Creating a Strategic Product Plan

By Bill Thomson
September 08, 2008

Most technology companies have a product management department serving as the “voice of the customer” and helping to better understand market needs but is product management really being used strategically?

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Now an astute executive may ask the product management team to answer or help answer many of these questions. And that makes some sense since product management sees market opportunities, has heard customer feedback first hand and has aggregated it from others, has tracked competitor’s moves, and has an in-depth view of their products’ financial trends. But at the same time you still want to leverage the knowledge and experience of the executive team and make sure they agree with the assumptions and logic being used.

Therefore, a practical approach to strategic planning could involve a meeting (or series of meetings) where product management presents their market and customer information to executives, who then have a chance to discuss what they have heard and how they think it should apply to the future of the company.

You could expand the discussion to include input from other functions like sales, marketing, and finance so that everyone is hearing key information that will lay the groundwork for the strategy. In a subsequent meeting, product management can replay the conclusions and decisions from the previous discussion(s) and then present a proposed product strategy that responds to them. Hopefully by then, a consensus on the strategy will be reached and the product management team (with the assistance of development) can then present an updated roadmap and proposed release schedule for the coming quarters for final review and approval.

The second reason why corporate strategies are not incorporated into product plans is that product managers don’t know about them or don’t understand them. It is certainly possible that an executive team will define a company strategy and then will succinctly describe that strategy in a form that can be handed down to all employees for successful execution. More typically however, the executive team communicates the strategy to their teams in a less formal fashion. Atone mid-sized software company, the executives felt that the strategy was too sensitive to share broadly and tried to share it on a “need-to-know” basis only. Most of their own employees were therefore in the dark about how to successfully execute the strategy.

The product management team is a key executor of the strategy. The will translate corporate strategy into product strategy and will create roadmaps that drive the work of many of the company’s employees. For product managers to thoroughly understand the corporate strategy is to significantly improve the odds of its successful execution. Thus, I would highly recommend that the entire executive team present the strategy directly to the product management team. This will facilitate the necessary dialogue and allow for a joint understanding of the implications to the product strategy. Product management should then be required to develop a product strategy and proposed roadmap and present back to the executive team to close the loop and ensure alignment with the corporate strategy.

The third reason why a corporate strategy may not be adequately incorporated into product plans is that the strategy itself appears to be inconsistent or contradict market and customer data heard by product managers. This is a likely result if the executive team developed their strategy without being adequately in touch with the market and customers.

If the product management team is being utilized appropriately, then they will be serving as the “headlights” of the company driving the front-end of the product development process and thus they will be spending the majority of their time discovering market opportunities, customer needs, technology trends and competitor positions. Now executives should always make it a part of their jobs to speak with customers and to review market trends.

But to ensure they hear the wealth of available market and customer information, it should be considered a prerequisite to developing the corporate strategy to have the product management team present a review of what they have learned.

You may have noticed that in all three of the cases where corporate strategies are not adequately integrated into product plans, we found that the solution was direct communications between product management and the executive team. Product management can help to educate senior executives with their market and customer knowledge, can help mold the strategy, and must also hear it first-hand so that they can properly execute it. However, there are reasons why this direct communication does not occur.

It is quite common for the product management team to report to a VP of Marketing or a VP of Product Development who represents them at senior-level meetings. These are broad functions with many responsibilities. Marketing executives are often measured and rewarded on driving revenue (with sales) for the company.

Product development executives are expected to deliver quality products on schedule. Now I am admittedly oversimplifying here, as many good executives will make decisions with a big picture perspective on business priorities beyond their direct responsibilities. But there are some general tendencies based upon short-term rewards and there are limits to a person’s time and attention. So when sitting at the strategy planning table, what types of things are they most concerned with? How well do they understand customer needs and market opportunities? Is profitability one of their primary concerns? Are they concerned with short-term or long-term issues? In other words, will they be good representatives of the market and will they push to defend the bottom-line?

This brings us to a broader issue at many technology companies. Who is actually concerned with profitability and the balancing short and long-term goals? Who is ensuring that every key decision is being made with key business goals in mind? In short, who is minding the store? For most functionally-aligned technology companies comprised of sales, marketing, operations/support, development, and finance, the lowest level of management where accountability exists for profitability and long-term strategic issues is amazingly the COO, if one exists, or the CEO if not. Think about it. The sales organization is primarily concerned with revenue and tends to be short-term focused. Marketing typically supports sales objectives. Operations and support keep the services running well, maintain customer satisfaction and are primarily cost centers. Development focuses on delivering quality products on schedule and is also managed as an expense. Finance tracks revenues and costs but is in a limited position to influence them.

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About the Authors

  • Bill Thomson is a consultant and expert in strategic product planning based in Fort Lauderdale, Fla. He has 25 years of experience conceiving, developing and successfully growing high-tech products and services and has more than 12 years in product management leadership at companies including AT&T, Citrix, Adir Technologies,and NTT/Verio. Contact Bill at bill@thomsons.us.


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