On Product Strategy

Product strategy is often discussed in terms of features, growth, and market positioning, but at its core, it is about trade-offs. Every decision optimizes for one outcome at the expense of another, and the worst failures stem not from lack of effort but from failing to recognize which trade-offs are being made—intentionally or otherwise.

Let's break this down through three critical but often overlooked principles: value asymmetry, customer segmentation misalignment, and engagement paradoxes; and explore how even successful products can fall into these traps.

Value Asymmetry

Every product delivers value in two directions: to the company and to the customer. The best products create a balance where both sides benefit proportionally, but value asymmetry occurs when the perceived or actual value exchange becomes lopsided.

Take World of Warcraft (WoW) as an example. It operates on a subscription model, meaning its optimal revenue scenario is players who pay every month but use minimal resources. However, the game itself is designed to encourage heavy playtime, catering to users who invest enormous hours into grinding content. These highly engaged users, while important, aren't necessarily the most profitable.

This imbalance is a classic Pareto Principle failure: 20% of users drive 80% of engagement, but they don't necessarily drive 80% of profit. WoW's product decisions often optimize for the loudest, most engaged players, leaving casual player, who might pay just as much but with lower engagement, struggling to keep up. The result? High churn among casuals and an over-reliance on the most hardcore segment, shrinking long-term mass appeal.

The same happens in SaaS and subscription models where companies overbuild for power users while alienating a broader customer base. The key takeaway: Optimize for the most valuable customers, not the most vocal.

Customer Segmentation Misalignment

Understanding who your ideal customer is sounds simple, but many companies get it wrong—not because they don't know their customers, but because they listen too much to the wrong ones.

Consider Google Stadia, Google's failed attempt at cloud gaming. The platform was pitched as a game-changing technology that let users stream high-quality games without expensive hardware. However, the business model was fundamentally flawed: it required users to pay full price for games that they didn't own physically or digitally; an unattractive proposition for console and PC gamers who already had better alternatives.

The product was engineered for technological novelty, not customer need. Hardcore gamers didn't want it because they preferred ownership and performance. Casual gamers weren't interested because they weren't buying $60 games to play occasionally. In trying to cater to both, Stadia failed to serve either.

This is a segmentation failure: an excellent product for a customer base that doesn’t exist in the way the company imagined. Successful product strategy is about ensuring that your best customers—not just any customer—can fully adopt and sustain the business model.

The Engagement Paradox

Companies often conflate engagement with value, assuming that the more time a customer spends using a product, the better. But in many cases, the opposite is true: the best user experience is one that delivers maximum value in the least amount of time.

This is why platforms like Google Search or Uber optimize for reducing time-to-value. A perfect Google Search result is the one you never have to refine. A perfect Uber ride is the one that gets you to your destination faster. Yet many products fail to recognize that forcing engagement can create friction.

A prime example is LinkedIn's messaging system. Users want a quick, efficient way to network, but LinkedIn keeps tweaking the system to encourage longer interactions by offering AI-generated responses, "open to work" badges, more notifications, etc. The result? More noise, more time spent filtering irrelevant messages, and less actual value.

The same applies to internal company tools. Many enterprise platforms optimize for user engagement instead of minimizing friction. Slack, for instance, boosts engagement but can also create cognitive overload, making deep work harder. The best productivity tools don't just increase interaction; they optimize efficiency.

For a strong product strategy, ask: Does engagement lead to retention, or is it just masking inefficiencies in the user experience?

The Hidden Trade-offs in Product Strategy

Product strategy isn't about building more; it's about building right. That requires understanding the hidden trade-offs in every decision:

• Are we optimizing for the most valuable customers or just the most engaged?
• Are we solving a problem for a real segment, or just the one we wish existed?
• Are we pushing for more engagement when users really want less friction?

Companies that fail to navigate these trade-offs often build impressive but unsustainable products. Those that get it right, like Amazon, Google, and Apple, intentionally design for efficiency, sustainability, and the right customer behaviors.

True product strategy isn't about innovation for its own sake. It's about ensuring that every decision aligns with the value exchange that drives long-term success.