16 min read

Why Is Product Management Important?

QUICK SUMMARY

The role of product managers is critical to organizational success. Find out why, along with the variety of roles and responsibilities that product managers may be called upon to fill.

TABLE OF CONTENTS Why Product Management Is Important? The Role Of Product Management In An Organization What Is The Role Of A Product Manager? Who Works Under Or With A Product Manager? Successful Product Management Processes And Practices

Product management is the most important function in an organization, with the term "product" meaning both products and service offerings. Other functions like marketing and sales, engineering, or finance might feel otherwise, but without a product development team delivering a solid product that customers are willing to buy and use, a company's prospects are poor at best.

Here’s what I plan to discuss in this article:

Why Product Management Is Important
The Role Of Product Management In An Organization
What Is The Role Of A Product Manager?
Who Works Under Or With A Product Manager?
Successful Product Management Processes And Practices
How To Hire A Great Product Manager

Why Product Management Is The Most Important Role In Your Organization

Product management is the reason an organization exists: to deliver great products to customers and hopefully make tons of cash. However, having the right product strategy and developing a successful product is hard because Darwin rules supreme in the world of products. Most new products and start-ups offering products struggle to survive.

Here is a shortlist of the challenges faced by an organization in product management terms:

Customers cannot easily articulate what they want
The technology landscape is changing rapidly
Competition is fierce and global
Industry boundaries are changing
Players from outside are launching products in your markets (Tesla, Apple)
Product pricing is more challenging than ever, especially given global competition
Operational efficiencies and economies of scale are making mincemeat of margins
Figuring out how to be #1 or #2 in any market is harder than ever
Getting the maximum ROI from an organization’s existing financial resources and other resources is difficult

I’m just rattling this off the top of my head. Creating successful offerings that can deal with all these criteria is what keeps product managers up at night.

Good product managers who can make sense of the cacophony of customers and markets and then dream up and deliver successful products are worth their weight in gold.

What Is The Role Of Product Management And Product Dev In An Organization?

illustration of a conductor and orchestra with the conductor labelled as a product manager and other orchestra members labelled as ops, design, management, finance, and other departments — *Product managers are akin to conductors of orchestras.*

The product manager role has traditionally either been part of engineering for technology-focused companies or has been a part of marketing for consumer companies. To understand why it is important for product management to stand alone, we need to first examine what the role entails.

It is often said that a product manager is a jack-of-all-trades and must know a little bit of everything, but that is not exactly correct. The truth is that a product manager must know enough of everything, which is a whole different enchilada. The definition of "enough" differs from industry to industry and from organization to organization.

Additionally, product management must be independent enough to be able to determine product roadmap, direction, and strategy. For instance, a product manager reporting to an engineering head will be forced to focus on engineering details like technical specifications & requirements.

On the other hand, in marketing, a product manager will need to be primarily focused on the marketing aspects. This is natural because the heads of each of those functions want to ensure that their division does well, which ironically means the product management function as a whole, does poorly. A classic case of local maxima.

What is needed is for the product management function to be equally involved in both. Therefore, it is best to have product management as a separate, independent entity with its own C level representative and clear definitions of success. Even an early-stage start-up with no org chart needs to keep its product management function independent.

The location of product management in an organization's structure will quickly tell you whether a company considers the function to be important.

What Is The Role Of A Product Manager?

A product manager is someone who can make soup out of stone. If this is being vague, it is because the role is not easy to pin down. Product managers have influence over cross-functional teams, and are often leaders, not managers, in the sense that they have no direct authority and no large teams assigned to them.

In a larger organization, the product management function may be split among roles like group product manager, technical product manager, growth product manager, and product owner. However, someone in product management, such as the vice president of product, will be responsible for everything, so let’s take a look at things from that perspective.

The mission of a product manager is simple: deliver successful products. The path to that goal, however, is complex and requires a product manager to wear several hats:

The Idea Evaluator Hat

Every good product manager needs to have a system to receive new product ideas or features and evaluate them. Typically evaluating ideas involves a combination of market and domain expertise, customer insight, and a mechanism to evaluate the idea in the real world.

Such a system would include steps like focus groups, customer surveys, pilots, MVPs, or A/B split testing. Some of this may be part of marketing, but ideally a product manager has to be part of the evaluation team.

Even if an idea has merit at first glance, it may not be viable:

The market may be too crowded with options
There may be no other similar product on the market which means having to educate prospective customers
The cost of manufacturing may be too high
Customers may not be willing to pay for a product
There may be insufficient barriers to entry which means too much competition too soon

The Strategizer Hat

No product manager can function effectively without the ability to create a strategy for one or more products or features along with a roadmap for these. Strategy involves defining a vision, using business models to evaluate the possibility of success, analysing the competition, and defining the product position or brand position in the market.

