Recently, I have found myself in several discussions about the value of product management. On the west coast, specifically in Silicon Valley and the Pacific Northwest, there is a engineering-driven notion of product, borne from sort of a "maker" culture, which values the kind of invention that comes from tinkering in your garage. On the other hand, though my time here in New York City has been short, I have gotten an acute understanding of how differently product is defined to the businesses and industries that populate this centuries-old city. Not surprisingly, media behemoths and financial services mega-corporations have for decades conceived of their products in board rooms and b-schools, not in garages (although DUMBO lofts seem desperately trying to become the east coast version of a mid-century tract house garage.) I don't mean to disparage either as a source for great ideas. On the contrary, I simply suggest that both produce vastly different perspectives of the value, scope and purpose of a pure product management role.
Steve Johnson, in his e-book, The Strategic Role of Product Management, writes, "Companies that do not see the value of product management go through a series of expansions and layoffs. They hire and fire and hire and fire the product management group. These same companies are the ones that seem to have a similar roller-coaster ride in revenue and profit." Service industries, especially the kind of which New York has no shortage - financial and professional services, are the ones that seem to struggle the most with defining a role for product managers. Why would that be the case? The answer lies in how the service is delivered, and who owns that workflow and the resulting customer experience it creates.
Think about it...the organizational handoffs to deliver a service-only experience can produce a mosaic of interactions and customer touchpoints, based on each individual or system required to execute it. In some companies, the only team that can wrangle the responsibility to oversee how these all knit together is a Chief Operating Officer, who might use a legion of business analysts to offer performance metrics which drive business and technical priorities, budget and resource allocation and decision-making.
This would also explain the challenge product teams can have finding a home in the reporting structure in these kinds of companies. If product is to be a front-line oriented job as part of the sales and marketing organization, then positioning, pricing, promotion and packaging become the lion's share of that PM's job. Ten years ago, I used to hear people call this an "Outbound" Product Manager job. (Johnson refers to this role as a Product Marketing Manager, but in today's economy, few companies can afford those to be two separate positions, and even if they do, they may call both functions Product Manager.) Alternatively, product may be absorbed by IT systems, taking requirements orders from internal stakeholders to evolve their executional platforms, like CRM and point of sale.
For a great case study to review that highlights the impact of these different perspectives of service and technology companies on the role of product management, one need only look at Yahoo, and the inflection point it has revealed it is facing. After Terry Semel re-chartered Yahoo from being a search and communications platform company to a media company, one supportive employee posted this on his blog, "Cisco is a technology company, Yahoo! is a consumer services company — the fact that those services are delivered via IP is just a detail." But did that perspective provide the optimal vantage point for products to emerge that would allow Yahoo to compete successfully? For the first year or two, maybe, but with the downturn in the economy came a number of missed product opportunities for Yahoo, notably the failure to grow Delicious or make any deeper move into social networking after Messenger, and the stock has never recovered.
Kara Swisher writes on AllthingsD, "The way products are made got a long look-see this past week, in a day-long meeting that Thompson had with Yahoo’s top team execs. Thompson reportedly quizzed the group on its plans, and pressed it to look less at short-term features and maintenance than on finding the next great thing.
'I think it’s fair to say that Scott is wondering why Yahoo did not come up with innovations like Pinterest and Instagram,” said one person about hot new start-ups that are in the sweet spot of Yahoo’s business. “Or, at the very least, why it did not even try to buy them.'"
Steve Johnson points out that "8% of product managers report directly to the CEO, acting as his or her representative at the product level," because those leaders believe that markets, not marketing, should drive product strategy.
Just this week, Yahoo's Chief Product Officer announced via a memo revealed “We have a bias toward action in Products and expected that our new org design would be in place well before any corporate changes took place. However, it is clear now that the two efforts are starting to run in parallel, and making Product org changes prior to corporate changes no longer makes sense.”
But that does beg the question, when does it make sense to not consider those efforts in parallel?
A recent re-org at Yahoo! disassembled the central product organization and Chief Product Officer, Blake Irving got his answer to the question, is there a role for product?