Product Strategy for internal products
A well thought out and communicated product strategy provides a powerful decision filter for decisions about your internal product.
There are three aspects to product strategy. One you hear about quite a bit, the other two, not as much. All three are important for teams working on internal products.
The first aspect is creating your product strategy. You hear about this quite a bit along with a healthy dose of frameworks and ad libs like techniques.
The second aspect is how you communicate your product strategy. There doesn’t seem to be a ton of communication about communicating product strategy.
The third aspect is what you do with said product strategy. This topic doesn't get as much conversation as the first either, which is a pity. Knowing what you're going to use something for might provide some clarity on how you create it and communicate it.
And all of those observations relate to product strategy for B2C and B2B products. It’s even harder to find much covering product strategy for internal products.
So in this issue, I’m going to take what I can find out there about product strategy and apply it to internal products.
Note that I’ve avoided (except for this note) the term “internal product strategy”. I figured that particular modifier would get interpreted in all the wrong ways. Just like slapping “agile” on the beginning of an concept leads to all kinds of unintended consequences. (Think agile product management).
Creating your product strategy for internal products
Like I said, there are tons of resources out there that tell you how to create a product strategy, most of which suggest a workshop setting to walk through some form of canvas. Most of the articles miss the necessary research into your company strategy, capabilities and the people you’re trying to serve.
I appreciate Tim Herbig’s perspective on product strategy, especially this particular point:
The real value of Product Strategy comes from enabling teams to confidently say yes or no to opportunities over the next ~6-18 months. Any framework or template should serve this purpose, not become an end in itself.
So in general, a product strategy helps product teams make informed decisions that align with organizational objectives. To do that the product strategy should address key questions:
Who are your customers?
What problem does your product solve?
How will you differentiate in a crowded market?
For the specific instance of internal products, those questions become:
Who are users and what are their needs?
What process does this product support?
How does the product enable business outcomes?
You still need to research the people you’re serving with the difference being is those people will most likely include folks inside your organization. The same discovery techniques that are helpful for understanding customers will help here. Plus, you should have better access to your potential users, including being able to observe them as they do their work.
You’ll also want to set specific measurable goals tied to business objectives. Depending on the process you support, those metrics may be things like:
Number of claims processed in a week
Cycle time to set up a new account
Pricing error percentage
Of course if your customers have some interaction with your internal product (such as a banking app), you may be able to establish metrics more closely related to customer behavior as you would for a purely customer facing product.
Communicating your product strategy for internal products
If you want your team to use product strategy to make decisions about their product, they have to know what it is. In an ideal world, the product team played a part in creating the product strategy so they should know what it is, but they may need the occasional reminder.
But let’s pretend for a minute we don’t live in a perfect world and the product team isn’t involved in creating the product strategy for their product. In that case, they need to know what it is in a way that they can use it to make decisions.
Then there’s the need to communicate the product strategy outside of the product team, if for no other reason to convey why the team made the decisions they made regarding what to do, what not to do, and the order in which they are doing the things they chose.
In this particular instance, the same communication mechanisms are probably fairly similar for both customer facing products and internal products. The audiences may be a little different.
For internal products you need to make sure you keep the stakeholders impacted by and interested in your product informed about the criteria you use to make product decisions.
As for the methods to communicate product strategy, I thought I’d refer to ProductPlan’s 2025 State of Product Management Report. The report is based on a survey they ran during the last quarter of 2024. According to the report,
Respondents were generally happy with how they communicated strategy, but not quite as satisfied with how people understood strategy
Here are the survey respondent’s choices for most effective method for communicating product strategy
And here’s how the respondents ranked those communication methods with respect to communication effectiveness and understanding.
I’ll let you draw your own conclusions about what communication method will work best for you. And I also suggest you get the whole report. It’s a good read, but I may be biased.
Using your product strategy for internal products
If you haven’t guessed already, you use a product strategy to guide your product decisions. Specifically, to decide what you are going to do, and in what order.
It’s a decision filter for your product.
From an internal product standpoint, having that guide is helpful cover when you decide not to implement changes from a particularly vocal stakeholder when they don’t contribute to what you’re trying to accomplish.
When used properly it helps your decisions appear less arbitrary and capricious.
You can best employ your product strategy as a decision filter through thoughtful use of a Now - Next - Later product roadmap.
Keep in mind that referring to the product strategy is an ongoing activity. Every time you have some new feedback, or you need to update that roadmap, it’s time to refer back to that product strategy and let it guide your decisions.
What’s been your experience with product strategy?
For all those folks out there who work on internal products, I'm curious:
Do you have a product strategy?
Who created it?
How did they create it?
How did they communicate it?
How do you use it ?
Let me know if you have any particularly informative experiences you’d like to share.
Thanks for reading
Thanks again for reading InsideProduct.
If you have any comments or questions about the newsletter, or there’s anything you’d like me to cover, let me know.
Talk to you next time,
Kent