Getting strategy right is insanely for new products in uncertain business cycles, but it is hard at the best of times. A good strategy needs to be accompanied by a roadmap with clear outcomes, goals, a timeline, and checkpoints or gates.

Once the strategy is in place, a good product manager will evangelize it inside the organization to all the stakeholders and constituencies. The strategizer, therefore, needs to be a great communicator, able to win over the hearts and minds of product teams and stakeholders alike.

Learn more here: Using Product Strategy To Make Meaningful Impact (with Chanel Maddox from Crema)

The Market Maven Hat

This person needs to be a guru in the markets where their product is sold. They need to have a deep understanding of customers’ psyche including how they perceive a product and why they are motivated to buy.

Simultaneously, they need to know the competitive landscape thoroughly including each competing product’s comparative strengths.

The Naysayer Hat

Product managers must be able to deal with the tug-of-war between various constituencies within the organization and outside. They need to be able to keep their focus on what’s best for the product and say no to everything else.

A seasoned product manager will be able to decline a request while explaining why. They will be comfortable with the disapproval of others. A thick skin is an essential tool in the armory of a product manager.

The Empathizer Hat

In this role, a product manager has the customer’s best interests at heart. The empathiser can hear not just what a customer is saying but also what that customer is unable to articulate clearly or is hesitating to say.

Getting into customers’ heads is non-trivial and requires the ability to ask the right questions, understand the nuances of vocal tone and body language, and have deep empathy for a customer.

This is a critical ability because without having the right understanding of what customers need, and more importantly, being able to intuitively suss out what customers don’t know they need, a product can be dead in the water before it is even launched.

The Advocate Hat

An advocate speaks up for and represents the customer or any stakeholder who is not present in the room. Typically, since customers can't attend meetings, the product manager in the advocate avatar becomes a customer, asking questions from the perspective of a customer. This goes hand-in-hand with having deep empathy for a customer.

Sometimes, this role requires a PM to be the devil’s advocate who asks tough questions that no one is asking or that everyone is avoiding.

The Deliverer Hat

Getting the right product or feature through the door in time is one of the key responsibilities of a product manager. In this role, the product manager pushes hard to release a product.

This may involve nudging the engineering team to expedite, removing roadblocks to marketing or distribution, and taking specific actions to ensure that a product or release hits the market on time (or more realistically, after minimal delays).

Achieving operational excellence usually involves using carrot-and-stick or kissing and kicking approaches, and having the willingness to be tough and realistically stubborn when it comes to meeting deliverable deadlines, and goals.

A product manager needs to be tough without being an a-hole as far as possible. These definitions may seem vague and one person’s tough guy is another person’s a-hole, but the point I’m trying to make is to have the driven sense of urgency and fire that pushes teams just the right amount to get them to deliver while keeping morale as high as possible.

If being tough sounds difficult, there is always the option of getting into an easier line of work like becoming a navy SEAL. 😉

The Analyst Hat

While a lot of product management requires intuition, heuristics, and gut feel, there is a whole world of data, metrics, and analytics that can tell a product manager how the product is doing. The ability to analyse, digest, and make sense of the ocean of data that is available is critical to being a successful product manager.

For instance, which metrics are real and which ones are vanity metrics that will simply kick problems into the future? If the number of users/subscribers go up after a sale discount, what does that mean? Is it better to go after more prospects and have a higher churn rate?

Even received wisdom like the 80/20 rule a.k.a the Pareto Principle can be misleading. In software, 80% of users indeed use around 20% of the features of an application, but if each user uses a different feature set that amounts to 20%, it makes no sense to optimise for 20%! This is an important consideration for LITE versions of a software product.

The Optimizer Hat

In the messy and competitive world of product management and dynamic markets, a product manager often needs to choose between two equally (apparently) difficult options. Limited resources, strict deadlines, and tough competition means making hard choices and figuring out the optimal route to product success, despite all the constraints.

The optimizer can deal with ambiguity and pivots—continuous changes in direction—that are inevitable in early-stage product development.

Who Works Under Or With A Product Manager?

This depends on whether your organization is a start-up, an SMB or SME, or a large enterprise. In a start-up, the founder or CEO may be the product manager and therefore have everyone reporting to them.

In Small and Medium-sized Businesses (SMB or SME), there will usually be a distinct role for product managers with the product management hierarchy looking something like this:

Chief Product Officer (CPO)

The CPO is the C-level representative of the product management function, usually the senior-most in the organization. This person is responsible for the overall strategy and budget of the product management function.

Head Of Product Or Vice President Of Product

This role involves managing a group of product managers in a large organization along with P&L and budgetary responsibilities. In some organizations, the VP Product is also the CPO.

Senior Product Manager Or Product Manager

A product manager owns a specific product and leads it through the product life cycle. A senior product manager is a seasoned product manager who guides or acts as a mentor to other product managers.

