The DHM Model to craft Product Strategy
10 min read on how Gibson Biddle did product strategy at Netflix.
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I have adored Gibson Biddle’s (Former VP of Product @Netflix) approach to Product Strategy. And he explains his approach wonderfully through his product strategy essays.
And back in the days, I posted a decently viral post on X about it:
In today’s newsletter I want to give a prime on what his approach is.
With this, I aim to help you get his approach within a reading time of 10 to 15 minutes maximum, and then if you choose to - you can still read all his essays too.
So lets go right in.
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According to Gibson Biddle (ex Netflix Product Leader), Product Strategy simply is an answer to the question:
“How will your product delight customers in hard-to-copy, margin-enhancing ways?”
And further it can be broken down into three questions:
1. How will the product delight customers? (D)
2. What will make the product hard to copy? (H)
3. What business model experiments are required to build a profitable business? (M)
And above three constitutes the DHM model to craft the product strategy.
To effectively address the questions regarding product delight, uniqueness, and business model experimentation, consider the following structured approach:
1. How Will the Product Delight Customers? (D)
Understanding Customer Needs: Identify the specific needs and pain points of your target customers. Conduct surveys, interviews, or focus groups to gather insights into what features or benefits they value most.
Creating Unique Value Propositions: Develop a compelling value proposition that clearly articulates how your product solves customer problems or enhances their experience. This could involve superior quality, innovative features, or exceptional customer service.
Enhancing User Experience: Focus on the user experience by ensuring that the product is easy to use and aesthetically pleasing. Consider usability testing to refine product design based on real user feedback.
Building Community and Engagement: Create a community around your product through social media engagement, loyalty programs, and customer feedback loops. This fosters a sense of belonging and encourages repeat purchases.
2. What Will Make the Product Hard to Copy? (H)
Intellectual Property Protection: Secure patents or trademarks for unique features or branding elements of your product. This legal protection can deter competitors from imitating your offerings.
Creating a Strong Brand Identity: Develop a strong brand that resonates with customers. A loyal customer base is less likely to switch to competitors, even if they offer similar products.
Leveraging Technology and Innovation: Invest in proprietary technology or processes that enhance the product's functionality or efficiency. Continuous innovation can keep your product ahead of competitors.
Building Relationships with Suppliers and Partners: Establish exclusive agreements with suppliers or partners that make it difficult for competitors to access similar resources or capabilities.
3. What Business Model Experiments Are Required to Build a Profitable Business? (M)
Hypothesis Development: Formulate hypotheses about potential business models based on market research and customer feedback. For example, test whether a subscription model increases customer retention compared to one-time purchases
Designing Experiments: Implement small-scale experiments using test and control groups to assess different business models. This could involve varying pricing strategies, promotional tactics, or distribution channels
Analyzing Results and Pivoting: After conducting experiments, analyze the data to determine which models are most effective. Be prepared to pivot based on findings; for instance, if a particular pricing strategy leads to higher sales but lower margins, consider adjustments
Continuous Learning and Iteration: Foster a culture of experimentation within your organization where teams are encouraged to test new ideas regularly. This iterative approach allows for ongoing refinement of business strategies based on real-world performance
The next step is to create a list of ideas and hypothesis that you believe will delight customers, will be hard to copy and margin-enhancing.
Then run experiments, qual/quant surveys or live tests to understand whether they actually are D,H or M.
Over a period of weeks and months, you should be able to get to a map of what ticked all boxes of DHM and what ticked only some or none of the boxes.
But in general it is not possible to explore so many ideas and hypothesis in a short period of time, so every year as a way to lay down your product strategy, you should target setting the top 5 or 6 product strategic directions you want to experiment and validate, leading to the Strategy-Metric-Tactic lockup as below:
It is extremely important to decide the right metric to move for each strategic direction.
This is where proxy metrics come in.
Proxy metrics help understand more early indicating and more sensitive metrics.
For example, it is not possible to always measure the retention metrics for all strategic directions
Lower-level metrics — proxy metrics — are easier and faster to move than high-level engagement metrics.
To find your low-level metrics, you have to ask fundamental questions.
If customer experience (lets call it X) will improve retention, that ask how do you measure X? and how is X linked to retention?
Going into specific behaviors of customers during the customer experience X and then find which behavior you want to repeat more (and which ones less) will help you find your low-level metric.
The proxy metric we devised was “the percentage of new members who add at least three titles to their queue during their first session.” (instead of just directly measuring retention of users)
simplified as: Percentage of (members/new customers/returning customers) who do at least (the minimum threshold for user action) by (X period in time).
Now once you have a strategy and the swimlanes defined as shown above, you might want to plan for the near term, and understand your rolling roadmap.
The roadmap is an artifact — an expression — of your product strategy.
Also, roadmap helps align resources and plans over next few months - even if the roadmap timelines may move.
So far we have discussed how to come with product strategy and its translation into roadmap.
However, product leaders are often required to create big enough product vision and need product teams to also think longterm.
This is where the GLEe model comes in. It helps teams to think much bigger, long-term and sequence or phase the approach to build the product. The GLEe model focuses on 10-15 years
The GLEe model is derived from the first word of product vision, that should emphasise what to Get Big on, where to Lead and where to Expand.. hence the GLEe.
Netflix Product Vision
1. Get big on DVDs
2. Lead downloading
3. Expand worldwide
And these three statements can be treated as three phases and not that all three have to be done simultaneously.
So if you think in terms of multi-years, each step in GLEe needs lot of work over multiple years before progressing to next:
As Netflix got big on DVDs, personalization powered the merchandising of high-quality, high-margin titles.
In the early days of streaming, when Netflix had limited content, personalization helped members narrow down the small number of titles that were “just right” for them.
As Netflix expanded globally, personalization helped connect members with movies they loved, regardless of nationality.
Note: This edition of newsletter is inspired from Gibson Biddle’s Essays and the content plus images used are directly used from the original link. It is an effort to bring a short version of known strategic frameworks to the audience.