How to Answer Product Strategy Questions
Product Strategy interview questions evaluate your skills as a product manager to assess various strategic paths for a product or company and make an informed decision as the path forward.
The product strategy questions are meant to assess your ability to:
1. Clarify the question
Your main objective at this step is to narrow down the scope of the question. In some cases, the question is already specific enough that you don’t need to go any further into narrowing it down. Let’s say the question was “Should Instagram add shopping experience to its website / app?” In this case the scope of the question is clear and you already know what the question example asks.
If the question was “What should be Netflix’s strategy moving forward?”, you would like to ask some clarification questions such as “Are we talking about the strategy from a particular angle such as business strategy?” or “Is there an objective such as revenue growth or user growth we’d like to focus on?” to help you narrow down the scope of the question. Note that it is possible that the interviewer’s response to your question might be that “You can make your own assumptions” or “You tell us what it should be”. In this case, you are given more freedom to choose the path to move forward.
It is also important to ask some questions around the current status of the company and why it is considering a shift in strategy or launch of a new product. In the Instagram question, you can ask “Why is Instagram considering adding shopping? Is there something wrong with its current revenue model?”. In the Netflix example, you can ask “What is the current status of Netflix? Are the users churning?”. The interviewer’s answers to your questions about the current status of the company and product will help you prioritize the right strategy.
2. Describe the company & product
This is your chance to quickly showcase your understanding of the product and the company. If the product is something you have not interacted with in the past, ask the interviewer if your understanding of the product is correct before moving on. You should not spend too much time on this.
You might have heard that you can apply the SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis to come up with an answer. While this is one way of applying a framework for product strategy answers, it is recommended to think broader than just the SWOT analysis. You can think of the product’s (or company) strengths and weaknesses as something you highlight at this stage. The Opportunities are described later in the Strategic Choices section and Threats are generally only part of the evaluation process of your strategic choices. We will talk more about this later.
Regardless, it sometimes makes sense to talk about the strengths and weaknesses of the company and the product that you are evaluating. For example, Instagram’s strengths are its strong network of celebrities and people, high stickiness among the younger generation. And its weaknesses can be too much reliance on ads as a source of revenue which is a friction point in the user experience.
In the Netflix example, you can highlight the experience in dealing with and partnership with studios, the large user base, and large volume of video content as the strengths of Netflix. And in terms of weaknesses, you can highlight the fact that the company is highly dependent on the studios who might decide to build their own distribution network one day.
Here, it is helpful for you to highlight the priorities of the company as you are aware of it and how these priorities will affect their products. For example, you can highlight that Instagram would most likely prioritize driving engagement and UX further to strengthen its network and increase its revenue. And you can argue that, given the video streaming market is still new, it’s important for Netflix to continue prioritizing growth in user base as a key objective when evaluating its strategic choices.
3. List your strategic choices
The strategic choices are obvious in some questions. In the Instagram example, the options are
4. List your evaluation criteria
The criteria for evaluating your strategic choices should be high level. Some examples of good evaluation criteria are UX, revenue, execution, and effort. These criteria are easy to remember and you can always pick and choose the relevant ones during the session.
You’ll also want to add specific criteria that are more relevant to the particular situation that you are assessing.
An important note here is that some people recommend that you apply strategy consulting frameworks such as Porter’s Five Forces analysis to answer product strategy questions. The challenge with the consulting strategy frameworks is that they don’t consider all the relevant aspects of a tech product. For example, the importance of engagement is undervalued in a Porter’s Five Forces framework. A better approach is to think about the key lenses from which you’d like to evaluate your choices (this is very similar to how strategic choices are evaluated in the real world). Just imagine how you would tackle a product strategy question if the task was assigned to you in your job as a product manager in the real world.
For the Instagram example, you can evaluate your strategic choices from the user experience, engagement, revenue, and implementation effort on the network perspectives. There are other evaluation criteria I could have used (e.g. competitive landscape) however, since you have limited time, bring up the criteria that are more relevant to your particular company, product and the strategic options that you’ve highlighted earlier.
