to be more AI fluent, AI this or that? Or do you actually want customers to be more effective, more efficient, more or faster in the problem-solving? Make that the actual goal, how you measure the success of your strategy and not a random AI output metric.
- AGAakash Gupta
So is it better to have a metric that's more of like a leading product usage sort of metric?
- TITim
That's a good question. And I think the... Let me see if I have something. What I like to go back to, there's this great quote. I don't know who has it before. There's this great quote is, "There are no solutions, only trade-offs." The problem is there is no this one-- th-- not this one perfect metric. I think ultimately you have to decide, okay, let's say you pick a m-most customer-centric metric, but it takes you nine months to figure out if the metric has changed. Well, that's not, that's not great. That's not a good metric. So then you have to reverse engineer. You have to go from lagging to leading indicator. Okay, what is the earliest signal I can detect? And it's a little bit like what we did with the audience tree. You might have this comically narrow metric where you say, um, it's like number of tokens used per day. Might be comically narrow, and it's super leading. You can track it every day. But it doesn't tell you anything about the value you have produced. And so that's the balance we have to strike ultimately to say, "Okay, we have a very lagging on the one hand of the scale. We might have very lagging customer change in behavior. On the other hand, we have this very leading work output indicator." And the thing is. [keyboard clacking] The thing is, there might be a time where you might have to work with this leading work output indicator. But honestly, my biggest pain is always why do we do all this AI stuff if it doesn't lead us to faster products in the hands of customers and therefore measuring things faster? If it still takes you nine months to measure customer behavior changes, but you're burning through all these tokens, what exactly is the point of that?
- AGAakash Gupta
So how do you create the right strategy and metrics loop then?
- 58:33 – 1:12:02
Closing the loop: tying strategy choices to specific metrics, roadmap decisions, and org layers
- TITim
So the way you do it, we, we're gonna revisit now. We're gonna package things up. We're gonna revisit some of the compo-- some of the things we talked about before. So we have this fundamental idea of what we do, and we can go through the full picture. So we put it here, and we say, "This is what our strategy should answer. It needs to give us some context on why us, why now, for whom, which problem, et cetera." Then you would say, "Okay, let's say our narrative is, uh..." Or let's skip the narrative for now. Where are we gonna use these, uh, the first-time buyers, uh, of these ones. We use the strategy choice, for example. It's something you would do. Okay. We have these as our, our playing field, part of our strategy. So what we want to do now is, okay, the core question to answer is which metrics will tell us that this strategy choice has worked? So of course, the second part we still need to put in place, just having the segment doesn't really make it a strategy. We still need to make a choice of how we will, uh, serve this market, how we w- will we win this market. Maybe let's say let's take a bold bet and say, how do we-- what's the value we provide? We provide white glove on-site inspection and car delivery services. Right? So you might say this. Maybe this is the winning move we believe will help us win this market. Who knows if it's right? So if we have this in place, the question is then still, okay, which metric will tell us that the strategy has worked? And the last thing we have to put into place is, okay, why do we want to focus on repeat buyers of cars? Essentially, the narrative might be in this case, coming back to the example you gave, is grow company revenue without losing margin by focusing on high-end markets. Right? So maybe these are the three things that we have in place, and we have a somewhat coherent strategy.
- AGAakash Gupta
Mm-hmm.
- TITim
Now, if we have this in place, okay, what kind of metrics could we set up here that tell us if this strategy has worked? Of course, on the one hand, we might-- it's something simple. It's something like share of cars sold larger hundred K. This would be an obvious one. We would also have something like average profit margin per transaction from German buyers. Could be another one. This should go up as well. Like we don't just want to have more cars. We want to sell them at a certain profit. Um, we want to have, let's say, and to prove that the white glove thingy has worked, recommendation score larger eight among German buyers of cars larger than hundred K. So that's how we know we were, we were able to were succ-- to-- we were able to be successful in the high-end market. These are some metrics we could put into place here to see, okay, has, has this strategy worked? What we want to avoid is we don't want to use generic metrics. We don't want to say something like ... increase in revenue or increase in inventory. These are great KPIs, but these are not great OKRs you would use to execute the strategy because they could change through all kinds of stuff. You want metrics that are specifically tied to those strategy choices that you make. The strategy choice to focus on repeat buyers, the strategy choice you made on providing white glove on-site inspection and car delivery, and you want metrics that really tie to that. Because if these metrics don't go up, if they don't improve, then, well, then you made the wrong strategy choices, and then you have to course correct and the game begins, uh, again.
- AGAakash Gupta
And so that's why it's a loop. After you come up with your strategy, you figure out what are these right metrics. You use those metrics to feed back into your strategy.
- TITim
Exactly. Because-- And you mentioned the point of leading lagging is exactly the point. If I only look at generic metrics like increase in revenue, the problem is with these metrics, there's, um, there's too much noise and too much delay for these metrics to tell me ex-actually if m- if this particular strategy has worked. Uh, and that's the difference between something like OKRs and something as generic as KPIs.
