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What is the Business Role of Product Management?



With agile methods, we can build the wrong product faster than ever.— Steve Johnson


Over the last few years, product teams have gotten better at building things right, but many find they’re now building the wrong things.


New products haven’t achieved the results we’d hoped for. New upgrades aren’t installed for months after release. New features aren’t adopted by our clients.


Why are we building the wrong things?

Because we are not listening to the right people.


A recent survey reports that executives and salespeople are poor sources of product ideas. They are exposed more to prospects than existing customers and more often represent the buyers of products rather than those who use the product. Yet, for many organizations, product and feature ideas come primarily from executives and salespeople—and are given to a product team to implement.


That reveals a lack of understanding of the product management function within the organization.


We believe the success of your business depends on leveraging the strategic role of product management: identifying friction for buyers and users of our products, prioritizing which solutions to deliver, and providing market context to development and delivery teams to ensure product success. Ultimately, to maximize value for our business and our customers.


Yet almost every product management leader expresses frustration with their inability to get senior leadership to understand this role of product management—the strategic role rather than a tactical one. For many teams, product management is undervalued and marginalized. Or non-existent.


There is some good news. Research shows that product management teams report directly to the CEO more frequently than in previous years. We hope this will provide a better chance to make the case for strategic product management.


That said, there is still a large understanding gap that needs to be overcome with respect to product management.


A parable

Do you know the parable of three blind people and an elephant?


In the parable, three blind people are all touching and describing different parts of an elephant. One touches the trunk and says, “It’s a snake.” Another touches a leg and says, “It’s a tree.” The third touches the elephant's side and says, It’s a wall.” Each describes the elephant based only on their own perspective.


As in the parable, each department in your organization describes product management from its own lens. They define product management as a support role for their function.


If you ask developers what they want from product management, they’ll say, “Tell me exactly what to build.” If you ask marketing teams, they’ll say, “Tell me exactly what to say.” If you ask salespeople, they’ll say, “Help me close more deals.” Each team sees product management as serving their needs—supporting their objectives.


Product management is in a unique situation as perhaps the only truly cross-functional role in an organization. Each function understands its need for expertise from product management, yet they often do not understand the scope of product management beyond their own interests. They see product management as their primary source of product and marketing expertise. They see product managers as subject matter experts. They see product management as a servant, not a leader.


But when we ask senior leadership about product management, they’re simply dumbfounded.


Do other functions need to explain their roles to the organization? Turns out they do! Few executives are clear on the scope of UX or marketing or sales ops. For that matter, salespeople think developers are factory workers who churn out code on command. And developers think salespeople are coin-operated incompetents who can’t sell what has been built.


It seems every department thinks every other department is broken. And subordinate.


But here’s the question: who in your organization is making business decisions on the product? Who decides which products to fund and which to retire? (If you said, “Finance,” that’s the wrong answer.)


Strategic Product Management

Who owns the responsibility for product strategy? Not sales, not marketing, not development. Not HR or finance. Not even company leaders have adequately defined product strategy.


(And, just to go on a minor rant, everyone groans when we ask about their product strategy. Everyone. No one thinks their company has a strategy beyond “sell more.”)


What, after all, does product management manage? Product management manages the business of the product. The purpose of product management is to maximize the value created for the market and your business throughout its lifecycle.


The Quartz Open Framework provides a view of the scope of product management. Discover important problems to solve, commit the resources to solve them (or discontinue the idea or product if it is not viable), describe the personas and their problems to the creation and delivery teams, and then measure how the product connects with the market.


Once your company has more than one product, you need someone focused on guiding each product to achieve business outcomes. Product management makes decisions that maximize the value created for the organization and the market. It is about validating, understanding, and socializing the value your product creates for your customers. It is about fully understanding your competitive advantage and differentiation and actively leveraging them. It is about making tough decisions around prioritization.


Every organization has more ideas than resources, so we must determine the right bets to place with limited funding. The right personas and market segments to target. The right problems to solve. The right time to either strengthen your investment or retire the product.


