How to Align Your Product Strategy with Effective Quarterly OKRs (Insights from Tim Herbig)

TL;DR

• The main function of product strategy is to help you say NO (stay focused, avoid distractions).

• Your strategy components are your why, who, and how.

• Match product efforts with overall company goals.

• Set and review quarterly OKRs. Develop actionable OKRs based on both lagging and leading indicators.

• Customize strategies to fit your team's unique needs.

Everyone can write OKRs, few can make it work, and even fewer can align it with their product strategy. Why?

Because creating a product strategy and translating it into actionable quarterly Objectives and Key Results (OKRs) is not easy if you don't have a clear understanding of the fundamental value these practices offer. If you do, the process can become more manageable and effective.

In this article, we'll share key takeaways and valuable insights from our webinar "From Product Strategy to Quarterly OKRs" with Tim Herbig. Tim is a top PM voice in product strategy, and OKRs and an expert in making sure they're aligned. In the webinar, he offered a practical approach to developing a product strategy and converting it into quarterly OKRs; We gathered the key takeaways for you below.

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Understanding the value of product strategy

The main value of a product strategy lies in its ability to guide the product team in saying "no" to opportunities. This guidance should span a timeframe of 6 to 18 months and be based on user and market data, as well as company priorities.

A product strategy should help you focus on what's essential and avoid distractions that don't align with your long-term goals.

Key components of a product strategy

A product strategy can be broken down into three fundamental patterns:

1. Strategic narrative: This answers the "why" behind your actions. Why is your team the right one to tackle this challenge, and why now?

2. Playing field: This defines "for whom" you are creating value. It includes your target audience, the jobs you're solving for them, and the alternatives they might consider.

3. Winning moves: This outlines "how" you will serve your audience and differentiate from competitors.

By focusing on these patterns, you can select the components that best articulate your product strategy, such as your company strategy, user segments, value propositions, and distribution channels.

Aligning product strategy with company strategy

Product strategy should fit within the broader company strategy. It's essential to understand the company's strategic choices and constraints to ensure coherence and alignment at the product level.

For example: if a company decides to expand to a new market, the product strategy should reflect this by focusing on the segments and audiences relevant to that market.

Translating product strategy into quarterly OKRs

Once you have a clear product strategy, the next step is to develop quarterly OKRs that guide your team in measuring progress towards strategic priorities.

OKRs consist of an inspiring objective complemented by 2 to 5 measurable key results. These should be responsive to your team's actions and provide a clear indication of progress.

From lagging to leading indicators

When setting OKRs, it's helpful to differentiate between lagging and leading indicators.

1. Lagging indicators: These are outcomes that result from past actions.

2. Leading indicators: These predict future outcomes and can be influenced by current actions.

By reverse-engineering the customer journey, you can identify behaviors and actions that lead to your desired outcomes and use these as the basis for your OKRs.

Example: Creating OKRs for a car marketplace

Let's consider a car marketplace company focusing on luxury cars in Europe, with a goal to expand to the US market. The product team responsible for the intake process of cars onto the platform might have a product strategy that includes focusing on US sellers of vintage premium cars and offering value propositions like no-touch vetting and quick physical intake.

For this team, a lagging indicator might be the number of ready-to-sell vintage cars on the platform. Leading indicators could include the number of registered US sellers, the number of started intake processes, and the number of cars vetted. These leading indicators can then be translated into quarterly OKRs to measure the team's progress and guide their actions.

Here are some extra tips from Tim on designing your OKR cycle and how it relates to your strategy.

Actionable guide: How to conduct an OKR retrospective

Conclusion

Developing a product strategy and converting it into quarterly OKRs is a structured process that requires a clear understanding of the value these practices provide.

By focusing on the fundamental patterns of product strategy and aligning them with company strategy, product teams can create actionable OKRs that measure progress and guide decision-making. Always remember that the goal is not to adhere to rigid frameworks but to adopt practices that are contextual and provide fundamental value to your team and organization.

Additional resources on product strategy and OKRs

• The Ultimate Guide to Product Strategy

• The Ultimate Guide to Product OKRs

• 2024 Enterprise OKRs: A Strategic Guide for Effective Planning

• How To Choose the Right Product Strategy Framework (With Examples)

• How to Align OKRs with Product Strategy and Business Objectives

• The Ultimate Cost of A Bad Product Strategy

• Downloadable checklist: 5 Actionable Steps for Crafting Your Product Strategy

• How to Write Effective OKRs in 5 Steps (+7 Mistakes to Avoid)

• Downloadable checklist: How to Know it's Time to Pivot on your OKRs

• How to Drive Customer-Centric Product Development with OKRs (Insights from Jeff Gothelf)

• Is There a Perfect Way To Set OKRs? Insights From airfocus’ Own Journey

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