5 Steps to Building a Great Product Management Organization

A reality of Product Management teams is that they are usually relatively small, particularly when compared to larger departments such as Engineering, Marketing or Sales.  And perhaps it is because these teams are small, that not much thought is given to how to best structure them.

But given the critical cross-functional role Product Management plays, having a well structured, scalable and properly staffed team is absolutely critical, and can make a huge impact on the top-line of a company’s balance sheet.

Here are the 5 steps to building a great organization.

Understand the full value of Product Management

Too often technology Product Management is viewed as the requirements collector, or keeper of the product roadmap, or an adjunct to Engineering. But all of these sell short the value and impact Product Management can have on a business.

What is the ultimate goal of Product Management? I view it as the following:

To optimize the business at the product, product line or product portfolio level over the lifecycle of the products.

Another definition (courtesy of Don Vendetti of Product Arts) could be:

To deliver measurable business results through product solutions that meet both market needs and company goals.

Either way, the focus is on the business success.

And if you look back at the how Product Management got its start at Procter and Gamble almost 80 years ago, the focus was clearly on maximizing the business opportunity and focusing on product success.

Put formal Product Management in place very early in a company’s life

Understanding what should be built and for whom is a core task of Product Management. But it is only a small part of what Product Management must do. Even in very early stage companies, there are many other questions that Product Management must answer:

Questions such as:

  • What high value problems does the product solve?
  • Who faces these problems today?
  • How much pain do these problems pose for these people?
  • Who will be the main buyers of the product? (Note: buyers and users are not necessarily the same).
  • Will the buyers pay to address the user pain (i.e. is the pain a high enough priority for the buyer to spend money to address it?)
  • What are the current alternatives to using the product?
  • How might competitors react once the product is launched?
  • What obstacles need to be overcome for people to adopt this product?
  • What skillsets will the target users have?
  • Do the skillsets of those users match with the required skillsets needed to use the product?
  • How should the product be priced and licensed?
  • How should the product be initially delivered into the market?
  • What channels or partnerships are required to enter the market?

These are just some of the fundamental questions that should be asked and answered in the earliest stages of a business, as they not only impact how a product is built, but also the activities and people needed to bring the product successfully to market.

For any startup, company success is tied directly to product success. Or as Bill Campbell, former CEO of Intuit said  “Great companies start with great products”.

It is something a lot of companies seem to forget, as they release complex or unfocused products that require significant marketing and sales efforts to generate customer adoption. Put skilled Product Management in place early to accelerate market adoption, revenue and profits.

Product Management must be part of the Executive team

If there are no executives with a strong Product Management background in a startup, then an experienced Product Management executive should be the first formal Product Management hire that startup makes. Why? Because she/he can not only help with overall product strategy and market alignment, but can set the stage for building a great team as the company expands. In short, Product Management needs a seat at the management table.

Many companies that hire early, make the mistake of hiring a less experienced person — a “hands on” individual contributor — to be “the Product Manager” for the fledgling product. This person typically reports into Engineering, Marketing or possibly the CTO, and thus isn’t part of the Sr. Management team. While a good individual contributor can certainly help a company avoid common mistakes, an experienced executive can help drive the company forward and accelerate success.

Don’t starve Product Management as the company grows

Far too many companies have significant budgets to hire additional engineers, sales and marketing staff as growth occurs. But as they grow, they typically don’t increase the Product Management team to keep pace.  This is a pattern repeated in many companies.

Over time, Product Management becomes a bottleneck for other groups in the company. This not only reduces the effectiveness of Product Management, but also impacts all the downstream teams and activities that depend on information and decisions coming from Product Management. This creates a drag on the company’s ability to execute effectively, to address changing market needs and to bring new successful products to market.

Create Product Management teams with differentiated roles

An often heard lament of companies looking for Product Managers is that it’s difficult to find really good Product Management candidates. I’m sure that’s true, but it’s also true when it comes to finding really great candidates for sales, marketing, software development, QA etc.

In general, good talent is hard to find. But what exacerbates the Product Management search even further is how companies define the job of individual Product Managers.

Product Management is a very broad function with a mix of technical and business responsibilities. Product Management needs to stay abreast of changing market conditions, competitors, and new technologies. Product Management also must create product and business plans to address market opportunities. Additionally Product Management must work across multiple groups and departments in a company to help ensure they are aligned.

A lot of companies make the mistake of rolling all of these responsibilities into a single role – the Product Manager – and then look for the ideal candidate with all of the technical and business experience, domain knowledge and leadership skills to fill that role.

And then when they need to scale – for example when looking to create a second product – the same companies look for yet another candidate with the same broad skill set. This process gets repeated over and over again across many companies.

Not only does this make it hard to find suitable candidates, but it makes it very difficult for those people, once hired, to be truly effective and successful.

Would any company hire software developers and then ask them not only to design and write software, but to test it and also write the documentation ? Or how about trying to hire a salesperson who can do their own lead generation and act as their own sales consultant? Not very likely.

Few if any companies would think that these are ways to build scalable and effective software development or sales teams.  It should be evident then, that it is also no way to build a scalable and effective Product Management team.

Roles in Product Management should differentiate between technical and business focus; between short term tactical and longer term strategic activities; between internal (inbound) and external (outbound) responsibilities. These roles should be organized as small teams focused on specific products or product lines, with defined metrics to measure progress and success.

This is what is done with virtually every other department in a company. Why should it be different for Product Management?

Want more information on how to make your product management team successful? Attend a Pragmatic Institute course today.
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