- AGAakash Gupta
Makes sense.
- TITim
That's why... how I bring things full circle. Like, we talked about what is the point of strategy. We talked about why it's important to s- being able to say no to things as a result of your strategy. What are the different core questions you have to be able to answer? What kind of components, what kind of tools can you utilize to answer all of these potential parts of a strategy? How easy then is to really distribute them into different strategy frameworks and templates and whatever you want to use? And how vital it is to being able to flip them s- uh, and do the stupidity flip to make sure they allow you to say no to things. How you can break things down, like audiences or differentiators, using very simple but incredibly effective tools. And ultimately, how you have to make sure that strategy execution happens through specific metrics tied to those concrete choices of your strategy.
- AGAakash Gupta
What should some PM who has strategy work, they need to define the strategy for their next half in their product area, what should they go do on Monday after this episode?
- TITim
What they should do on Monday is if they have an existing strategy, I think the first important thing I would r-remind them to, uh, um, the first thing I would encourage them to do is to do the stupidity flip on whatever they have in place at their strategy. Like, what am I... what are my choices about audiences, value proposition, differentiation, and are the opposites obviously stupid? So have I essentially not made a choice? That would be my first thing. The-- And then depending on the result, I would encourage you to think about, can I break down the audiences much more? Can I create, can I provoke focus through the audiences of my product strategy? And how does that influence the parts of value proposition and differentiation? And the third thing I would recommend to do is, okay, do I-- If my current strategy has me believe that people come to me because of AI, please think again and think about people won't just come for AI to my product. Instead, what is it actually that makes people come choose my product, and how can I use AI to leverage that reason much, much more to have people keep coming back?
- AGAakash Gupta
So let's say we're at Fairmile and there's three people working on strategy at three different levels, right? There's the CEO probably defining a lot of these seven powers and core user group.
- TITim
Yeah.
- AGAakash Gupta
Then there's like the head of product, whatever they are, VP of product or chief product officer, kind of defining some of the more nuanced elements. And then maybe let's say there's a PM who's sitting group product manager on buyer. And then there's a-
- TITim
Right
- AGAakash Gupta
... individual ICPM within the buyer experience who's focused on, okay, this is what the delivery experience is. So if we think about-
- TITim
Yeah
- AGAakash Gupta
... like those four-- These are four different people who probably can't-
- TITim
Right
- AGAakash Gupta
... all make these choices. Like if you are just that-
- TITim
No
- AGAakash Gupta
... PM on buyer experience, how do you think about building your strategy? What do you inherit versus what do you-
- TITim
Yeah
- AGAakash Gupta
... kind of create yourself?
- TITim
Yeah, I love that. So a great concept that I always keep coming back to in this multilevel, multilevel thing of product strategy, of course, is also from Ravi Mehta, is the product strategy stack, uh, right, where he talks about at the top you have your mission, your company strategy, you have your product strategy in between, you have your roadmap, below you have your goals. And what you have to really think about is when you look at these levels, and you-- I love that you used the word inherit. You have to think about each of these levels of strategy to-- as like funnels. It's like a funnel. You have to narrow down each level. So you might have-- You mentioned you might have the company level, you might have a product strategy, maybe you have a level below, and you want to think about which choice from the level above can I just inherit the way it is? Like if the company says we're betting big on brand or SEO, I can probably inherit that very easily. Um, if you, if the company just says, um, you know, car people in Europe, if you're the head of on the buyer side, you have to break it down. You would say, "Okay, what is the biggest leverage on the buyer side, the biggest segment we should focus on, um, to, to, to really choose down here?" And yeah, I think that's the, that's the core message I would give. Like which-- Look at the choice you have, you have from the level above. Does it allow you to say no yet already, or do you have to break it down one level further?
- AGAakash Gupta
Mm.
- TITim
And the, the best concept I've heard about this, a friend of mine works at Personio, which is like Europe's largest HR software operating system. And uh, when I talked to him for my book, he talked about an idea at Personio where people are encouraged when they think about product strategy to think about something that they call evergreen benefits. And evergreen benefits is essentially, well, what is something the company is already incredibly good at, and how will you leverage it for your product? And that's why it's a great example for me how things have to carry through, through those different levels by saying, "What is the company already pretty good at, and how do you leverage it?" Because you don't have to reinvent the wheel on the product level or feature level if your company has mastered a certain distribution channel or has tech available, uh, or integrations in place.
- AGAakash Gupta
So it sounds like we kind of go back to that first fill-in-the-blank statement slide that you had.
- TITim
Yeah.
- AGAakash Gupta
And you look at what of this have I inherited already? Where have people already made decisions?
- TITim
Yeah.
- AGAakash Gupta
And then you apply the stupidity flip, and you apply the does it allow me to say no for my area.
Episode duration: 1:12:12
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Transcript of episode SRZANdperl8
