Dear Budi: My team is focusing on the revenue. I feel we have no clear direction. How can I define a strategic direction?

Dear Budi: My team is really focused on the revenue. I'm a product manager, and I feel like my team has been blindly building anything that can increase revenue. Like you mentioned, I can cut corners and still connect it to the revenue—honestly, I feel a bit lost. I wonder what your way of defining this direction within your team is? — Daniel

Hi Daniel,

Thank you for the question. In this post, I’ll share the work-in-progress framework I use to start thinking about the strategy—which can be a starting point to consider.

By the way, we’re reaching a new milestone with 1,800 subscribers in the tribe :) Thank you for joining the tribe. Please don’t hesitate to reach me out via email and we’ll have a fun discussion.

You can access the table of contents here.

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Revenue and impact, should go hand-in-hand

A lot of company focuses on revenue.

But it's unclear why they even exist or what the impact they aim.

To be clear, there's nothing wrong with aiming for revenue to ensure the company has enough money to keep going. However, without a clear impact to aim, things can be directionless. The better way to see it is this drive to be profitable should go hand-to-hand with the mission.

Consider Tesla

Tesla is one of the most mission-driven company. Tesla is also a profitable company. So, the profitability can live together with the mission. Elon Musk famously published his master plan for Tesla explaining his logic about how they should make money to accelerate their mission.

Create a low-volume car, which would necessarily be expensive

Use that money to develop a medium-volume car at a lower price

Use that money to create an affordable, high-volume car

While doing above, also provide zero emission electric power generation options

Reading this, everyone can understand that his plan essentially starts with an expensive car because that's what he can afford with his money. He will then move to a high volume. This strategic narrative is so powerful because it's super simple.

Strategy narrative

I’ve been experimenting with a few ways to come up with this level of clarity for my team. I have been doing a lot of readings and discussions. I read Playing to Win, Good Strategy Bad Strategy, and more. So far, this is how I structure the strategy:

1. Compelling problem: What is the compelling problem we want to solve?

2. Impact: What the better future do we seek to make?

3. Solution: What's the solution we envision to achieve that?

4. Near-term outcome: What has to be true in the near term to achieve that impact?

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Compelling problem

Your team must build a clear understanding of the problem space to the point that you can explain why this problem is so painful for the users or society in a simple way. This is fundamental to why your team exists. For example, Elon Musk explained that civilization will collapse if we don't have sustainable energy. He also mentioned the increasing oceanic carbon level. This is a very compelling and important problem—a lot of motivated people would want to really join the journey.

Prompt: What's the compelling problem you want to solve? Why is that important?

Impact

Then, your team must be able to articulate the desired future you seek to make. This future must be an exciting one. It's something you'll rally around your team to keep people excited because everyone knows what they do now is leading toward that better future. For example, Elon Musk always mentioned a sustainable future where fewer emissions are created by fossil fuels. You can even see that Elon opens up the pitch with a clear why in this Model 3 presentation.

Prompt: Looking at the problem, what's the better future you seek to make?

Solutions

Tesla has different solutions to achieve its mission. Tesla builds an electric car, solar roof, and battery storage. Detailed solutions like this ground the team to have clear solution spaces to explore.

Prompt: What is the opinionated solution you think will highly have a chance to achieve the impact?

Near-term outcomes

Once you can articulate the compelling problem and the impact. You want to step back and connect the dots between today and the future. What are the key aspects that need to be changed? In Tesla's example, it's important to (1) make the electric car not expensive and (2) break the preconception that the electric car is slow. This will be your fundamental logic for the roadmap.

Prompt: Looking at the future you seek to make, what's stopping you from achieving that?

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Key actions to make:

1. Make a new doc

2. Draft out the problem-impact-solutions

3. Go through each prompt and try to articulate

4. You can workshop this with your leadership if you want more perspective

5. You can consider going out to the field and observing users if you want to understand the problem more deeply.

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In the upcoming post, I'll share how I develop the strategy in the context of digital products for the Government, which my team is working on now. Identifying the compelling problem requires you to really understand what happens on the ground, so I'll tell you about my experience doing field studies.