Five considerations in creating a product management function for hi-tech and online businesses

June 20, 2022

Background and Disclosures

While I currently head Focus Research in an official capacity, I spent a number of years in product management and product marketing roles at various companies, mostly small businesses in the $2mm to $50mm annual revenue range. Although I don't officially cover product management issues here at Focus, I wanted to provide some advice based on my personal experience to those small businesses interested in laying the groundwork for a world-class product management functions.

Building a Product Management in Small Businesses

The focus of this guide is for small businesses with severe resource constraints that need to institute some type of product management function. Perhaps, you can only hire one product manager and you have to decide where to start - what will be there responsibilities of the person you hire and what are skills and experience that person needs to have.

An Introduction to Product Management

But first let's step back and understand what product management is. Product management in its truest form is both a market-oriented and an organizing function with the mission of ensuring a company successfully delivers the right product to the market. Beyond this general definition, product management can take on a number of responsibilities, including:

Product-specific (inbound) responsibilities:

Product strategy development (high level vision for how the product drives the business model and competes against competition)
Requirements and use case gathering and development (both internal and external customers)
Requirement prioritization
Create specification (detailed to address requirements)
Product life cycle management (including release definitions, roadmap development, etc.)
Project management - manage the day-to-day execution of the product team (QA, development, design, copy, etc.)

Market-specific (outbound) responsibilities:

Product positioning and marketing messaging
Competitive monitoring and analysis
Collateral development explaining product and features
Training and education of internal and external customers on new product and features
Launch campaign development and support - e.g. PR campaigns, tradeshows, webinars, social media marketing, etc.

General business responsibilities:

P/L management

Creating a Product Management Function that meets your needs

Product management is one of the more amorphous functions within companies. Not surprisingly many companies fail to take into account their specific needs when defining product management responsibilities. In order to create the right type of product management function, you must keep in mind your company's specific circumstances including organizational structure, business model, product attributes and existing core competencies within the company. Based on your specific situation, you'll need to address five considerations to ensure a success product management function that meets your company's needs.

1. Inbound or outbound?

You'll need to decide whether you want a product management function that is inbound, outbound or both. Inbound product management concentrates on looking at the market, defining requirements and then managing the product life cycle to deliver the necessary product to market. Outbound product management takes on product marketing tasks such as competitive analysis, product-specific collateral development, product-specific sales support, etc to ensure a product is successfully rolled out to the market.

Especially in a young company's growth when you may have only one product manager, it can be very difficult for a single product manager to have the time (or skill sets) to master both inbound and outbound product management.

When to consider inbound product management as a priority

You are early in the product life cycle and still need help defining what needs to be built
Your product is complicated and you're not confident the development team can create the right product without constant guidance
There is nobody else to work with your development team on requirements and use cases

When to consider outbound product management as a priority

You have a product well into development t and you're focused on rollout and market adoption of the product
You have a product that is either straightforward to build or there are other people in the organization that can communicate requirements and use cases to your development team
You're product requires a direct sales function that must understand the product (e.g. B2B enterprise software)

2. Who is managing the product schedule?

Especially for inbound product management in small companies, you must decide whether the product management function will also handle project management. In larger companies there is often a separate project management function responsible for coordinating the schedule across all the functions (design, development, QA manufacturing, support, etc.). Small companies often lack a dedicated project managers but certainly not the need to manage a schedule. Because of their cross functional expertise, product managers often pick up the slack. But having your product managers take on project management can come with a cost, as your product management function will have less time to focus on requirement definition, specification, etc.

When to consider having product management own project management

If there are many functions that need to coordinate and there is not a schedule owner to interact daily with each function
If getting the product done is absolutely the number one priority
If schedule management is complex and dependent on detailed knowledge of the product

When to not to have product management own project management

When you need product management to focus more on requirement, use case and specification development
If you have other project management-capable staff (e.g. an engineering director)

3. Prioritizing feet on the street

You'll have to decide to what degree you want your product management focused outside the four walls of your offices.

Many people think inbound product managers are often "in" the office working with development teams and outbound product managers or product marketers need to be "out" of the office with customers and sales team. While it is true that product marketers may indeed be "out" of the office more than inbound product managers, the value of any product manager is to understand some aspect of the market. Inbound product managers take that knowledge and build products. Outbound product managers take that knowledge and market products.

Especially for inbound product management that takes on project management responsibility, it is easy to end up spending the vast majority of time in the office. However, there is no substitute for interacting directly with customers and seeing them in their own environment.

When to make sure your product managers is spending enough time with feet on the street

You are still early in the product cycle conducting investigation and gathering requirements
It is difficult to understand how people use your product without watching them (e.g. on premise software vs. an e-commerce website)
Usability is a core requirement for your product
You product management function is outbound focused and is launching a product with a direct sales force

When to your product manager will likely spend less time on the road

You have an inbound product management function
You are in the development phase a project
Your product has fewer usability requirements that can only be gathered through direct observation.

4. Do you need a product manager with technical core competencies?

Product managers, both inbound and outbound, may need special technical competencies given the nature of the company and product. A technical competency can range from having a quantitative background to having been an engineer who has developed similar products. Keep in mind some of the best product managers and product marketers in highly technical companies DO NOT have technical backgrounds but are still extremely capable of mastering market understanding, defining product requirements or launch product to the market.

When you may need product managers with technical competencies

When you an extremely complicated product or product component where a technical background may help both with your understanding of the product requirements as well as how to communicate requirements to engineers
Where many of the current managers in the organization have purely a business background and it would be useful to have somebody in the organization that can easily bridge detailed business and technical topics

When you may need product managers with less technical experience

When you have a tech-oriented culture but your product requirement requires a great deal of usability, having a capability, non-technical product manager can set the tone for what needs to be done (e.g. "If can't understand this feature, our users will never understand this feature")
You already have plenty of technical people who are also good communicators and can easily work with a non technical person

5. Strategic or execution-oriented production management?

Product management has both a strategic and execution-oriented component. Strategic product management includes evaluating the market (customers' needs, competitive landscape, market trends etc) and be able to develop a strategic positioning or long-term product strategy and roadmap. Execution product management involves more of the hands-on day to day work to use-case development or product collateral development. In most cases a strategic product managers will be able to do execution-oriented work but not all executional product managers can handle the strategic work.

When to ensure that your product management is capable own strategic responsibilities

Your current team lacks a strategic product and marketing capability
Your company still has outstanding strategic decisions that need to be made before committing to a product

When you don't need a product management that is strategic nature