In the Netflix example, you can evaluate your strategic choices based on user experience, user base, revenue, competitive landscape, and implementation effort perspectives. Similar to Instagram, you can list additional criteria here but each company usually has sets of priorities at each stage of the company's lifecycle and by looking at the company priorities, you can think of more meaningful criteria here. For example, Netlflix has been focused on growing their user base and you can argue that since the market is still new with low adoption in many parts of the world, it’s important to consider growth in user base as a key evaluation criteria.
5. Evaluate each strategic choice
For each evaluation criteria, provide a brief summary of pros and cons of each strategic choice. This is your chance to showcase your ability to think holistically about the product and the key high level perspectives you must keep in mind when making important decisions.
In the Instagram example, you can explain that enabling users to purchase merchandise they have seen on Instagram with a click enhances the user experience while in some rare scenarios some users might also have a bad experience due to receiving faulty products or becoming victims of scams.
From an engagement perspective, you can highlight the fact that the shopping experience can increase engagement for the users as it enables the user to continue engaging with Instagram if they are interested in purchasing a particular product they have discovered on Instagram. And it will also incentivize celebrities and brands to invest more time and money in engaging with their users on Instagram.
From a revenue perspective, you can highlight that a shopping feature enables Instagram generate revenue from the transaction fees of the sales, and make additional revenue from the additional ads that the shops will be running to drive their Instagram shops.
From an implementation effort perspective, explain that e-commerce is a complex business with lots of moving parts such as payment, order tracking, and marketing so entering into this business will require significant investment from Instagram to either build these technologies or it has to find the right partners such as Shopify who are willing to offer the capabilities within Instagram.
You can apply a similar model to Netflix and say that from a user experience perspective, offering gaming or music streaming does not necessarily enhance the existing Netflix user’s experience as the use cases are very different. However, offering premium content can be a great way to enhance the experience of the users who are willing to pay more for premium content and are unhappy with the fact that they cannot watch best selling movies on Netflix. You can also mention that Netflix can significantly improve the UX of its users by creating its own premium content which costs less to produce.
From a user base perspective, you can highlight that entering new regions is great because the user base will increase. But increasing prices is not a good idea because the focus of the company at this time is growing the number of users. And offering self-created premium content will result in more user sign ups in existing markets due to their exclusivity aspects.
From a revenue perspective, you can mention that entering new regions or producing exclusive content will result in more revenue as new users join the platform. You can also mention that entering new functionalities such as Music and Streaming can be financially lucrative for the company in the long run.
From a competitive landscape perspective, you can say that entering new markets is a good way to stay ahead of the competition but increasing pricing is not. Launching new businesses such as music or VR streaming will distract the company from its current market. And creating exclusive content enables Netflix to be more self sufficient and independent from studios who are considering setting up their own distribution channels.
And from an implementation effort perspective, entering the music or gaming or VR businesses is not easy because these are new businesses with different sets of industry players that Netflix does not have existing relationships with. Or that entering new geographical markets is easy for Netflix since it has already obtained lots of experiences in this area. And creating exclusive content can be hard in the initial days but Netflix has lots of valuable user data that helps it predict the success of a new movie or TV show.
6. Make a recommendation
After evaluating your strategic choices from various perspectives, you can make a recommendation. This is your chance to present your ability to take various perspectives and pros and cons into consideration and then make an informed decision. Here, you can provide a quick summary of your evaluation in step 5.
In the Instagram example, you can say that “Given that by adding shopping to Instagram, we can enhance the user experience and engagement among the users and generate additional revenue from enabling its celebrities and brands to sell on Instagram, it is worth implementing a shopping experience. However, we should minimize the implementation efforts and address the risks associated with negative shopping experiences by partnering with experienced ecommerce platform providers such as Shopify, who are interested in offering the ability to sell on Instagram to their merchants.”
For the Netflix example, you can say that “Given the current state of the online streaming industry and its early days, it makes sense for Netflix to focus on strategies that can help it to continue growing its user base. And out of the various strategic choices that I have considered, the most interesting ones are entering new markets such as new regions and creating exclusive premium content which gives additional incentives for people to sign up to Netflix.”
I have gathered a list of product strategy interview questions for you to practice.
