If you are interested in Product Management but have no prior experience with it, the first thing you will want to know is: What does it mean to manage a product? In this blog post, we will first define what a product is before we dissect this comprehensive discipline into its major constituents Software Engineering, Marketing, and Sales. As a Product Manager (PM) you will be constantly exposed to all three domains and, thus, the specifics of how PMs operate successfully in these domains will be important for you to learn.
Before we can understand what Product Management is, we need to first understand what a Product is. This may sound like a trivial question but it is not. If you do not understand what you need to manage, then it will not be possible to appreciate all of the approaches that we can possibly use to successfully manage a product. So let’s start with the holy grail first: The Product.
A product is software that solves one or more problems for a group of people at a profit.
Let us now break down this definition:
- Software – In the context of this blog, we will only be concerned with that subset of products that can be coded in a formal language which can then be processed by a computer. The reason for this constraint is that we will then only need to focus on those PM capabilities that are unique to the process of building great software products. Non-software products such as physical goods will require different techniques for being managed and are out of scope here, even though there is some overlap in techniques, e.g., in customer research.
- Problems – In the most generic sense, a problem is a challenging situation that requires efforts to be dealt with. Efforts can be measured in different ways. A common measure is that of time to solve a problem, but other measures may be possible depending on the context. A product that solves the problem provides an alternative way to deal with this challenging situation that requires less efforts (e.g. less time). If the product required the same or, in the worst case, even more efforts than the current state of the art, then the product would never be considered as a viable alternative. The more effort can be saved, the more value the product brings.
- People – We are focusing on people who are dealing with problems and a group of people dealing with the same problem are potential customers. A great product that solves problems with less efforts than what our potential customers are used to today can turn them into real customers. This only works if potential customers know about the product. In the future, we may even see autonomous agents to become customers. With the advent of Artificial Intelligence (AI) these agents may even make their own product choices. This will surely deserve a separate discussion but for now, let us assume that we are dealing with people choosing products.
- Profit – Companies invest time and money in building products and therefore it is more than fair to ask for money in return. If a product is generating enough value so that customers are willing to pay for getting their problems solved with less efforts than before, this becomes a win-win situation for both the customer and the company that is offering the product to the customer.
From this breakdown, it becomes clear that a PM will be heavily exposed to the three domains shown in the figure.
- Engineering – This domain refers to Software Engineering in particular and is a direct consequence from our definition of products as software. People who are working exclusively in this domain are called Software Developers or Software Engineers. A PM does not necessarily need to have a technical background in developing software, but a PM will need to work intensively with a team of Software Engineers.
- Marketing – Understanding the customer is key in building great products but at the same time the customer also needs to know about the product’s existence. In this context, Marketing should not be assumed to be uni-directional from the company to the customers with the sole goal of persuading customers to buy the product. The channel from the customer back to the company is equally important. Good marketing messages address specific problems of customers in a convincing, funny, or maybe even alluring way. Crafting these messages can only be achieved by proper customer research which is as much of a core task for Marketing Managers as it is a core task for PMs. Only by understanding the problems through proper customer research, PMs can come up with efficient solutions to their problems.
- Sales – Leveraging the aforementioned win-win situation requires a suitable business case to be developed that optimally monetizes on the value that the product brings to its customers. Here, the willingness to pay is of critical importance so that the product is not priced too expensively but neither should it leave money on the table. Establishing suitable distribution channels is as important as the marketing messages themselves. Different types of customers may require different distribution channels. A PM should support their Sales team by clearly defining the value propositions of the product but also help the Sales team to optimally price the product in the market.
While each of the three domains may have people already working in them as experts, it is the PM who needs to bring all of them together and add value in each of the three domains. A common misconception is that a PM is just acting as an orchestrator or a director, leaving most of the work to the experts in these domains. That is far from the truth! In this blog, we will see which unique expertise PMs need to have in each of these three domains and how PMs provide additional value through this experise and, therefore, justify the role of the PM. We will also see how the PM should best collaborate with Software Engineers, Marketing Managers, and the Commercial team.