Product Management is Business Management —Why Does Everyone Forget That?
There are a lot of problems in tech product management. But there is one problem that outweighs all the rest, and it’s time we clearly state it and address it.
TL;DR
There’s a change in progress in the tech Product Management space. It’s happening slowly and somewhat haphazardly, but it’s happening. The age of delivery-focused Product Managers seems to be coming to an end, and a more business-focused Product Management role is re-emerging.
I say re-emerging because about 25 years ago, that’s what it was in tech. It’s like that in other industries such as Consumer Packaged Goods (CPG) and retail. But in tech, it drifted away from that business focus, pulled by delivery focus methods such as Agile and the Lean Startup, and a focus on the technology, vs. how to explicitly leverage technology to drive business success.
We need to re-establish that clear business connection with tech products. In short, we need to understand and commit to the following key points.
- Product Management is Business Management
- Product Success drives Business Success
- Product Leaders are Business Leaders
- Product Planning is Business Planning
It’s a challenging time for the technology Product Management community. Over the year and a half or so, there has been a reckoning happening in the tech industry and a re-evaluation of what Product Management should and shouldn’t be doing.
Aside from the large number of the layoffs in tech industry overall, that also impacted product management, there were several events that were focused specifically on Product Management that can shed some light into some of these issues.
1. The AirBnB incident
Probably the most notable was the interview with Brian Chesky where he famously said:
“…we got rid of the classic Product Management function…” — Brian Chesky
Now Chesky didn’t actually eliminate Product Management — it was merged with Product Marketing — and the context was related to the challenges AirBnB faced during the Pandemic, as well as Chesky’s own views of how he wanted to structure and operate the company.
But, that one line did get a big round of applause at the (design) conference where he said it, and it also got a LOT of keyboards clicking in the Product and Design spaces.
I wrote about it in the article below. The title itself — Product Management: It’s a System for Business Success, Not Product Features — and the article contents dig into some of the issues and some solutions to common Product Management challenges.
2. Do Snap’s Product Managers Slow Things Down
Another headline that made the rounds was when Snap laid off a number of Product Managers.
The kicker was the stated reason for laying off those PMs — “to speed up decision making”. i.e. the implication being that Product Managers were a drag on moving quickly and making fast decisions.
Maybe the problem was the system the Product Managers were working in, or the quality of their leadership? Anyway, this also got the online community talking about Product Management. Was this another nail in the PM coffin? Hint: It wasn’t.
3. Poolside PM goes viral
Who can forget the poolside PM video by Darby Maloney that went viral drawing both admiration and scorn. But was she (and her coworker friend Kallie) actually doing Product Management? Watch the video if you haven’t already seen it.
Darby created the video to try to explain what a Product Manager does.
“What’s a Product Manager?” Darby asks?.
Her friend Kallie (in the pink shirt) responds: “We help prioritize and help the engineers stay on track and help them know what to build.”
So, that sounds more like Requirements, Project and/or Delivery Management, and not Product Management, but you can see why this short video got people talking.
You can (and should) listen to the detailed interview with Darby on Jason Knight’s excellent podcast One Knight in Product.
It’s well worth the listen to get past the memes and superficial responses to what Darby was saying. She also explains the context of the video, and like most things, the details matter.
NOTE: For completeness, here’s a follow up video Darby posted to that orginal poolside video to address comments she received about it.
Bonus: Episode 156 of Jason’s podcast is also a good episode to listen to. 😃
4. Product Managers Quitting, But Not Quietly
And lastly there was this December 2023 survey that indicated that 2/3 (yes, 66%!!) of Senior Product Managers in the US were looking to change jobs in the coming year.
That’s a very large percentage looking to leave good paying jobs. It’s #1 on the list. Not the kind of #1 ranking you want to brag about. Below is a screenshoot of the first 5 of 15 jobs in the list.
My Own Theories
As Product people, we have to ask ourselves why this is the case? Why the immense dissatisfaction in what is considered a high paying, in-demand job?
I have my own theories, as well as some evidence. I wrote about some of the major issues in Product Management here:
The 5 Dysfunctions I listed in that article are:
- Poor Job Definitions
- Under-skilled Product Managers
- Poor Processes
- Unclear Objectives
- Weak Product Leadership
Think about working in a company where some, or possibly all, of the above exist. How demoralizing and frustrating would that be? And while the above 5 are VERY common, and from my experience, most startups, companies or Product Management orgs have 2 or 3 (and sometimes more) of these dysfunctions, the most impactful of these is Weak Product Leadership.
A capable and experienced Product Leader (VP Product, CPO, even a strong Director) could address many of the other dysfunctions, and many other problems that plague Product orgs. They could probably significantly reduce that 66% Product Manager turnover statistic. Recall the line that people don’t quit their jobs, they quit their managers.
I love the following quote from David Marquet’s book Leadership is Language.
“As individuals, we should embrace our responsibility for being the best we can be within the design of the organization.
