On Product Management
04 March, 2020 - 20 min read
Peter Thiel, in his book, Zero to One, outlines his belief that the biggest insights in life are ”hidden in plain sight” — concealed only by our preconceptions or tendency to accept realities as they are (complacency).
Tell me something that’s true, that almost nobody agrees with you on. — Peter Thiel
The product manager's ultimate quest is to answer this question — “what is hidden in plain sight?” In order to answer this question, product manager should be a generalist. As engineering and design becomes more specialized, the generalist fills the gap.
Customers don't have needs, they just want to make progress within the system they belong. — Alan Klement
A good product takes chaos and creates order. — Brian Nogard
The essence of strategy is choosing what not to do. — Michael Porter
What is product management?
Product management is an organizational function within a company dealing with new product development, business justification, planning, verification, forecasting, pricing, product launch, and marketing of a product or products at all stages of the product lifecycle. Product lifecycle management is the process of managing the entire lifecycle of a product from inception, through engineering, design, prototyping, manufacturing physical products, scaling software businesses, to service, maintenance and disposal of products.
A set of process or processes drives product vision. Process defines the framework and discipline to accomplish the product vision. Every organization has a different process but the following should be addressed when defining a famework.
- Product Vision: what do you want the world around you to look like in 6 months? 1 year? 2 years? 5 years?
- Outcome: what do you want to achieve to help realize this product vision?
- Goals & Metrics: what are the measurable goals along the way? How can we measure them?
- Strategy: what are we going to do in sequence to hit our goals?
- Resourcing: what resources do we need to hit these metrics? For example, how many engineers and designers to assign?
What is product life cycle management?
Products have a limited life and thus every product has a life cycle. The goals of product life cycle management are to reduce time to market, improve product quality, reduce prototyping costs, identify potential sales opportunities and revenue contributions, maintain and sustain operational serviceability, and reduce environmental impacts at end-of-life. To create successful new products the company must understand its customers, markets and competitors. Product lifecycle management help organizations overcome the increased complexity, engineering and design challenges of developing new products for the global competitive markets. Following are general stages of product lifecycle:
Market introduction stage
- costs are very high
- slow sales volumes to start
- little or no competition
- demand has to be created
- customers have to be prompted to try the product
- makes little money at this stage
- costs reduced due to economies of scale
- sales volume increases significantly
- profitability begins to rise
- public awareness increases
- competition begins to increase with a few new players in establishing market
- increased competition leads to price decreases
- costs are decreased as a result of production volumes
- sales volume peaks and market saturation is reached
- increase in competitors entering the market
- prices tend to drop due to the proliferation of competing products
- brand differentiation and feature diversification is emphasized to maintain or increase market share industrial profits go down
Saturation and decline stage
- costs become counter-optimal
- sales volume decline
- prices, profitability diminish
- profit becomes more a challenge of production and distribution efficiency than increased sales
How to extend product lifecycle? Once the product reaches maturity, organizations desire to extend the product life cycle to maximize revenue. Some of the following ways to extend the product lifecycle are:
- Advertising: its purpose is to get additional audience and potential customers
- Exploring and expanding to new markets: by conducting market research and offering the product (or some adapted form of it) to new markets, it is possible to get more customers
- Price reduction: many customers are attracted by price cuts and discount tags
- Adding new features: adding value to the product to enhance its usability or to attract the attention of a wider customer base
- Packaging: new, attractive, useful or eco-friendly packaging influence the target customers
- Changing customer consumption habits: promoting new trends of consumption can increase the number of customers
- Special promotions: raising interest by offering giveaways and other offers
What is the role of a product manager?
A person who is responsible to set overall vision, direction, capability, quality and delivery of products. A PM ensures roadmap is prioritized to address market opportunities, and lead the product management discipline for the team. Product managers turns goals into projects with the help of their teams and entrepreneurial spirit. Too much to do is always a battle. That's the perpetual state of being a product manager but the goal is to use a hammer on the highest nail.
Product managers focus on user and data research through design and development to marketing, sales, and support. Beyond shipping new features on a regular cadence and keeping the peace between engineering and the design team, the best PMs create products with strong user adoption that have exponential revenue growth and perhaps even disrupt an industry.
