Why Product Management Is Crucial for Company Success

Product management is a core function if you continuously want to create products that hits home with customers. In this article:

• What is product management?
• Why product management makes the difference
• What does a product manager do?
• Where does product management fit into the organization?

If you take a step back and give it some thought, what actually makes a company survive and thrive in the long run? Yep, we agree. Earning revenue and being profitable is quite necessary (in the long run the same goes for venture-backed startups). And to earn revenue you need to sell something. And to sell something you need products and services. Developing those successfully is where product management comes in.

Maybe not too surprisingly, a lot of companies aren’t exactly excelling at it. Stay tuned to learn what product management is and how it can help.

What Is Product Management?

First of all, let’s start with the objective of product management. Product management is the objective of ensuring your company launches products that meet current customer needs, while also driving business objectives such as profit, retention, market share increase and alike. It is also making sure those products are adjusted over time. That is the only way they can continue to meet the everchanging needs of customers. Ideally product management is systematized so the company can carry out that exercise on a consistent and continuous basis.

Now moving from the objective of product management to the role of product management. To be clear, product management does not have to be carried out by an actual product manager. In many cases product management are done by e.g. a founder or someone with a senior role within the company. This might be more true the smaller the company is, or the less mature the company is working with product development. This might have some consequences though, as we will discuss later.

There is of course a big advantage of having dedicated product managers (so we think), which is they are able to focus on product. And in doing so, there should be a difference to be felt. Check for instance this survey revealing that an optimized product manager can increase company profits with 34%. If that doesn’t convince you, keep reading.

Why Product Management Makes the Difference

Because, if product management is done right, it should drive the success of the company’s products. These are some of the benefits you can expect to see with a well-driven product management effort.

• Increased sales performance of products
• Increased customer satisfaction / less customer churn
• A clearer internal direction for product strategy, easing the life of development, sales and leadership
• Increased ability to track product performance
• Better ability to adapt to market changes brought by trends and/or competitors
• A continuous ability to launch products successfully

Naturally, without active product management the company risks the reverse effect of the above.

An additional and often overlooked advantage of product management is that it can help you make the leap from building customized products to building products that can be sold again and again. A lot of companies find themselves trapped in building products that are tailored for that one project, or that one customer. If you want to transition to building one product for several, or all your customers, it takes a more structured and inclusive approach to product discovery and management.

So What Does a Product Manager Do?

There is no easy description on what product managers do, as they do a lot. In fact, we would wager that the PM role is one of the most diverse within an organization. Which also makes it one of the most fun ones. Check this process of activities that a PM might be involved in, but keep in mind that the list is a perfect-world image. Often PMs jump from activity to activity, often not having the luxury of being able to spend the time they would like in each of them.

The above model is a typical way of depicting the product life cycle. It serves well in showing what stages a product person ideally take product through, though you will learn – or already know – that reality sometimes is more complex and less linear. Sometimes the process is a lot more iterative. Your might launch a product with limited functionality to test product/market fit and demand. You might also just get to the analysis stage before realizing you are focusing on the wrong customer need and therefore product.

Innovate

The innovation phase is all about product discovery and learning to know your customers and market. This can practically speaking be a product team that dives into a specific opportunity space and researches target customer’s pains, needs and desires. This can be done for both a new and for existing products. There are a lot of different methods for this, ranging from qualitative interviews with customers to quantative data analysis on how customers interact with a product.

Analyze

The objective of this phase is to convert customer insights into product strategy. The product strategy should, in experience, both honor customer needs and business objectives. It should also give the right foundation to make a decision whether to develop the product, as well as guide on how it should be done.

Deliver

In the delivery phase the product is being developed. This is often done by someone else in the organization, e.g. a technology or development department. Often Product Management will act as the product ambassador in this phase. That means supporting development functions in staying true to customer needs and the vision for the product.

Launch

When product development is nearing completion, the organization starts gearing up for launch. This can take many different forms depending on the nature of the product and the market the company operates in. But in general, product management again serves as the product ambassador in this phase. This time around it means supporting sales, marketing and operational functions. Both in getting to know the product, but also in making sure that the product are presented to the world according the customer needs.

Manage

Once the product is launched, product management often bears the responsibility of monitoring product performance. Is the product performing accordingly to business objectives, e.g. selling as it should? Are users and/or customers interacting with it as we expected?

Based on that monitoring, there is a ongoing task in adjusting the product to increase and maintain product/market fit. That task continues till the best decision for some reason is to delist/kill the product.

Throughout the process, the product manager are expected to keep the high-level overview and be the product ambassador. Also, sometimes referred to as the customer ambassador. A large part of that role is to keep sure that the organization understands the targeted customer needs, keeps deepening that understanding and delivers a product that is aligned with it.

Where Does Product Management Fit Into the Organization?

It is clear from the above that product management is also a collaborative role that spans across the business. But where does it fit into the organization?

It can be tempting, especially in smaller organizations, to place product management within development. Then PM’s are close to the where stuff gets built, right? Or in sales, as they then are closer to the market? Marketing could also be a good bet. But, we actually think all of the above are suboptimal ideas.

• Place PM in development and you risk too much focus on technology and project management of the delivery process. You also risk too little focus on customer insights and proper product launch strategy.
• Place PM in sales and you risk too much focus on creating customized solution for the individual customer. And too little focus on creating the right product for the long run
• Place PM in marketing and you risk too much focus on market communication and too little focus on product discovery

You also see examples of product management being placed in other departments with other core objectives. It can make sense, but often the product manager gets pulled in the direction of whatever that department’s core objective is.

In the end, product management is ideally placed in it’s own function reporting directly to top management. In that way they can function objectively and focus on having the high level overview that glues the organization together around the product.

What is your take on the importance of product management? Leave a comment below to share your opinion.