Every organization needs to make these strategic business decisions. These are normally decisions for a founder or CEO in smaller organizations. As a company grows, product management can take this over so leadership can work “on” the business, not “in” the business.


As the product suite grows, its complexity grows. This complexity turns into dysfunction across the organization, impacting the entire organization's success. And that’s where product management can guide each team with clarity of problems, personas, prioritization, and outcomes.


Delivering Product Success

Increasingly, private equity firms recognize the importance of product management. Product management is one of their first areas of focus as they counsel their equity investments. They have seen the value of strategic product management: delivering product success.


How can you build an organization that delivers product success systematically?


As a product leader, evangelize the strategic role of product management.


Get your organization and its leaders to understand the true role of product management: defining which new products to build and which markets to serve, guiding the product planning and growth initiatives with market insights, and prioritizing the extensive list of product ideas to the vital few that are most likely to succeed.


Product management isn’t support for development, marketing, and sales. It’s support for leadership. Ensuring their investments are on the right things. So we can sell what we’ve built and build what we’ve planned.


The Business Role of Product Management

“The signature of greatness is a disciplined and consistent focus on the right things.” — Jim Collins


Even companies without a formal product management function are managing their products. However, those activities are spread across multiple functions without a central person responsible for the product's key business decisions.


Someone is making decisions on what should be built for what markets and personas.


Someone is providing requirements to design and development to help them build the product, and information on the product and value proposition to marketing and sales.


Someone is managing the product through its lifecycle and evolving its strategy.


The question is this: is “someone” (or several someones) the right answer? You need someone who is systematic, market-focused, and transparent. The “someone” who owns it is the one who writes it down and keeps it current. (Uh-oh, did a bunch of stuff just get “un-owned”?)


The role of product management thrives in being the glue for the organization. Being the fulcrum point that manages decisions about the product and enables the entire organization to successfully build, manage, and maximize the value of the product to the company and the market.


The business role of product management is responsible for:

  • Engaging with the market to understand market segments and personas and discover market problems to solve;

  • Partnering with leadership and strategy to focus the product strategy on the opportunities that have the best chance of success and creating value for the company and customers;

  • Enabling design and development to build successful products with context on the market segments, personas, and problems;

  • Enabling sales and marketing to go to market successfully with context on the market segments, personas, value propositions, and differentiation;

  • And managing the business and strategy of the product throughout its lifecycle, including defining growth opportunities in new markets and with new products.


What is Product Management?

When I taught B2B Marketing in the Rutgers MBA program, I always gave my students a hint of how to figure out the meaning of a term or role: flip the words. So, what is “market research”? It is researching the market.


With that approach in mind, product management is responsible for managing the product, and product development is developing the product. Simple enough.


But what does it mean to manage a product?


In a recent conversation, there was a strong consensus that the “why” for product management was to ensure your company is doing the right thing.


Every company I have worked with has more ideas than resources, and as such someone needs to determine what product you sell (or develop or end-of-life) to which markets and personas.


Even if a company does not have a Product Management function (big P and M), someone is making these decisions—that person is managing the product; they are doing product management (little p and m).


For a startup or smaller company often it is a founder, CEO, or president that does little p and m product management. As a company grows in size, in product and markets, as well as in complexity, the need for big P and M Product Management grows to help scale the company.


Doing the Right Thing

Making the decision of what product to sell to which markets and personas may sound simple, but it is often very difficult. Research shows that around 75% of product initiatives fail to create any value. Some even destroy value.


When a company has more ideas than resources and so many product initiatives fail, product management becomes risk management. Product management is really about placing bets on the right initiatives to maximize the value created from those resources.


Product Management is about Value to the Market

“The customer is the foundation of a business and keeps it in existence.”—Peter Drucker


Product management (the role or function) at its core is about delivering value to the market as your product is determined “by the want the buyer satisfies” when they purchase a product.


To do this, product management must become the voice of the market.