Junior Product Manager Or Associate Product Manager

This role involves working under a product manager having responsibility for a specific part of a product or even a complete small product.

Product Owner

Strictly speaking, product owner is a role in Agile and Scrum, not an organizational role. The product owner role may be played by a product manager, a junior product manager, or even a business analyst.

Product managers may be part of a product team that consists of marketing, UX, architecture (for software companies), and analytics. They may be responsible to ensure that engineering delivers on spec, in time.

How Successful Product Management Processes And Practices Increase Business

Successful product management practices can determine whether a business succeeds or fails. Some of the factors that impact a business from a product culture or product management perspective are:

Resource allocation: Most companies have limited resources and an unlimited set of opportunities to deploy those resources. Product management can determine the optimal resource allocation strategy, helping a company get the most bang for the buck.
Alignment with real, current market requirements: It is easy for businesses that have been successful to continue down a redundant path. Success can be its own undoing and the history of business is littered with examples where someone held on to an outdated strategy for too long. Nokia and Blackberry are two examples of market leaders in a single industry that lost the plot. A high-quality product management team will help ensure that an organization’s strategy is guided by market realities and not by mere wishful thinking.
Delivery of terrific products: Good product management practices help a company that has the right resource allocation strategy and market strategy to build and deliver awesome products. Delivery can involve creating product specs, guiding engineering and marketing teams, and coordinating with distribution channels.
Sales enablement strategy: Helping your sales team to generate the maximum possible sales is an important aspect of product strategy. Ensuring that the sales team has the in-depth product knowledge, the tools, and the content to succeed, forms the basis of the sales enablement strategy. The content and tools include product guides, articles, whitepapers, blogs, videos, feature lists, product comparisons, or any other assets that help a sales team to identify more prospects and close more deals.

How To Hire A Great Product Manager

As I’ve already mentioned before, finding an excellent product manager is not easy. However, there are several steps you can take to improve the odds in your favour. Have a clearly defined role tailored to your organization’s product strategy.

Be Clear About What Is Expected From Your Product Manager

Are you looking for a product manager who has successfully managed a multi-million-dollar product in a similar space and brings in that experience?
Do you need someone who has deep knowledge of technology (in which case you may need a technical product manager)?
Do you want a PM who will roll up their sleeves and tackle challenges coming at them from multiple quarters in a start-up?
What does your current product roadmap look like?
At which stage of the product life cycle will they be joining your organization?

Identify Clearly Where A Product Manager Fits Into Your Organization

Will they report to the CEO? The head of product?
What teams or individuals will report to them?
Will they be managing one single product or a product portfolio?

List out the skills, responsibilities, and key performance indicators (KPIs) that are critical to your hire’s success.

Where To Find Product Managers

Sourcing candidates for your open product manager position will involve accessing multiple channels: LinkedIn is a great source for potential product management hires from around the world. Top job search portals like Indeed, Monster, as well as sites like Glassdoor can help you reach out to candidates. Remote working sites are another option to locate potential hires.

Hiring Process

Since the skills required to be a successful product manager are varied, product managers typically come from one of these three backgrounds: marketing, design, or engineering. This in turn means that your PM candidate has a natural preference and affinity for one of these.

Your interview process needs to be able to identify the stars from the also-rans. Your process might involve steps like:

Resume filter: Identify a fit based on the resume and see whether it is worth setting up a 30 minute telephone or video interview

30 minute video interview: Here, you as the hiring manager attempt to understand your candidate better. These are some ways you can find out if your PM candidate is a good fit:

Are they passionate about product management? Ask questions like “Name one great product you have personally used in the last year. Why do you feel it is great?” Look for specifics in their response that tells you about how they think as a product manager.
Do they have the required skill set for your organization? Ask questions about what skills they feel a product manager needs and which ones they feel are their strongest ones. Needless to say, it pays to be tactful with senior candidates.
Are they a good fit for your organization? Provide one or more challenging scenarios that a hypothetical or actual product faced and see how they would tackle such a scenario.

Panel interview: If your candidate has passed the first two filters, get a panel to interview them. Your panel can consist of the hiring manager, one or two colleague PMs or senior PMs, and someone from design and engineering. This can help identify the cultural and personality fit.

Decide the structure of interviews in advance and ensure that confirmation bias and the halo effect are minimised or eliminated.

Offer, Acceptance, Onboarding: Finally, once you’ve decided to hire, extend an offer and set up the onboarding process once the offer has been accepted and your PM hire is due to join.

What’s Your Take?

Like everything truly worthwhile, product management takes time and effort to master. During this process, you may sleep like a baby (wake up crying every couple of hours), but the rewards are well worth it.

If you are an experienced product manager, feel free to share your challenging experiences in the comments below. If you are a new PM, let me know why you decided to become a product manager and what aspects of product management challenge you the most.

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