Product Strategy in a Bubble: 

Making Decisions When the Herd Is Running

The Recurring Cycle of Hype

Every few years, the product industry convinces itself that this time is different. A new technology appears to change everything. Capital floods the market. Analysts announce a generational shift. Founders rush to reposition their companies. Boards begin asking pointed questions. In the middle of it all, product teams that were previously focused on solving real customer problems suddenly find themselves chasing whatever the market happens to be celebrating at that moment.

We have seen this cycle repeat many times. Dot-coms, mobile, social, crypto, Web3, and now AI. Some of these waves produce lasting transformation. Many do not. Most land somewhere between promise and disappointment. The real danger is not paying attention to these shifts. The danger is abandoning sound product judgment and strategy in favor of following the herd.

The Challenge of Overheated Markets

When a market feels overheated, product leaders face a uniquely difficult challenge. They must decide how to make durable, high-quality decisions while the rest of the ecosystem optimizes for speed, perception, and narrative rather than long-term customer and business value. That challenge is what separates enduring product organizations from those that peak during hype cycles and struggle afterward.

When Excitement Masquerades as Strategy

One of the first mistakes teams make in these moments is confusing market excitement with product strategy. In fast-paced environments, decision-making often becomes a reactive process. Conversations start to revolve around competitors, investor expectations, and fear of missing out. Teams begin to justify initiatives not because customers are asking for them or because evidence supports them, but because the market seems to demand a response.

This kind of thinking feels pragmatic in the moment. It is anything but. Product strategy is not a response to headlines or conference keynotes. It is a coherent set of choices about which customers you serve, which problems you commit to solving, and which outcomes you are willing to be accountable for. Just as important, it is a clear articulation of what you will not do. When teams outsource these choices to the market narrative, they give up the very thing that makes strategy valuable in the first place.

Recognizing Herd Mentality Inside the Organization

Herd mentality inside an organization is rarely subtle. You can see it when roadmap discussions focus more on what competitors have announced than on what customers are struggling with. You can hear it when leaders ask why the company does not yet have a particular capability instead of asking which customer problem they are trying to solve. You can feel it when teams are rewarded for shipping visible features rather than achieving measurable outcomes that matter to the business. Over time, your strategy documents begin to mirror those of other companies in the same space.

This behavior does not come from incompetence or bad intentions. It usually comes from pressure. Pressure from boards, investors, executives, and a market narrative that makes standing still feel irresponsible. Strong product organizations are not defined by the absence of pressure. They are defined by their ability to absorb pressure without surrendering judgment.

The Role of Leadership in Bubble Markets

In these environments, the role of product leadership changes. It becomes less about generating ideas and more about protecting decision quality. This is the moment when leadership matters most. The job is not to amplify enthusiasm for a current popular trend. The job is to slow the organization down when everyone else wants to speed up, to ask difficult questions when easy answers are available, and to insist on evidence when assumptions are cheap.

Above all, product leaders must protect teams from building things that feel exciting but deliver no lasting value. This protection is not passive. It requires clear framing, strong principles, and the willingness to say no when saying yes would be simpler and more popular. Leaders who fail to do this often believe they are empowering teams, when in reality they are pushing risk downward without providing strategic clarity.

Re-Anchoring to the Customer Problem

The most reliable anchor in bubble markets is the customer problem. Yet this is precisely what teams are most likely to abandon. Instead of starting with a clear understanding of who the customer is and what problem they face, teams begin with the solution. They ask how they can add a new technology or how they can position themselves within the latest trend. This reverses the fundamental logic of good product development.

Strong product teams always begin with a specific customer and a problem that is both real and meaningful. They seek evidence that the problem exists, that it is painful enough to matter, and that solving it would create real value. New technologies are relevant only insofar as they allow teams to solve these problems in meaningfully better ways. If the primary justification for an initiative is that the market expects it, the organization has shifted from product management into performance.

