A good answer builds to a logically defensible strategy that you can summarize in a few sentences, but a great answer includes more than a solid strategy. Aim to come to an incisive understanding of the landscape, synthesizing your exploration into new insights. These insights will be the basis of your strategy, but they should also open up future possibilities.

You also want to save a few minutes to discuss what you’d do differently given more information, discuss risk mitigation strategies, or describe how your long-term vision would evolve.

The thought of doing all that in 40 minutes may be intimidating, but remember that interviewers care more about your process than your final answer.

A framework for answering product strategy questions

Follow this 7-step process to get you started.

Step 1: Clarify the problem
Step 2: Define the product, company, or industry goals
Step 3: Define the landscape
Step 4: Define guiding principles
Step 5: Establish an option set
Step 6: Make your decision and argue for it
Step 7: Evaluate and recap

Note that under this framework, you won’t start generating options until step 5. This is key. It’s impossible to make good decisions without understanding the task at hand (clarifying the problem), where you are (defining the landscape), and where you’re trying to go (product/company/industry goals.) We recommend you spend up to 50% of your time on steps 1 through 4.

Let’s work through an example. Assume you’ve been asked “What’s the biggest threat to YouTube over the next 5 years?”

Step 1: Clarify the problem

First, take time to clarify the problem and check any assumptions. This ensures that you and the interviewer are on the same page and you’re addressing the proper scope. Asking good questions also shows your interviewer that you have a sense for important information that might be missing and that you know to ask for it, rather than making assumptions.

Start by scoping out each component of the question. Look for company names, nouns, and verbs. For example, “Should Amazon start selling live plants?” Breaks down to a few key components:

Should Amazon start selling live plants?

You might begin by asking:

By Amazon, do we mean Amazon online, or can we consider Amazon-owned brick and mortar entities like Whole Foods?
By selling, do we mean Amazon (or the Amazon-owned entity) would sell directly, or could we consider facilitating third-party sales?
By live plants, what’s in scope? Individual potted plants? Trays of seedlings? Whole trees?

Anything that you find helpful to making sense of the problem is fair game. Specifically, you want to:

Clarify any vagueness in the question
Ask about constraints
Simply state important assumptions you’re making so the interviewer has a chance to correct you if you’re wrong

Example

For our example question “What’s the biggest threat to YouTube over the next 5 years?” You might ask your interviewer to clarify what they mean by “biggest threat” and “YouTube.” Ask:

"Do we mean YouTube as a company or just the core YouTube product?"
"Are we considering threats globally or just in the US?"

Let’s assume the interviewer confirms that we’re talking about the whole company when we say YouTube, not just the core product, and that we’re considering threats globally.

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Step 2: Define the product, company, or industry goals

Once you’ve scoped the problem, you’re ready to begin defining important goals. The key is to land on a clear and concise sense of what matters most to the entity that you’re strategizing for, whether it be a product, a company, or an industry. You probably won’t know the real product/company/industry goals off-hand, so you’ll have to make reasonable assumptions based on the product portfolio, company mission, or other facts you might know. List those assumptions for your interviewer, as well as any relevant:

Key business value-drivers
Existing strategies
Specific strengths and weaknesses

Tip

If you’re new to this, we recommend familiarizing yourself with classic strategic analysis frameworks like value chain analysis. This will help you move through Step 2 faster.

Note that you’ll be diving into all of these in more depth in the next step (defining the landscape.) For now, focus on goals– having a set of goals will make it easier to decide what parts of the landscape are relevant for your strategic analysis.

Once you feel like you’ve distilled the most important goals, reiterate them for your interviewer. Any decision you make thereafter should support these, so don’t move on until you feel confident.

Note that we’re answering a question involving YouTube, a company, but the steps are the same for a question involving a product or an industry–you’ll just consider different dimensions.

Example

For our YouTube question, consider how YouTube’s business works and what’s most important to it.

Start by making some reasonable assumptions:

“YouTube’s most important product is its core product, the YouTube video platform. It drives most of YouTube’s revenue. Though they have other initiatives like Music and TV, over the 5-year time frame, this will be the primary driver of success.

YouTube’s primary metric is watch time. Their business model is primarily based on ad revenue, though there are some alternative monetization schemes. YouTube’s most important goal is to increase watch time.

