A couple of months ago I was having a conversation with some of the students of a leading B-School of India. They were part of the Strategy Club at the institute and wanted me to take a strategy session for the students.
When I proposed I would like to focus on Product Strategy, the energy in the room fell sharply. I could sense that. Offline I reached out to one of the students, and called it out. I got a counter proposal. They would connect me to the IT Club of the institute who would be better positioned to take Product Strategy.
I don't blame them.
During my early years of Product Management, we had a new Head of Product (SC) joining to lead the function. After settling in for the first few months, the entire product team met at an offsite. We were 10-15 odd PMs spread across multiple products.
First thing SC did was to pick up a Red Marker and write YoY target revenue numbers for the current and next 2 years followed by a big question mark on the White Board. He was asking his team - how do we do that?
Each PM got the opportunity to speak - and some of the interesting features and functionalities came to fore. But, SC wasn't happy and asked us to be more creative. More features and functionalities flew across the room.
This went on for a few more rounds. Finally he said - "Why can't we just market the hell out? Why can't we just focus on Operations and give the customers best operating experience? Why can't we just focus on the existing relationships?"
He went on to write names of the three of our largest believers (clients) and said - "if we could just make sure these three clients are happy - they alone will give us more than the targeted revenue. Why do we need new bells & whistles?"
He was right.
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PMs need to look beyond Technology. We need to understand P&L. We need to understand that tech is not the only lever Product can play with. We have (or should have) lot more at our disposal than we think we do.
Product Management is about Maximising Impact to the Mission while Achieving everything through Others - Finance, Legal, Engineering, Support, Operations, Marketing, Sales et. al.
And, an effective product manager knows when to leverage which levers to drive maximum impact for the business and the organisation as a whole.
To expand this understanding a bit - Product Management and Strategy at an abstract level is about - Ideate & Conceptualise, Secure Investment, Build, Take it to Market, Manage the P&L, and Scale.
Organisations, incl. its leaders, and many a times us PMs think about a PM role as tech representative and not business representative. In actuality PMs can only be effective and deliver their worth if they are seen as true business enablers, and are closely mapped to business strategy/function.
What this means is that product first or product led organisations must hold Product Function responsible (better if accountable) for the P&L.
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Does that mean that all PMs are P&L owners? Yes and No.
P&L accountability can be clearly demarcated in case of tangible products, e.g., consumer durable; where each product can be represented as a stock-keeping-unit and the PM would be concerned with landed costs, contribution margins, sales forecast, pricing, marketing plan etc.
However, it's slightly harder in case of technology products - SaaS, Consumer Internet or Apps. Product teams are generally organised such that each team focusses on one aspect of a collectively larger offering. For example - for a SaaS offering a PM and her team might just be focussing on the client onboarding journey.
The way a product leader navigates this challenge is by leading with context, not control. She drives P&L accountability to her team by organising the team around a set of proxy metrics (KPIs) that closely represent the P&L such that -
- She is able to effectively communicate the business priorities, and ensure that effort of every PM in her team are aligned to the business strategy
- She's able to identify which PMs are making right decisions, and true progress towards executing the Business Strategy
The product leader defines the KPIs and priorities for each PM or PM teams, and the teams then work towards achieving those goals.
Profitability or Revenue may very well be one of those KPIs. But, more commonly so it would be - increasing growth, reducing churn, driving engagement, increasing user adoption, driving ARPU, increasing wallet share etc.
And this doesn't necessarily have a technology solve all the time, or doesn't mean that the PM team is spending 99% of the time building features. Infact it's actually opposite.
A mid-senior PM, or a product leader, is generally heads-down solving for some of the common product strategy problems -
- New Product Introduction / Investment - Market Potential, GTM Strategy, Optimal Price, Business Case - Financial Model, Brand Architecture, Name
- Industry Landscape, Competitor Dynamics - Whether or not it is an attractive industry to enter, ramp-up or potentially exit
- Pricing Optimisation / Strategy - How to structure commercials and set the price to attain certain goals, e.g., profitability, growth, penetration, skimming, sustainability, recurring revenue etc.
- Market Entry or Expansion - Expand or enter a new market - new geographical region or customer segment
- Sustainability/Profitability Optimisations - Identify sources of declining (projected to decline) profit and plan to reverse/obviate it
- Growth Plan / Strategy - Growing a certain product's sales, growing in certain geography, increase in total sales etc.
And some 'not so common' strategy problems - incorporation or legal aspects of setting up the org., and M&A/JV to - widen product portfolio, increase market share, takeout competition etc.
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Back then when SC joined, our teams were transitioning from Tech PM to P&L responsibilities. On one of the flights with him I asked — “what does it mean when you say we need to manage P&L?”
He said — “You’ll figure it out. Everyone does.”
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So, what have you and your PM teams been upto in your current or previous organisations? Did you solve tech or business problems?
Did you 'build a flying saucer feature that would potentially make customer love the product', or did you 'tangibly move a business KPI / drive P&L impact'?
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