Think about the products you can’t get enough of – maybe it’s Billie razors, your Spotify weekly playlist, or Miro’s collaboration boards.
What are the features that stand out? And what prevents you from getting something similar from another company?
For years, former Netflix VP Gibson Biddle has been laser-focused on these questions.
Here’s his model for developing a winning product strategy.
The three core elements of a winning product strategy
Gibson encourages leaders to brainstorm around three questions to develop a product strategy:
- How will the product delight customers?
- What will make the product hard to copy?
- How will the product generate margin?
The resulting strategy is called the DHM Model. Let’s walk through it step-by-step.
1. Delight customers
First, think about how your product delights customers, and what you could do to make it even more delightful. We’ll look at Netflix as an example.
Netflix has considered many of the following ideas:
- Next-day delivery of DVDs
- Personalized choices for each user
- Autoplay on episodes after they end
- Autoplay on shows as they appear in your menu
- Categorizing movies in fun ways (see: “short-ass movies”)
- Original content (see Stranger Things or Orange Is the New Black)
- Downloadable videos for airplane travel
- News and current events
- Live sports
- Ability to skip the intro credits of a show (one of our favorites)
- Recommendations from family and friends
- Ability to personalize your avatar with a character
- Categories like “trending now” and “popular on Netflix”
Brainstorm a similar list for your product – what are things you could try that would delight and satisfy your customer?
2. Be hard to copy
Some products just can’t be replicated, no matter how hard competitors try.
Take Spotify, for example. If you are a longtime user who jumps to a different music streaming service, they might promise personalized playlists, but if they don’t have years worth of data on what you like to listen to, it’s going to be a very different, and likely inferior, experience.
Gibson breaks down “hard to copy” strategy into seven powers, borrowed from Hamilton Hower:
- Brand. A well-built brand is hard to compete with. You’re unlikely to switch to a new music competitor if you trust and believe in Spotify.
- Network effects. If your friends all use Spotify and share their playlists with you, you’re less likely to move to a competitor where none of your friends are.
- Economies of scale. Because Spotify controls 31% of the music market (double that of its nearest competitor, Apple), it can invest more in new features and “surprise and delight” creations like Spotify Wrapped.
- Counter-positioning. If you can offer something that your competitors can’t, you have a rare power. When Apple debuted a 30-day free trial period to compete with Spotify’s, Spotify extended theirs.
- Switching costs. If you’ve spent 10 years building personal playlists, libraries, and recommendations on Spotify, the cost of “starting over” at a new music provider will seem like too much work.
- Process power. Develop unique, hard-to-copy processes, and your competitors will struggle to catch up with you because processes take time and manpower to create.
- Captured resource. Gibson says “the closest example of this power is a patent” – but it can also be a set of people on the executive team, a set of loyal customers, or artists who don’t do business elsewhere.
To apply this to your own company, think of ways your product might create a hard-to-copy advantage.
3. Enhance your margins
For years, McDonald’s reigned as the king of cheap eats — largely due to their dollar menu.
The prospect of an inexpensive double cheeseburger proved to be a massively successful way for the fast food giant to draw in budget-conscious customers, but individual franchisees continually pushed back on the grounds that they were forced into selling food at a loss.
The situation, which ultimately led to a rocky process of the dollar menu being phased out, tweaked, and ultimately restructured, is a reminder that what’s popular for customers might not always be economically viable.
Under the DHM model, Biddle emphasizes the importance of experimenting to find the sweet spot where products can simultaneously delight their audience while expanding margins.
Apply it to your company
Exercise 1: Write down how your product delights customers today, then brainstorm how it might delight them more in the future.
Exercise 2: List the ways your product might create a hard-to-copy advantage.
Exercise 3: Think about how you might restructure your business model to generate more profit.
Want to learn more from Gibson Biddle? Sign up for the Measuring Product Success workshop.