At the heart of watch time is the relationship between viewers and creators. Creators post on the platform to reach an audience and make money. Viewers come to watch videos made by creators. Advertisers display ads to these viewers, creating revenue for YouTube and creators. This is a strong, positive cycle, and supporting it is critical for YouTube.”

Based on the above analysis, your takeaways would be:

Driving up watch time is most important to YouTube.
The relationship between creators and viewers is important.

Based on these takeaways, you would state to the interviewer:

Youtube's most important goal is to drive up watch time by maintaining a strong relationship between creators and viewers.

Step 3: Define the landscape

Next, consider outside influences that may affect your strategic decision. Two key questions to ask yourself include:

What aspects of the landscape will influence my options, and ultimately my decision?
What opportunities or challenges might I reasonably expect to face?

Here are a few of the most common factors to consider:

Market and competition: Is the market unusually competitive? Are there entrenched players dominating the market? What are key competitors doing?
Public opinion: What does public opinion look like? Is the cultural climate welcoming of my product / company / industry? How will users and the broader public react to change?
Technology: What technologies already exist? What new technologies are coming? What kind of technological barriers to entry exist?
Regulation: How might relevant governments react to change? Is there existing regulation to watch out for? How stable is the overall regulatory environment?

Use your judgment as a PM to select the dimensions that are most relevant to your question. Be sure to leverage all the work you did defining company goals. It’s easy to get lost mapping the landscape–everything seems relevant at first, but anchoring on goals will help you quickly discern the context that matters.

For example, if your goal is market expansion and you’re operating in a young, dynamic industry, you might spend more time thinking about how your company relates to competitors or how a developing technology may change the way your product is used.

Tip

This is another place where using strategic analysis frameworks can help you understand the landscape. Applying a framework like Porter’s Five Forces can help you capture a lot of context and quickly filter out the unimportant pieces.

Don’t forget to articulate your thought process throughout. There’s a lot to consider, so we recommend checking in frequently to ensure you haven’t lost your interviewer or made an incorrect assumption.

Example

For our YouTube question, recall that you defined the following company goals in the previous step:

Goal 1: Driving up watch time
Goal 2: Nurturing the relationship between creators and viewers

Given that the relationship between creators and viewers is critical, you might decide to focus on threats in terms of what could disrupt that relationship. What in the greater landscape would you need to consider before building your option set?

“A key company goal for YouTube is nurturing the relationship between creators and viewers. If we consider big threats to be those that threaten this relationship, I see two main categories:

The most obvious are direct competitors who convince creators to post on their platforms instead of YouTube. They could do this by making it easier to create and reach an audience or by offering more money. TikTok, Instagram, and Snapchat could all fit the bill.
From the viewer side, anything that pulls viewers away also weakens this relationship. The same competitors (as mentioned previously) are relevant, but so are indirect competitors; platforms that pull away time from our users. For example, Netflix and other streaming platforms, Roblox, Minecraft, Twitch, and Twitter.

On the plus side, YouTube has a strong brand and is seen as a go-to platform for user-generated video content.”

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Step 4: Define guiding principles

Your landscape analysis coupled with the goals you defined in step 2 will allow you to converge on a set of guiding principles that will help you build your option set and eventually make your strategic decision.

Guiding principles, in this context, are a snapshot view of the situation that captures business rationale and allows for consistent decision-making without second-guessing priorities. A set of guiding principles for an e-commerce company launching a new feature might look like this:

Customer trust is our number one priority
Personalization is our secret sauce
The best customers are those we nurture

Example

For our YouTube example, recall the goals you defined. YouTube cares about:

Goal 1: Driving up watch time
Goal 2: Nurturing the relationship between creators and viewers

Because the creator-viewer relationship is critical, you identified two key threats to YouTube’s business:

Direct competitors who can effectively draw away YouTube’s creators
The larger set of “indirect competitors” including anything which pulls away viewers

Given these, let's say you decide on the following guiding principles:

YouTube cares most about watch time
The biggest concern, then, is what could disrupt viewers and/or creators - especially the relationship between the two
Competitors that can effectively draw the attention of both creators and viewers are an outsized threat to YouTube's business

Step 5: Establish an option set

Now that you have defined relevant context and established guiding principles, you can finally begin brainstorming strategic options and ranking how well they fit against your principles and goals.

You probably have a few options in mind already. Write them down first then return to the original question to come up with more. Your brainstorm will depend on the specifics of the question.