But as leaders, our responsibility is to design the organization so that individuals can be the best versions of themselves.” — David Marquet
The second half of that quote is critical. It is the Product Leader’s responsiblity to create an environment where Product Managers can thrive. And yet, in so many companies, that is not the case. Product Managers struggle AGAINST the organization to do their work. Add in to that poor job definitions (part of the bad system), lack of necessary skills, unclear objectives etc. and it’s no wonder things are a mess in the Product orgs of so many companies.
But the elephant in the room is…
But, there is one problem that I see over and over again, and maybe it should have been in that article, but it deserves to be discussed explicitly. It’s the cause of a lot of problems, not just for Product Management, but for the companies themselves.
That problem is the lack of a clear and explicit connection between the product work that is planned and gets done, and the business goals that companies want to achieve.
This ties into the Unclear Objectives and Poor Processes dysfunctions I listed above, but it’s actually much larger than that. Let me dig into this.
1. Product Management is Business Management
There’s a lot of discussion about what Product Management is and isn’t, with people having various definitions and interpretations of the term. Certainly Chesky had a view and made specific changes in his company to align with those views.
What I always find funny is that when people say “Product Management”, it’s interpreted more like “PRODUCT management” i.e. big emphasis on PRODUCT and little thought about what the “management” actually is.
And yet, in Product Management, the main word is MANAGEMENT. Product is the modifier; the adjective. It’s MANAGEMENT of Product.
But what is the management that people are actually doing? For many people who work in Product Management, the work is heavily (or exclusively) skewed towards feature & delivery management. Where is the BUSINESS management — i.e. risk management, cross-functional management, stakeholder management, financial management, operational management, strategic management, lifecycle management, etc.?
Product Management in Consumer Packaged Goods (CPG) is clearly BUSINESS management of those products. CPG Product Managers are focused on the markets and sales/distribution channels and driving business success for those products.
The McElroy Memo
Product Management is viewed to have started at Proctor and Gamble almost 100 years ago — 1931 — with Neil McElroy and what has come to be known as the McElroy Memo. If you’re not familiar with Neil or his memo, read this article below by Ken Norton. It’s worth the time to understand a major milestone in the formation of Product Management.
https://www.bringthedonuts.com/essays/product-management-mcelroy-memo-turns-ninety/
Like CPG, the same is true in many other verticals such as pharmaceuticals and retail. i.e. the Product Management roles are BUSINESS management roles.
It’s only in technology and many enterprises, where there seems to be confusion (or neglect), and an over focus on the “product” part. i.e. on building and shipping the product. In fact, this focus is so prevalent that the build/ship parts became the sole focus of Product Managers in far too many companies.
It’s time to shift the focus of Product Management more to the MANAGEMENT side and align product and business much more closely.
Product Management is Business Management
I wrote about one aspect of this in this article below.
i.e. EXPLICITLY aligning what we focus on in Product to specific business objectives and getting agreement on that with leadership.
But that extends to far more than simply what to build and deliver. e.g. if there’s a goal of increased revenue, we need to look at ALL the levers we have in that area.
Yes, that might include MORE product capabilities (or new products), but that new revenue can come from improved pricing, packaging, bundling, partnerships, new markets, better market segmentation and positioning, messaging, refined GTM, better, more focused ICPs etc. There are a LOT of levers to MANAGE beyond simply building more product.
In a nutshell, Product Managers need to align their work to clear business objectives defined by senior management. These can be aligned to increased revenue, market expansion, profitability, retention, adoption etc.
The Product Managers then identify how they, via product and cross-functional organizational work, can support and contribute to these objectives. This is done in COLLABORATION with senior management. Thus, there is a clear connection and relationship between the goals of the business and the work within Product Management that is understood by all.
Without this connection, the gulf between the product org and business creates friction, uncertainty and waste for the company; something that is far too common.
Once the connection between product and business is clear, it can drive focus and actions across and through the company, to Marketing, Sales, Operations, Services and beyond.
2. Product Success Drives Business Success
Business success — i.e. revenue, profits etc. — is almost entirely driven by product success — i.e. adoption, utilization, expansion, renewal etc. of products. This seems pretty obvious.
But far too many companies don’t explicitly focus on the relationship and pathways between product success (the leading indicators) and business success (the lagging indicators).
It’s fundamental to define what business success really means. Business success is about more than just revenue and profits.
Business success is about designing a company that can repeatedly create and deliver products (or services), that maximize the return on those products, and create sustainable competitive advantage in the market.
Note that none of this requires or mandates shipping rapidly or continuously, or building without deep understanding of market needs and then iterating. i.e. beliefs and behaviours common in the technology product space.
In fact, to create SUSTAINABLE competitive advantage, companies MUST understand their markets, customers, competitors and make explicit choices —i.e. define and execute on strategy — that positions them with the best odds of winning, by differentiating themselves and their products/services for their target markets.
Note the highlighted words: strategy, positions, differentiating, target markets.
These are all business terms, and none of them specific to technology companies. And yet they are also commonly glossed over or ignored by many Product Managers in technology/software companies.
POP QUIZ: Can you state how your own products are positioned and differentiated in the target markets you serve?