They engage with the market to discover unmet and under-met needs, what the market values, and how they make decisions.


From that engagement, they can understand all of the opportunities where value can be delivered to the market, and focus their initiatives and strategies on doing the right things—those things where they have the best opportunity to deliver on that value.


As the voice of the market, product management is also responsible for orienting all organizational stakeholders around understanding the market, their needs, and their perception of value. This focus helps to ensure the product that is developed delivers on the potential value, and our sales and marketing efforts communicate clearly the value proposition to the market.


Product Management is about Value to the Organization

Organizations deliver value to the market for some sort of value in return. In for-profit organizations, value is normally viewed in terms of revenues, though the concept of benefit corporations may be changing that. In government, education, or non-profits, each may have its own definition of what value is to their organization and stakeholder.


Doing the right thing, therefore, is not just about delivering value to the market but also value to your organization.


This means both value to the market and value to the organization need to be factored in when deciding which things are the right things, and product management is the role that should understand each, and balance them in determining what are the right things to do.


Often, we see product initiatives deliver value neither to the market nor to the organization. Eliminating these non-value-added initiatives is the greatest opportunity to improve the productivity of organizations currently, and that is not even taking into consideration the residual impact of non-value-added initiatives have on morale.


Product Management is about Value to the Team

Everybody wants to have success. Designers want to design successful products. Developers want to develop successful products. Sales and marketing want to sell and market successful products. And without focus, direction, and context each of them will do what they think is best for that success.


A leading indicator of product success is team morale.


Product Management, by focusing everyone on doing the right things and enabling them to do their part successfully, is the glue that brings everyone together for success. The only thing better than having success is to have success with a team.


If Product Management delivers value through doing the right things, if they deliver value both to the market as well as value to the organization, a critical byproduct is the value that is created for the team from that joint success.


So, why product management? Because you want success, however you define it, and product management helps you get there.


Why Every Company Needs Product Management

Product Management, with the big P and M, is a popular job title and function in the software, technology, and Internet markets. When you see the title of Product Manager, Director or VP of Product Management or even Technical Product Manager, the person most likely works for technology or technology-enabled company.


These are the people responsible for defining the product and providing the requirements for its development. In these companies, Product Management provides focus for developers and the organization to ensure all efforts support delivering a solution that fits the customers’ needs to generate revenue.


Modern product management began at Proctor & Gamble in 1931 as Brand Management, introducing a role that had absolute responsibility for a brand, managing the business and go-to-market aspects in a customer-driven approach.


Hewlett-Packard brought this approach into technology with product management. Putting decision-making as close as possible to the customer, with product management serving as the voice of the customer internally.


As the role of product management grew and evolved, the central core of managing the business of the product remained.


Every company needs to decide where to focus its resources, an existing product or market, a new product or market. Every company needs to look across all their opportunities and ideas, and determine which ones have the best chance of adding value to the market, to the company, and to the team.


Where to Start with Product Management

Successful products target the right customers (personas and market segmentation), solving their problems with the right customer experience for them.


So if you are going to start doing the business role of product management, where do you start?

  • Define the roles of product management.

  • Identify internal candidates with the skills and experience to fill those roles.

  • Define the processes of managing products with a standard playbook.

  • Align all products around a coherent product or portfolio strategy.


The best way to do this is to listen continually to your current, past, and potential customers. In these discussions, focus on listening, understand their problems and needs, understand the experience they are looking for, and start translating this knowledge across all of your customers into products that “fit them.” If you do this right, your product(s) will sell themselves.


It doesn’t matter if you’re starting a restaurant adding a new item to your line or building a service to address an untapped area of the market. You must first understand what the customer needs in order for your product to be accepted.


All Businesses Sell a Product

The takeaway? No matter what your business does, you sell products that solves your customers’ problems and needs. Since these products are where your revenue (and in turn business) comes from, shouldn’t someone manage your product(s) systematically?


 

Download and read the entire eBook, "The Business Role of Product Management"

to learn how to improve the business performance of your products.


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