For example, if you’re asked to decide on a pricing structure, your options would include any pricing models the company already uses. You’d probably want to also consider competitive pricing models.
If you’re asked how to monetize a product, you might list all the ways a user segment could potentially benefit from your product, and brainstorm ways to monetize each.

Then, based on your guiding principles and the context you’ve built so far, filter out any weak options so you can focus on the most important. Be sure to explain why you remove each option so your interviewer can track your logic.

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Example

For our YouTube question, your option set would probably include direct competitors which host user-generated video content that lures both creators and viewers away, such as:

TikTok
Instagram
Snapchat
Twitch

You might also include the larger set of “indirect competitors” that pull viewers away from YouTube without specifically targeting creators, such as:

Netflix
Twitter

Based on our guiding principles, which emphasize the relationship between creators and viewers, you decide to eliminate indirect competitors from the option set, as they don’t explicitly target creators and thus don’t pose as big a threat to the creator-viewer relationship.

Step 6: Make your decision and argue for it

Similar to filtering out weak options, making your final decision means referring back to your guiding principles and goals to pick the strongest option. You’ll likely have to decide between multiple good options, so you’ll need to clearly justify your choice. There are many factors to consider when making final strategic decisions. Depending on the question, you might consider:

Scale
Impact
Cost
Risk(s)
Likelihood of success
Additional benefits (like partnerships or product synergies)

and more. Use your judgment and experience as a product manager to guide you.

Example

Recall our original YouTube question “What’s the biggest threat to YouTube over the next 5 years?” This isn’t a strategic decision per se. Instead, you’re asked to make a choice and justify it.

Let’s say you’ve come to the conclusion that competition via short-form video content platforms like TikTok is the biggest threat to YouTube:

“Let’s consider TikTok to be the biggest threat to YouTube. Though all three of my final options (TikTok, Instagram, and Snapchat) could pull users and creators away from YouTube, TikTok has the clearest success so far and is growing rapidly, particularly in a popular form of video (short-form) that YouTube hasn’t quite cracked yet.

TikTok has made it easy for creators to post and build an audience, making their platform an attractive place to start as a new creator or move to as an existing one. Short-form video is extremely popular with viewers and the experience is very sticky, pulling viewers away from spending time on YouTube. TikTok also does well with an important demographic of younger users, who are critical for the short- and long-term success of YouTube.”

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Step 7: Evaluate and recap

As a last step, evaluate and recap the work you’ve done above.

To preempt follow-up questions, it’s a good idea to:

Discuss tradeoffs
Share what you’d do differently if you had more time
Summarize how you’d mitigate potential risks
Emphasize why your choice sets up the company for success.

Example

As we close our example, note that we were asked to identify the biggest threat to YouTube, so there aren’t tradeoffs to discuss per se.

However, you could certainly include something like this in your evaluation:

“If I had more time, I’d like to have explored the implications of acting on TikTok as the main threat. For instance, TikTok users skew younger than the average YouTube user. If we’re not careful, we might make strategic choices that prioritize YouTube’s younger audience to the detriment of its older core users.

Overall, YouTube has a solid hold on core users and their use case, so as long as we don’t harm their experience with any competitive move we’d make to address TikTok, we’ll likely be able to maintain our competitive edge.

I’d also like to do more research. This has all been based on intuition and assumption, so while I’d want to confirm all of my assumptions, the key assumption I’d need to look into is how creators really feel, both those on YouTube, and those who have chosen other platforms, before I could give a definitive answer as to whether the TikTok threat is as big as I’m assuming.”

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Common pitfalls

Set context. Don’t just jump to an answer. Your interviewer wants to see your ability to make sense of the situation and justify your decisions.
Structure your answer. Whether you use this framework or create your own, there’s a lot to discuss. Having a clear structure can keep you on track and make your answer easier to follow.
Make sure to answer the question. It’s easy to get caught up laying out a bunch of strategic insights. Don’t forget to drive towards an answer and turn these into a specific decision. Make clear choices, give details about your approach, and make it concrete.
Consider trade-offs. Most strategies mean prioritizing one aspect to the detriment of another. Don’t forget to explain what the trade-offs are and why you think they’re reasonable (or when they wouldn’t be).

Overall, remember that we recommend light use of frameworks. You don’t want to sound robotic or force yourself down a single path too early. Use this framework as guidance as you start answering strategy questions, but work on developing your own intuition about how to structure your answers that builds on your unique strengths.