If you can, bravo. If you can’t or it’s difficult, then take it as a homework exercise to go figure that out with your manager (and product marketing counterpart, if you have one). If you need some help in doing this, contact me. 😃
As Product Managers, we have to be thinking about these things constantly — strategy, target markets, positioning, differentiation etc. Because if we don’t, who will? These are foundational elements when defining and building products and absolutely required to market and sell them and drive business success.
3. Product Leaders are Business Leaders
Product Leaders — VP Product Management, Chief Product Officer, even Director Product Management — MUST be business focused. If product success drives business success, then Product Leaders have no choice but to be business focused, because their job is to help the organization define, deliver and take successful products to market.
And yet, in many companies, this is not the case. And it’s not always the fault of the product leaders. I know a number of such leaders who have to fight and push to be seen as business leaders.
One CPO told me that in her company — a Sales-led organization — the product organization is seen by the CEO and VP Sales (and likely other executives) simply as a delivery organization. i.e. deliver on the features that Sales teams sell, and make sure “the product” works well overall.
There was no understanding of targeting new markets or building for markets or setting the company up to compete more effectively or having a clear vision for the future. The focus was on the NOW. i.e. supporting what Sales and Marketing were doing to “bring in the revenue”.
Sales-led companies can flourish. I won’t say they can’t. I know a couple that were successful, grew and went public. It’s hard to argue with that. But the devil is often in the details. i.e. it’s not just “Do whatever Sales says”.
The Sales org and leadership must be disciplined. They must have clarity of focus on markets etc. and not dictate what should be built, but work closely with Product Management and Engineering when new feature requests or customizations arise.
A great example of such a company is Snowflake. They grew like a rocketship for years. It’s hard to argue with that kind of success. But how did they handle Product?
Snowflake’s current CRO, Chris Degnan, was the first sales rep hired by the company. He was there in the very earliest days of the product and has overseen that growth. But when Chris was interviewed on a podcast, (I highly recommend you listen to it) he said the following (paraphrased) :
“Put Product in the room with the customer to get direct feedback. It’s not for me to decide the Product Roadmap. Bring the Product team to the Customer and the Product team makes the decision.” — Chris Degnan, CRO Snowflake
THIS 👆is how Product Management and Sales can and should work together.
A good Product leader will build trust and a strong relationship with Sales (and vice versa).
Product success drives business success. And there can be no product success without sales success. They’re interrelated, so the two orgs need to be aligned.
Product leaders need to be business focused LEADERS, not subservient to other functions, regardless of how much influence those other leaders have. Sales, by definitions is focused on the NOW. Product is MORE focused on the future which attention to the now. In the words of Steve Johnson:
Sales is responsible for this year’s revenue. Product Management is responsible for next year’s revenue.
Product Leaders are business focused, but their focus is on setting the company up for ongoing future success. Sales is reaping the benefits of the work the Product has already done.
4. Product Planning is Business Planning
If product leaders are business leaders, then product planning has to be business planning.
But, if you look at most companies, product planning is simply or primarily deciding what “features” to build next. There may (or many not) be some rigour in that process (usually not), but the focus is on the build process. A lot of time and effort is put into this process — every sprint or every month or every quarter etc.
And yet, only a small fraction of that time is spent in ensuring that (or having high confidence that) what will be built will help drive the business goals the company needs.
Here’s a quote that a VP Marketing at a client once shared with me after their Product Managers presented their various roadmaps.
“How is what Product Management presented going to get us to $XX million? Where is the big picture? It seems everything is looked at as individual products instead of as a portfolio to grow.”
Product plans MUST be tied to business plans.
One very simple change companies can make is to start launch planning alongside product planning. i.e. as you’re working through the decisions on what to build and deliver, bring in Marketing and/or Product Marketing to discuss these plans so they can be aware and start thinking about launch.
This not only helps align Product and Marketing, but the lead time gives Marketing the opportunity to make informed decisions well in advance of when execution must occur.
And as for any business plans, they will be a hypothesis — i.e. how well will those product plans contribute to the business goals— because none of us can predict the future perfectly, but that hypothesis can be supported by data and validated assumptions.
The goal is to have an agreed upon picture of the path forward with strategy (choices) that are grounded in reality, aligned with GTM, that is then monitored and adjusted regularly as needed.
In Summary
In tech companies, we need to (re)create the explicit connection between business and product. This means creating a system and culture that understands how to balance long-term business goals and short-term revenue realities, and where the latest shiny objects or “hot deals” don’t divert from the core focus of the companny.
Product leaders MUST embrace the business aspects of their job. They are business leaders no different than those who lead Sales, Marketing, Finance, HR and yes, even Engineering. If they don’t do this, then Product Leaders are setting their teams up to be Delivery Managers, not Product Managers.
Product Leaders must understand, live and instill the 4 principles below into their teams . Product Management is a critical lynchpin in the success of the business. The cross-functional aspects of the role — often ignored in many companies — are fundamental to aligning teams and orgs and accelerating the path to success.
- Product Management is Business Management
- Product Success drives Business Success
- Product Leaders are Business Leaders
- Product Planning is Business Planning
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