Being resilient is a key to becoming a successful product manager because if you are doing something hard, there will always be failures. People who have overcome adversity in their life. But it is hard to find resilience in a resume. It is usually in between the lines. The perfect ‘A’ student at the best school who has cruised through has more emotional learning to do, and more to prove about their ability to pick themselves back up after defeat. Emotional intelligence goes a long way. The following core competencies are the baseline for any PM, and the best PMs hone these skills over the years of defining, shipping, and iterating on products.
- conducting customer interviews and user testing
- running design sprints
- feature prioritization and road map planning
- the art of resource allocation
- performing market assessments
- translating business-to-technical requirements, and vice versa
- pricing and revenue modeling
- community (internal or/and external) engagement
- guage prospects to adopt a new feature or a product
- act as a liason with cross-functional business units
- document stories, epics, technical requirements, user workflows
- defining and tracking success metrics
What are some of the tips to become a great product manager?
Story-tellers: the best PMs are able to weave tales that incorporate market needs, strategy, and tactics into a story that their stakeholders can get their heads around and hopefully adopt the story themselves. It can be challengeing when you see something clearly, but you can’t get others around you to see it. You work through other people, so it takes a lot of convincing. You have to be a great communicator and storyteller. You have to read your audience. You have to try harder to understand others and find an angle to explain that makes sense to them. People you work with are smart, they just need a great story to be convinced.
Learning by doing: to master the art of product management requires several years of practice and doing. Ultimately, the best thing you can do to prepare for a career in product management is to build. Manage and “own” a project from inception through execution and operation. Create KPIs and measure your impact.
3 Ps: analyze the 3 Ps— people, process and product to assess on the quality of people, the best process to deliver the product, and excellence and relevance of a product.
Hard decisions: be willing to stand up for what you believe, especially when you are representing your users. Confidence of a product manager comes from having a strong work ethic. Hard decisions make great products. Success is not guaranteed, but confidence eliminates fear of failure.
Questions: are a product manager’s best tool. The best way to understand what’s going on or how to get better is to pose probing questions to all stakeholders, and above all, to yourself. Stopping for a tune-up if you’re already further along the road is critical to leveling up as a leader and questions are the keys that unlock the door to development.
Emotional Intelligence (EQ): the best PMs have the ability to empathize with customers during surveys and interviews. A PM with a high EQ has strong relationships within their organization and a keen sense of how to navigate both internal and external hurdles to ship a great product. People don’t talk enough about EQ. Product managers get huge value from being highly empathetic with the team, not just with users. There are plenty of smart people, but not enough with EQ.
Social capital: the expected collective or economic benefits derived from the preferential treatment and cooperation between individuals and groups. Components of social capital include reciprocity, trust and values. If these are shared between individuals within a network then the community will function as an organic whole. This is important for the next up, relationship management.
Relationship management: probably one of the most important characteristics of a great PM is their relationship management skills. By forming authentic and trustworthy connections with both internal and external stakeholders, the best PMs inspire people and help them reach their full potential. Relationship management is also vital in successful negotiation, resolving conflicts, and working with others toward a shared goal, which is especially challenging when a PM is tasked with balancing the needs of customers, resource-constrained engineering teams, and the company’s revenue goals. Authentic and trusting relationships within an organization can lead to more support when additional funding is needed for a product or when an engineer must be swayed to include a quick bug fix in the next sprint. Outside an organization, these skills could encourage existing customers to beta test a new feature for early feedback or to convince a target customer to try the MVP of a product still in stealth mode.
Confirmation bias: PMs must be self-aware of their own confirmation biasis to avoid projecting their own preferences onto users of their products. PMs should stay objective despite of features they love which addresses their own pain points. The lack of self-awareness in any sort of biases could derail more important priorities or damage the PM’s relationship with engineers, who may lose confidence in their PM when the feature isn’t readily adopted by users.
Self-management: being a PM can be incredibly stressful. The CEO wants one thing, the engineering team another, and customers have their own opinions about feature priorities. Managing tight deadlines, revenue targets, market demands, prioritization conflicts, and resource constraints all at once is not for the faint of heart. If a PM cannot maintain their emotions and keep it cool under pressure, they can quickly lose the confidence of all their constituents. The best PMs know how to push hard on the right priorities, with urgency but without conveying a sense of panic or stress. These PMs also know when to take a breath and step away to regroup.