The product strategy questions are meant to assess your ability to:
- Have a structured thinking process in dealing with abstract situations,
- Comprehend a company’s strengths and weaknesses,
- Determine strategic choices for the company and the product,
- Carefully analyze and evaluate pros and cons of your options from various aspects, and
- Make a meaningful executive decision that considers all the key aspects of the decision
1. Clarify the question
Your main objective at this step is to narrow down the scope of the question. In some cases, the question is already specific enough that you don’t need to go any further into narrowing it down. Let’s say the question was “Should Instagram add shopping experience to its website / app?” In this case the scope of the question is clear and you already know what the question example asks.
If the question was “What should be Netflix’s strategy moving forward?”, you would like to ask some clarification questions such as “Are we talking about the strategy from a particular angle such as business strategy?” or “Is there an objective such as revenue growth or user growth we’d like to focus on?” to help you narrow down the scope of the question. Note that it is possible that the interviewer’s response to your question might be that “You can make your own assumptions” or “You tell us what it should be”. In this case, you are given more freedom to choose the path to move forward.
It is also important to ask some questions around the current status of the company and why it is considering a shift in strategy or launch of a new product. In the Instagram question, you can ask “Why is Instagram considering adding shopping? Is there something wrong with its current revenue model?”. In the Netflix example, you can ask “What is the current status of Netflix? Are the users churning?”. The interviewer’s answers to your questions about the current status of the company and product will help you prioritize the right strategy.
2. Describe the company & product
This is your chance to quickly showcase your understanding of the product and the company. If the product is something you have not interacted with in the past, ask the interviewer if your understanding of the product is correct before moving on. You should not spend too much time on this.
You might have heard that you can apply the SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis to come up with an answer. While this is one way of applying a framework for product strategy answers, it is recommended to think broader than just the SWOT analysis. You can think of the product’s (or company) strengths and weaknesses as something you highlight at this stage. The Opportunities are described later in the Strategic Choices section and Threats are generally only part of the evaluation process of your strategic choices. We will talk more about this later.
Regardless, it sometimes makes sense to talk about the strengths and weaknesses of the company and the product that you are evaluating. For example, Instagram’s strengths are its strong network of celebrities and people, high stickiness among the younger generation. And its weaknesses can be too much reliance on ads as a source of revenue which is a friction point in the user experience.
In the Netflix example, you can highlight the experience in dealing with and partnership with studios, the large user base, and large volume of video content as the strengths of Netflix. And in terms of weaknesses, you can highlight the fact that the company is highly dependent on the studios who might decide to build their own distribution network one day.
Here, it is helpful for you to highlight the priorities of the company as you are aware of it and how these priorities will affect their products. For example, you can highlight that Instagram would most likely prioritize driving engagement and UX further to strengthen its network and increase its revenue. And you can argue that, given the video streaming market is still new, it’s important for Netflix to continue prioritizing growth in user base as a key objective when evaluating its strategic choices.
3. List your strategic choices
The strategic choices are obvious in some questions. In the Instagram example, the options are
- Add shopping to Instagram or
- Don’t add shopping to Instagram.
- Enter new regions such as new countries or low internet speed places,
- Increase prices,
- Enter new businesses such as streaming music,
- Offer new products such as premium movies streaming or VR, and
4. List your evaluation criteria
The criteria for evaluating your strategic choices should be high level. Some examples of good evaluation criteria are UX, revenue, execution, and effort. These criteria are easy to remember and you can always pick and choose the relevant ones during the session.
You’ll also want to add specific criteria that are more relevant to the particular situation that you are assessing.
An important note here is that some people recommend that you apply strategy consulting frameworks such as Porter’s Five Forces analysis to answer product strategy questions. The challenge with the consulting strategy frameworks is that they don’t consider all the relevant aspects of a tech product. For example, the importance of engagement is undervalued in a Porter’s Five Forces framework. A better approach is to think about the key lenses from which you’d like to evaluate your choices (this is very similar to how strategic choices are evaluated in the real world). Just imagine how you would tackle a product strategy question if the task was assigned to you in your job as a product manager in the real world.
For the Instagram example, you can evaluate your strategic choices from the user experience, engagement, revenue, and implementation effort on the network perspectives. There are other evaluation criteria I could have used (e.g. competitive landscape) however, since you have limited time, bring up the criteria that are more relevant to your particular company, product and the strategic options that you’ve highlighted earlier.
