Product Managers are Really Super Heroes in Disguise!

By Nilofer Merchant June 20, 2007

There are two really hard jobs inside a company. One is being a CEO, and the other is being a product manager. Both the CEO and product managers are expected to be the most flexible, acrobatic kind of leaders—adjusting to people’s styles, making sure to communicate with clarity the requirements of what is needed, translating vision into specifics and constantly at the beck-and-call of many constituents. It’s a wonder someone would take either job.

As the point of contact between customer needs and engineering realities, a product manager is the linchpin who can make a product into a market success, or doom it to irrelevance. This determines whether a company lives or dies. Yet, many people don’t really get product management. Companies often fail to give product managers the support, training, and empowerment they need to succeed.

This article is my attempt to put the super hero cape onto product managers and to share what I think they need to be successful. Note to all product managers: share this with your boss.

Gone are the days when product managers created things. Some of the existing concepts in the industry today are based on old-school thinking of what constitutes a product. In the 1980’s, Porter’s model focused on the competitive edge of a company being managed by a silo function: design manufacture build market sell deliver. Product managers had to be the first to see the product definition vision of the silo function, or the market would have moved from underneath the company. It was a 2-year cycle, and it was largely about defining a product and shepherding that product to life.

That’s not the case anymore. Products are not the thing, solutions are. But I’ll get back to that later. I’ve been thinking about what constitutes market power in today’s era. I have a notion that replaces Porter’s model, at least in technology and the Web 2.0 era.

Why does product management matter?

In a word, globalization. More than ever before, efficient and low-cost companies in other parts of the world, some of them government-subsidized, have access to markets in the First World. Many of these companies specialize in the rapid, low-cost production of generic copies of successful products. A company based in the developed world can’t win just by making a good product at a reasonable price. To survive, Western companies must innovate—and they must make sure their innovations are compelling enough that customers will value them, even if they cost more. I would also argue that what we need today is “solutions” not “products.” That requires an inherently broader aperture to clearly understand the situation.

One of the most successful products in today’s market is the iPod™. When Apple® introduced it, the market for MP3 music players was commoditized, and dominated by no-name Asian manufacturers. The company was playing a hardware game, and the customer was expected to do a lot of work to assemble the real solution. Apple created the iPod (the hardware) but what made it “it”, was the accompanying iTunes™ music service. Apple’s approach made e-music purchase and playback much easier than it had ever been before, and the market rewarded Apple with an estimated 70%+ share in the US market for mobile music players.

The solution is also tied to who is using/deploying the solution. When selling dental implants and crowns, the initial customer isn’t the person getting the implant, it’s the dentist who sells and installs the implant. For the patient, a major drawback has been the number of visits required to create and install a finished implant. Recently new systems, such as Cerec® from Sirona Dental Systems, Inc., compressed the multiple office visit process to a single visit. The patient’s implant is measured in the office, fit is tested on a computer, and the finished ceramic implant is milled by an automated machine in the doctor’s office—all while the patient waits. This increases satisfaction for the patient, and saves time and expense for the dentist. Sirona’s insight was realizing that the dentist needed an implant production system, not just a medical CAD software program.

On the consumer side of dentistry, Procter & Gamble® realized that there was increasing interest in tooth whitening as the baby boomer generation aged. But conventional tooth whitening meant either a trip to the dentist or the use of uncomfortable home-use trays. P&G™ combined its expertise in fabric bleach, toothpaste, and thin film technology to create Crest Whitestrips®, a product that lets people whiten their teeth by applying a thin bleach-saturated plastic strip to the teeth. Creating this sort of cross-discipline connection is one of the key tasks of product management. The result in P&G’s case was a renaissance in the stale and commoditized tooth-care business. Suddenly tooth whitening was easy and convenient, sales took off, and some reports show P&G’s Crest® brand displacing Colgate® as the market leader.

The markets for things as simple as tooth cleaning, music, and dental implants are vastly different, but the common thread between these solutions was that the manufacturer had an important insight into the customer’s unmet needs and how they could be answered through solutions. Generating that sort of insight is the essence of good product management.