Social awareness: PMs must understand customer's emotions and concerns about their product as much as they understand the concerns of the sales team on how to sell that product, or the support team on how to support it, or the engineering team on how to build it. PMs need deep understanding of how the organization operates and must build social capital to influence the success of their product, from obtaining budget and staffing to securing a top engineer to work on their product. Finally, social awareness ensures the best PMs service their customers with a product that addresses their jobs to be done, which is ultimately what drives product-market fit.
How is product management different at a startup than at a mature organization? The role of the PM at a startup is far more likely to be responsible to wear “all the hats,” whereas at a mature company their role will be more distinctly defined.
Startup: beyond discovery, definition, and shipping, PMs may also be responsible for pricing, marketing, support, and potentially even sales of the product. These PMs thrive in a scrappy environment and are comfortable with ambiguity and frequent changes to direction as the company works towards product-market fit and learns to operate at scale
- Pro: PMs are likely to be more involved with company strategy, get exposure to senior leadership and the board, are able to take more risks and make a bigger impact. They also have more influence and authority over company resources
- Con: There’s typically little to no mentorship, role models, or best practices within the company. You may have to seek it externally. Budgets are typically tight, and PMs may not have the requisite experience to succeed at some of the things they’re tasked to do
Mature company: The PM may have a narrower scope and have coworkers who handle pricing, go-to-market strategies, and so on. And they are likely to be part of a larger team of product managers
- Pro: PMs are more likely to have mentoring and role models, as well as development standards and best practices. Close association with an engineering team can create strong relationships over time, which is great for long-term impact and career growth. And if the product has market fit, there is an established customer base and performance baseline to work from, versus guessing until you get it right
- Con: PMs have less exposure to company strategy and are just one of many voices of the customer. They can get “lost” in the system and have to deal with more politics and tight budgets
How to set product management goals? In its purest form, a goal is a way to track whether you’re achieving what you set out to do. When setting goals, start with what you’re trying to achieve as a company, team and product. What’s your ultimate mission? A goal should never be an end in itself— the end is achieving your mission. A good goal has the following attributes:
- Concrete: it’s clear and unambiguous (something that isn’t subjective)
- Simple: everyone understands what it is and how it’s measured
- Quick feedback loop: the results of your changes can be seen quickly. Think about how long it takes for a user to reach the milestone you’re tracking, and whether you can expect movement in a reasonable timeframe
- Business-oriented: it’s easy to see how this goal actually drives the larger business
What are some of the product philosophies?
Every company has a different philosophy about the product development process and where PMs fit into that process. Below are the three most common types, with pros and cons:
PM drives Engineering: where PMs gather requirements, write product requirement document, and hand it off to engineering to spec out the technical requirements. Contemporary organizations may do this process in a more agile and collaborative way, but the expectation is that PMs know best about what customers need and engineering is there to serve
- Pro: engineering can focus on coding without a lot of distraction; this tends to work well for Waterfall development shops with long lifecycles
- Con: engineers lose sight of the big picture and do not develop empathy for customers, which can lead to a poor user experience. Often there are unhealthy tensions when technical debt and “plumbing” work needs to be prioritized over customer requirements
Engineering drives PM: technically oriented product companies (cloud, big data, networking) tend to be engineering-driven, where engineers are advancing the science in their domain and PMs validate solutions or create front end access points (UIs, APIs) to tap into this new technology. There can be a collaborative relationship and feedback loop between customers, PMs, and engineering, but typically PMs are serving engineering in these companies
- Pro: breakthrough technology can offer customers things they didn’t even know they needed. An engineer thought it would be cool to do, a PM figured out how to monetize it, and it became a billion-dollar game changer for the company
- Con: engineers chase the shiny new thing, over-architect the solution, or iterate forever, seeking perfection before getting customer feedback. PM input on priorities is ignored, which sometimes includes the most basic needs of customers
PM-Engineering Partnership: there is a strong yin-yang between PM and engineering, with joint discovery, decision making, and shared accountability. Engineers join PMs in customer interviews, and PMs are in sprint meetings to help unblock tasks or clarify requirements. But the two roles respect the line where one starts and the other stops. PMs understand what’s being coded but don’t tell engineers how to code, and engineers have empathy for customers’ needs but leave the prioritization to the PMs
- Pro: a streamlined prioritization process that values technical debt and plumbing projects; better design processes leading to a more positive user experience; higher-performing teams with improved product velocity, quality, and, typically, happier customers
- Con: breakthrough innovation may not get greenlit; time-to-market may seem to lag (though I’d argue that what’s released is far better aligned with customer needs and more likely to successfully scale)
Understanding key areas of product management
Understand the industry, market and users (outward looking)
domain knowledge of an industry. Use the following Porter’s Five Forces to do an industry analysis.