Strategy Requires Real Tradeoffs

Strategy becomes especially fragile during bubbles because tradeoffs become politically difficult. Everyone wants to preserve optionality. Everyone wants exposure to upside. No one wants to be remembered as the person who passed on an opportunity that later appeared successful. As a result, teams attempt to pursue everything at once.

This is not a strategy. Strategy without tradeoffs is simply a collection of hopes. Real strategy requires saying no to opportunities that do not fit, even when they are popular. It requires accepting that some decisions will look wrong in the short term. It also requires comfort with the idea that not every trend deserves a response. History shows that many of the companies that appear unexciting at the peak of a bubble are the ones that survive when conditions normalize.

Empowered Teams as a Defense Mechanism

One of the strongest defenses against herd behavior is the presence of genuinely empowered product teams. These are not teams that receive feature requests disguised as strategy. They are teams that are given clear business objectives, have direct access to customers, and accountability for outcomes. Empowered teams do not ask whether they should copy a competitor. Instead, they ask whether an initiative solves real problems for their customers and whether they can demonstrate that value through evidence.

This shift in framing changes everything. Conversations move away from shipping something quickly toward understanding what would justify the investment in the first place. Evidence has a way of cutting through hype. When teams are expected to validate assumptions rather than execute directives, many trend-driven ideas fail quietly and early, which is exactly what should happen.

Learning Velocity Over Shipping Velocity

Another common failure in bubble markets is an obsession with speed. Shipping velocity becomes a proxy for progress. Teams celebrate how fast they can integrate a new technology or announce a new capability. What often gets lost is whether any learning occurred along the way.

Speed without learning is not an advantage. It is simply a faster path to waste. The best teams in uncertain environments optimize for learning velocity, not shipping velocity. They design small, inexpensive experiments to test assumptions. They look for signals before committing to scale. They are willing to kill ideas early when the evidence does not support them. This requires leadership to explicitly reward learning, which can feel uncomfortable when the rest of the market is applauding visible output.

Avoiding the Thin Wedge Fallacy

Closely related to this is what might be called the thin wedge fallacy. Teams convince themselves that they are making a small, low-risk investment simply to explore a space. In reality, even small initiatives can create momentum that is difficult to reverse, especially once they are announced publicly or sold to customers. Before approving these efforts, leaders should ask what success would force the organization to do next, how difficult it would be to walk away if the idea fails, and whether the company is truly prepared for either outcome.

Most organizations don't get trapped by bold strategic bets. They get trapped by incremental commitments they were unwilling to evaluate honestly. Over time, these small decisions accumulate into a direction that no one consciously chose.

Choosing Risk Deliberately

Avoiding the herd does not mean avoiding risk. It means choosing risk deliberately. Sometimes the right decision is to invest early. Sometimes it is necessary to wait until the signal is clearer. Sometimes it is to ignore the trend entirely. All of these choices require courage. What product leaders should be optimizing for is not short-term applause or valuation spikes, but durable customer value, sustainable business outcomes, and teams that trust leadership judgment.

When the Bubble Deflates

When the bubble inevitably deflates, the difference between these approaches becomes painfully clear. Organizations that chased the herd are often left with bloated roadmaps, confused positioning, demoralized teams, and products that customers do not care about. Organizations that stayed grounded tend to emerge with strong customer relationships, clear product narratives, and teams that are confident in their ability to make good decisions under pressure.

The difference is not intelligence or access to information. It is discipline.

Product Management as a Judgment Profession

At its core, product management is not a process problem or a framework problem. It is a judgment profession. Bubble markets stress test judgment more than almost any other environment. They tempt capable leaders to abandon first principles in favor of safety in numbers. The strongest product leaders resist that temptation. They stay anchored in real customer problems, insist on evidence over excitement, make tradeoffs explicit, and remember that the goal is not to follow the market, but to serve customers better than anyone else. That is how products endure, regardless of what the market happens to be celebrating this quarter.