Why does product management fail today?

Theoretically, a product manager’s involvement in the development of a product should be concentrated at the beginning and the end of the process. At the beginning, the product manager is responsible for defining the product—who it’s for, what problems it will solve, and how big the opportunity. At the end of the process, the product manager is responsible for feeding that information to Marketing, in a form that they can easily transform into messages and deliverables.

The reality at many companies is that the product manager often gets pulled into the middle of the development process as a problem-solver. When there’s a risk of a schedule slip, a conflict over resources, or a change in the market, the product manager often attends meetings and researches options, which eats into the time available for their core tasks. Product managers are so overburdened that they can no longer truly lead their products. They can’t do the up-front work necessary to define a winning product strategy, or the back-end work to make sure it’s marketed properly. The result is inevitably mediocre products that don’t hit their sales goals, and product lines that aren’t well differentiated from their competitors.

A critical goal for any company’s product management process should be to avoid this time trap.

How to get it right?

To get consistent and insightful leadership from product management, a company needs to consider several things to avoid the process from falling apart:

  1. Create a corporate culture in which product management leads.
  2. Support product managers with information and peer groups that help them succeed.
  3. Train product managers to listen properly to three key audiences—customers, competitors, and their own executives.
  4. Hire product managers and engineers who can collaborate.

1. Create a culture in which product management leads
In many companies, engineers are the kings and queens of the product development process. They build what interests them, or they build what they think some imaginary customer would want, no matter what input they get from others.

Our favorite example was an engineering director who once sent a memo to Product Management saying, “We’ve finished designing the product, now we need you to write the Market Requirements Document so we can do the launch.” That company was once a major technology player; it’s now on the verge of bankruptcy.

Sometimes engineering-led companies are successful. If they have brilliant engineers, or if they get lucky, they may manage to hit a sweet spot in the market. But most engineering-driven companies have very inconsistent results. Many of their products will win praise from technophiles, but won’t sell in volume. Numerous Asian consumer electronics companies are notorious for this, but they have cost structures that permit them to do “spaghetti development” in which they throw large numbers of products at the market to see what sticks. Western companies, with their higher cost of development, need a much higher success rate.

The ideal culture for success is one in which product development teams acknowledge the leadership of Product Management. They may argue about features and advocate their own ideas, but in the end, the product manager makes the decisions and Engineering carries them out. This is actually a two-way deal—Product Management should decide what needs to be done but let Engineering figure out how to do it. A product manager who starts second-guessing pure Engineering decisions usually ends up neglecting the work that only a product manager can drive.

2. Get the right information and peer support
Product managers’ thinking about the market is only as good as the information available to them. That sounds obvious, but it’s surprising how many companies make major business decisions based on poor or sparse information.

Companies often depend too heavily on the advice of syndicated industry analysts. Analysts have a valuable point of view, but their advice usually reflects the industry consensus, and most of the analysis companies don’t have enough budgeted to do original quantitative research in all the markets they cover. That means most of them are relying on the things they hear from others in your industry, plus their own hunches. That’s not a great basis for running a company. I don’t want to hear one more person quote Gartner, Inc. or IDC to confirm a market size or trend in a concept review. It’s silly to do so.

Be cautious about industry growth forecasts. It is difficult for anyone to predict the future accurately, but asking an analysis company that doesn’t do quantitative work to make a forecast is especially risky. The track record of most industry forecasts is remarkably bad. For example, at the start of the decade, the analysts over-forecasted demand in mobile phones, and then significantly under-forecasted demand for mobile phones in each of the last two years. Even worse, much of the growth has come from developing countries, at lower price points than most of the analysts expected. Companies that invested heavily in making expensive “smart phones” for the developed world, a market that was supposed to explode, have suffered.

It’s important for a company to do its own original, balanced research as part of the product planning process. In the case of consumer products, or enterprise products deployed broadly, the research should be qualitative and quantitative (in other words, focus groups / 1:1 interviews with early adopters, plus a numerical survey). There are two benefits to doing this research yourself. First, it ensures the quality of your data. And second, it allows your product managers to test the exact ideas they’re considering. The more specific the research, the more actionable it will be.