- threat of new entrants: how hard is it to enter an industry?
- bargaining power of buyers: how easily can buyers drive our prices down? How well can they negotiate?
- threat of substitutes: how else can customers satisfy the same need?
- bargaining power of suppliers: how easily can suppliers drive their prices up? How well can they negotiate?
- rivalry among existing competitors: how many competitors are in an industry? How strong are they?
- competitive analysis to understand market trends — product, business and customers
- find direct and indirect competitors
- user studies by spending a lot of time with users and understanding their pain
Understand the business objectives and goals (inward looking)
- business strategies to understand how the organization fits in the market
- business goals to understand key initiatives
- strategy does not mean goal (goals only talk about why; a strategy also explains how)
- a strategy is: choosing what to do and what not to do, a series of trade-off decisions, a quest for competitive advantage, about being different (not merely better), focusing a company’s resources on the most critical issues
- the ultimate goal of a strategy is to help us gain a competitive advantage, which leads to better financial results
- strategies may consist of being unique (Apple, Whole Foods, etc.), cost differentiator (Walmart, Ikea, etc.), customer segmentation by being the best in the niche market (Porsche) or a blue ocean strategy to escape competition by creating new markets and industries, by combining cost-leadership and differentiation. It eliminates certain competing factors (low-cost aspect) and focuses on those that matter the most to customers (differentiation aspect). Airbnb and Salesforce are some of the examples
- seek out to management to understand what kind of frameworks does the company use. Six-sigma and Objective Key Results (OKRs) are commonly known
- know how business model is creating, delivering, and capturing value
- know financial modeling behind business, product and customers to mitigate risks and losses
- communicate the what and the why. But if the team doesn't agree, then you have to revisit those whats and whys
- during collaboration, anybody can challenge the core fundamental assumptions
- you can't win without your team, and you certainly won't succeed without their backing
- there should be no feeling of rank, everybody has the same ownership of impact across data, design, engineering, product, communication and critique
- seek collaboration not consensus with your team
- collaboration, communication and inclusion are essential
- build a roadmap based on market research, user research and business objectives
- communicate with team members and get a buy-in from everyone involved
- consistent decisions around roadmap prioritization and tradeoffs
- be metrics driven to define the success of product/feature delivery
- use time series data to get insight into what people are doing with the product and see if the changes made are improving user goals
- if you are not measuring metrics you are just guessing
- know metrics at a business level: ROI, fixed costs, variable costs, etc.
- understand metrics at a product level: monthly/annual recurring revenue (MRR/ARR), customer acquisition cost (CAC), active users, customer churn, etc.
Understand stakeholder's expectations
- communicate roadmap and metrics with your stakeholders
- sign-off on deliverables, timeline and metric success
Understand the impact on cross-functional teams
- everyone internally needs to be on the same page when changes roll out
- you are the point of contact for all things related to the product
- build credibility and trust within an organization
- negotiate and resolve conflicts while ensuring everyone knows what product & feature progression means
Understand user expectations (pre-build and post-build)
- users need to see that the product is continually improving by hearing about it from you
- communicate upcoming changes to external customers
- communicate upcoming release with external users
- document changelog and announce release to internal and external users
Understand operations and execution
- develop product vision
- capture feature requests in stories and epics with clear and concise acceptance criteria
- build conviction about where things are going in the future and communicate with external and internal customers
- make hard calls about what to eliminate
- setting up timeline and milestones
- showcase work-in-progress demos to internal stakeholders
- delight customers with new features in beta period
- continuously improve quality by fixing bugs
This is a huge knowldge dump, but this is for personal use only. I built products before I knew anything about product management. I never heard of it when I was in school (a decade ago). When I joined Morningstar and got deep into tech ecosystem, I started hearing more about it. It is a contemporary general skillset. Products, and mostly digital products are everywhere so it is obvious why such importance on this topic. Lastly, Jason Evanish's Twitter thread which I highly recommend. There is so much to unpack, but every single tweet uncovers a larger topic. It is a good overview on what a Product Manager does.
Knowledge without action, is like having no knowledge at all. - Ted Nicholas