In the Netflix example, you can evaluate your strategic choices based on user experience, user base, revenue, competitive landscape, and implementation effort perspectives. Similar to Instagram, you can list additional criteria here but each company usually has sets of priorities at each stage of the company's lifecycle and by looking at the company priorities, you can think of more meaningful criteria here. For example, Netlflix has been focused on growing their user base and you can argue that since the market is still new with low adoption in many parts of the world, it’s important to consider growth in user base as a key evaluation criteria.
5. Evaluate each strategic choice
For each evaluation criteria, provide a brief summary of pros and cons of each strategic choice. This is your chance to showcase your ability to think holistically about the product and the key high level perspectives you must keep in mind when making important decisions.
In the Instagram example, you can explain that enabling users to purchase merchandise they have seen on Instagram with a click enhances the user experience while in some rare scenarios some users might also have a bad experience due to receiving faulty products or becoming victims of scams.
From an engagement perspective, you can highlight the fact that the shopping experience can increase engagement for the users as it enables the user to continue engaging with Instagram if they are interested in purchasing a particular product they have discovered on Instagram. And it will also incentivize celebrities and brands to invest more time and money in engaging with their users on Instagram.
From a revenue perspective, you can highlight that a shopping feature enables Instagram generate revenue from the transaction fees of the sales, and make additional revenue from the additional ads that the shops will be running to drive their Instagram shops.
From an implementation effort perspective, explain that e-commerce is a complex business with lots of moving parts such as payment, order tracking, and marketing so entering into this business will require significant investment from Instagram to either build these technologies or it has to find the right partners such as Shopify who are willing to offer the capabilities within Instagram.
You can apply a similar model to Netflix and say that from a user experience perspective, offering gaming or music streaming does not necessarily enhance the existing Netflix user’s experience as the use cases are very different. However, offering premium content can be a great way to enhance the experience of the users who are willing to pay more for premium content and are unhappy with the fact that they cannot watch best selling movies on Netflix. You can also mention that Netflix can significantly improve the UX of its users by creating its own premium content which costs less to produce.
From a user base perspective, you can highlight that entering new regions is great because the user base will increase. But increasing prices is not a good idea because the focus of the company at this time is growing the number of users. And offering self-created premium content will result in more user sign ups in existing markets due to their exclusivity aspects.
From a revenue perspective, you can mention that entering new regions or producing exclusive content will result in more revenue as new users join the platform. You can also mention that entering new functionalities such as Music and Streaming can be financially lucrative for the company in the long run.
From a competitive landscape perspective, you can say that entering new markets is a good way to stay ahead of the competition but increasing pricing is not. Launching new businesses such as music or VR streaming will distract the company from its current market. And creating exclusive content enables Netflix to be more self sufficient and independent from studios who are considering setting up their own distribution channels.
And from an implementation effort perspective, entering the music or gaming or VR businesses is not easy because these are new businesses with different sets of industry players that Netflix does not have existing relationships with. Or that entering new geographical markets is easy for Netflix since it has already obtained lots of experiences in this area. And creating exclusive content can be hard in the initial days but Netflix has lots of valuable user data that helps it predict the success of a new movie or TV show.
6. Make a recommendation
After evaluating your strategic choices from various perspectives, you can make a recommendation. This is your chance to present your ability to take various perspectives and pros and cons into consideration and then make an informed decision. Here, you can provide a quick summary of your evaluation in step 5.
In the Instagram example, you can say that “Given that by adding shopping to Instagram, we can enhance the user experience and engagement among the users and generate additional revenue from enabling its celebrities and brands to sell on Instagram, it is worth implementing a shopping experience. However, we should minimize the implementation efforts and address the risks associated with negative shopping experiences by partnering with experienced ecommerce platform providers such as Shopify, who are interested in offering the ability to sell on Instagram to their merchants.”
For the Netflix example, you can say that “Given the current state of the online streaming industry and its early days, it makes sense for Netflix to focus on strategies that can help it to continue growing its user base. And out of the various strategic choices that I have considered, the most interesting ones are entering new markets such as new regions and creating exclusive premium content which gives additional incentives for people to sign up to Netflix.”
I have gathered a list of product strategy interview questions for you to practice.
Like
Dislike