The primary reason companies don’t do this is cost. But skimping on research is a false economy if you’re investing millions of dollars to develop and market a product. For smaller-scale projects, the Internet has made it much less expensive to conduct quick and simple surveys. There is no excuse for not doing your research.

3. Listen to customers, executives, and competitors
One of the more common questions about product management is why company “A” is successful and company “B” is not. It’s often that company “A” somehow does a better job of listening to its customers. But it sounds superficial to imply that success could be so tied to a single axis.
Turn the question around. Rather than asking who listens to customers, we should ask who they listen to, and what they listen for.

There are three primary audiences a product manager needs to listen to:
Customer. It’s critical to know what’s important from the perspective of those buying and using the product. Take lots of notes, but then step back from all the specific input and ask: What are customer pain points? What are customers doing now to solve the problems? What can you do creatively to solve the problems? Remember that people can go on and on about things they would like to have, but won’t necessarily pay for. The most important task is to figure out what they need, not what they want.
When defining new markets, ask yourself:

  • What keeps the customer awake at night?
  • How could a product (any product) or service solve that problem? What must it do?
  • Why could you provide the best solution?

Executives. It’s important for product managers to listen carefully to what members of the company’s executive team say about the product. Not because they’re in charge (although that’s a good reason), but because a product manager needs to understand the key influences driving the company. What do the executives want to achieve? Is it share, growth, acquiring a particular customer segment?

Product managers who listen for these priorities use them to guide product strategy. For example, say top management was interested in creating beachheads in new markets. That would mean pricing a new product high, for short-term revenue optimization, would be a very bad idea.
The competition. The most successful products answer unmet needs, or answer existing needs in new ways. To make sure a product will be unique, a product manager needs to understand what the competitors are doing and where competitors could be going. How do the competitors position themselves? Is there any unclaimed space? Is there a fulcrum where leverage could be applied to move a market? An assessment of the competition should include an analysis of competitor’s advertisements, marketing materials, blogs, and community forums. The goal is to understand how competitors describe themselves, and how others describe them.

Plot these findings on a quadrant or perception map. This makes it easier to spot new opportunities not claimed by others.

4. Hire product leads and engineers who can collaborate
High-flying companies with growing stock values often hire the most capable people for every position in the company. This sounds great, but superstars have the biggest egos, and it can be very difficult to get them to cooperate as a team.

Companies are most effective when they hire people who are well suited to their roles. It’s usually better to have a “B” player who knows exactly what to do than an “A” player who tries to do everyone else’s job for them.
In the case of product managers, that means hiring people who are good at setting direction, understanding customers, and persuading others. Product management is a classic influencing job in which success is defined by persuading other people to do things. The product manager must be able to get out of the way of implementation. A product manager who tries to micromanage any part of the implementation process will fail.

Product managers also need to be teamed with people who are willing to work with them. Their most important peers are the product development staff. If the product developers are intent on setting their own direction, the product manager is doomed to fail from the start. Hire a good engineer who’ll work with a team rather than a brilliant engineer who refuses to take direction.

Hit products like the iPod aren’t always the result of a single genius being struck by a lightning insight. They can be designed systematically through the right combination of processes and leadership.

Good product management is the key to making that happen. Good product managers can make good companies great. And ultimately they are the key to company success for the long run. Get that cape on, you’re going to need it for how high you’re gonna fly.

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

Categories: Leadership
Nilofer Merchant

Nilofer Merchant

Nilofer Merchant is an advisor, writer, conference speaker and the CEO and founder of Rubicon Consulting, a strategy and marketing consultancy designed specifically for the needs of tech companies. She and her team have launched nearly 100 products, created five development platforms, designed 18 channel vendor programs, run numerous user influencer marketing initiatives and defined more than 30 new markets. To contact Nilofer, visit her blog, www.winmarkets.com or e-mail her at nilofer@rubiconconsuloting.com.

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