Is it time to take the ‘product’ out of product management?

Frequently, we are asked to tailor our ‘Grassroots Strategy’ workshops to serve as training for product managers.  Typically, the identified need is a lack of strategic thinking and/or tools for analyzing markets in a company’s product manager group.  Beneath the surface, however, we believe that the problem may run deeper.  The problem may be grounded in the very definition of what a product manager is and therefore what the rest of the organization expects from them.  We have come to the conclusion that there are at least three different roles that can all have the title ‘product managers’:

  1. There can be ‘engineering’ product managers, who keep drawings and bills of material up to date for the product line and may manage incremental product enhancements, but generally are focused on short-term customer (or sales) – generated requests, and do not have a full P&L view of their decisions.  This definition is most common in highly engineered/customized products – we had one client who made huge valves for the oil and gas industry, they decided this was the only kind of product manager they needed and re-organized so that all product managers reported to a VP of Engineering (obviously, they were not very open to our ‘market-back’ approach)
  2. Mainly in the chemical industry, especially in more commodity markets, the term ‘product manager’ usually means someone focused on managing the supply side of the business.  In the complex world of byproducts and co-products, this person determines the mix of product outputs (think about a refinery) and decides what to upgrade and what to sell on the raw market.  This person generally owns the Sales and Operations Planning process (S&OP), and reports directly to a business unit leader (i.e., it is not ‘sales’ or ‘marketing’ or ‘operations’ but a distinct and separate discipline).  This person usually has responsibility for a range of products defined by a set of assets (for example, all European refineries), rather than a set of end-use markets
  3. Sometimes called a ‘product marketing manager’, there is often a person focused on the market for a given set of products.  This person typically owns SKU management, product launches and at least high level pricing strategy.  They also usually oversee, or at least approve, marketing communications for their products.  Sometimes this role is compared to the Brand Manager in consumer products, who oversees and directs a brand without having solid line responsibility for Sales, Operations or R&D. 

Depending on your industry, one of the first two types may be necessary.  But we think it is almost always a mistake to overlook the third definition.  Someone needs to be looking at the market beyond current requests from customers and thinking about what we should offer in the future, not just ‘how’ do we do it today from a technical standpoint.

To make this role successful, we have identified a number of key factors:

  • First and most important, this person must be responsible for overall product line profitability and growth and so must be able to see the impact of their decisions on both the cost and revenue side of the income statement.  If product line P&L’s don’t exist, you will need to create them, no matter how much kicking and screaming there is from accounting.  Keep in mind that these ‘shadow’ income statements need not be perfect to be highly informative
  • Second, this person should own (and be able to defend) the product roadmap, clearly articulating  the priorities for new product development, and the segments we are  targeting.  In addition, they should understand how these new offerings will create advantage – what are customers’ alternatives and why do we think we can win against them?
  • Third, this person needs to spend significant time directly with customers, not asking about ‘satisfaction’ with current products, but asking about and looking for unmet needs – problems that we might be able to solve in the future
  • Fourth, this person must be able to see beyond the product to think about alternative ways to solve the customer’s problem whether they be in-kind competing products or seemingly unrelated software, subscription services or alternative business models

In addition to these specific abilities, it is critical to find and develop product managers who can balance the short-term and the long-term; responsibly dealing with the business and customer issues of today, while creating time to be proactive in helping shape markets for offerings that may not exist yet.  P&L’s are essential, but if hitting profit targets becomes the only measure of success this could lead to a very short-term orientation.  Therefore, some additional metric or metrics are required to measure market share, health of the product pipeline, or some other leading indicator. 

Doing all this well is not easy, the internal focus on products and the short-term tactics they drive (price lists, brochures, trade shows) comes with deadlines and can too easily crowd out the longer term thinking and analysis.  In our work, we are absolutely convinced that the underlying skills can be trained.  But, we are equally convinced that the skills will atrophy if they are not reinforced routinely by the rest of the business, especially other mid-level managers.  These managers and their leaders should stay close enough to distinguish those product managers who ‘get it’ and are making the right trade-offs from those who are sacrificing critical investments in order to achieve short term targets.

Changing expectations Is necessary to make these kind of product managers truly effective and ultimately drive a culture change to a market (not product) led organization.  To underscore the importance, about 3 or 4 years ago, one of our clients replaced the term ‘product manager’ with ‘offering manager’ to signal both that it was not just a product-centric role and that the desired outcome was a complete offering to solve the customer’s problem, not necessarily just a product.

If your product managers don’t know what is expected of them and are not thinking this way, maybe it is time to get them away from their products and out into their markets.  The tools and frameworks in “Grassroots Strategy” are a great place to start.

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