Product management is sometimes referred to as the accidental profession. Even though product managers fulfill a real and defined need in a company, the discipline is often not well developed or understood; and not always acknowledged.
Most people when they get to the office find it easier to pursue short term objectives such as project delivery, cost efficiency, and quarterly sales quotas. These tasks can seem more immediately fulfilling, important, and satisfying than the task of developing a longer-term market focussed product strategy.
Does your company truly understand Product Strategy?
All technology companies understand that they must manage their products and services to meet a market requirement. Yet in my experience, even the so-called successful companies can be quite immature in their product management and don’t even have the basics measures in place. Some can’t even report essential KPI’s which for example quantify exactly which of their product lines have been the most profitable since inception.
Products obviously include software products, but less obviously include services such as managed services, consulting, or support offerings.
These companies that “wing it” without product KPI’s must thrive on luck or chance or some other mysterious factor to succeed!
Clear evidence of product maturity in a company will be found in the way the budget is structured.
Show me your budget and I will tell you what you value
If the budget has no identified investment for a product line this is more than a warning signal.
If the management accounts can’t produce product line profitability – you know that the company is probably not managing products strategically at all. What you don’t measure you can’t control and you certainly can’t be strategic about it.
What is Product Strategy?
Gartner defines product strategy as the discipline of determining what products and solutions your organisation should develop, acquire, or retire to satisfy your target markets, support your business strategy, and optimise business outcomes.
Around 80% of all new technology products and services ultimately fail to be profitable and sustainable in the marketplace (Gartner again). This statistic alone can show the potential of a proper strategic approach to product management.
Product strategy must be concerned with business growth by identifying new market opportunities, planning, and launching products and services into these markets, sales and channel strategy, and market positioning.
A defined product strategy is a necessary foundation for business development in any company. All companies want to develop and acquire products (and services) that are aligned to a market segment. Every second-hand car dealer knows this. Rather than becoming a “Jack of all trades’; a company with a clear product strategy is arguably going to be more focussed, more responsive to changing market needs, and therefore more sustainable and profitable.
Shooting from the hip – opportunistic products
Opportunistic behaviors when introducing new products can damage the company’s focus and long term profitability.
In the technology sector, deciding on which third party products to introduce needs to be subject to rigorous criteria.
Yet some executives think that they can add digital product lines the way a supermarket decides on what items to stock this week in the vegetable department!
These opportunistic products inevitably don’t last beyond a couple of years; because they were never strategic and because they address a different market altogether. They invariably don’t leverage the real strengths of the organisation and don’t really contribute to the value proposition in the eyes of the customer (who can of course go elsewhere). I can point to several examples of this opportunistic approach in my own experience; and I have made all the mistakes too! These opportunistic products, therefore, have no real “shelf life”.
Worse still opportunistic products are sometimes introduced on the back of personal preference. Executive agendas can certainly muddy the water in this regard.
While some failure is inevitable in all growth initiatives; it should by now be obvious that the rate of failure of new product lines will be dramatically curtailed through good product portfolio management and a proper strategic framework.
Product innovation
Product management should be concerned with innovation. Any organisation needs a stream of new ideas that allow the introduction of new, profitable products. Getting an innovative culture within the organisation is a vast subject in its own right, but simple techniques Product Managers can use can be effective.
Innovation can often be facilitated by product managers simply by breaking down existing silos within the organisation and by leveraging existing customer relationships. Product managers can play a vital role here because their mandate is to act as a customer advocate in a multidisciplinary manner both within and outside the organisation.
Responsibility for Product Strategy
Because of the cross-functional nature of product lines and the strategic implications on the business, the ultimate responsibility for product management rests with the executive team. Ideally, there should be an executive who is accountable for product strategy overall. This must be supported by a well defined organisational structure that has clear job positions and career paths defined for product managers and product specialists.
Product strategy is often managed in portfolios where groups of related products and services are managed together to unlock efficiencies or leverage common elements such as a common market, internal processes, or investment objectives.
Deciding on exactly how to group and structure the portfolio of products and services should be very intentional and not left to chance. Getting the structure right (structure by product, by portfolio, by service or by market, etc) can have a radical impact on the organic growth of an organisation.
Product Managers must act across Disciplines
In fulfilling their mandate, product managers must also coordinate the following functions/areas of the business with the view to sustainable profits from each product line:
Marketing – competitive intelligence and in-depth understanding of the customer
Sales Channel – enabling sales and channel partners to effectively promote and sell the product to prospective customers
Research and Development – planning and control of activities and expenditure in a product line to ensure sustainable and continued growth
In organisation design terms, product managers can report into any of the functional areas above, but I would argue that this is a bad idea. Ideally, the reporting lines of the product managers should be separate to encourage a true cross-functional role.
Metrics and KPIs of a product manager need to be aligned to the performance of the product in the market, and little else.
Ambiguous roles rely on influence to achieve outcomes
In practice, the role of a product manager can be ambiguous and frustrating.
The multi-disciplined nature of the role can result in those responsible being pulled into many different directions. They become consultants, project managers, and marketing specialists by day; and product managers by night.
They are subject to the conflicting demands of short term projects at the expense of long term planning.
For this reason, product managers need to work to be recognised, not as the accidental profession but as the conductor of a symphony involving the whole company.
An exciting area to be involved in
I believe that product management is a fast-growing and exciting role in any technology company. It represents a viable career path for technical specialists who are wanting to extend their influence into all areas of the business.
There are a number of institutions for the promotion of product management, such as the Product Management Institute, The Product Development, and Management Association, the Institute of Product Leadership, etc.
These organisations can provide training and consulting and frameworks that can provide structure to product managers. I don’t have enough experience in these particular institutions to recommend any, but I would advise that you look for an institution that is accessible and that provides practical contemporary advice to businesses your size. At the end of the day speaking to someone with experience may be able to give some direction.
The trend towards more agile development processes, as well as shorter release cycles, is an interesting opportunity for product managers to push the boundaries into new and exciting areas of the business by integrating their expertise in areas such as agile software development; and so on.
