The Importance of Product Management

Another role or function that is often confusing to Germany high-tech companies is product management. Startups tend to get it right these days, but large organizations often remain unfazed by a lack of strong product management.

A product manager is responsible for defining the product innovation and associated business plan (strategic product management) as well as working out features to a level of detail (technical product management) so that they can be passed on to engineering. As the saying goes,

A product manager is responsible for building the right product, while an engineering manager is responsible for building the product right.

In a competition, the product manager is more important: Even a shoddy product can have some value, while nobody will buy a well-built but useless product.

Startups, even in Germany, tend to understand the need for product management, adapting structures they see in the Silicon Valley to their company. There usually is a person “who runs product”. If the company likes titles, he or she might be called CPO, short for Chief Product Officer. Often, the CEO is the first CPO in a startup. The good thing about the “C” is that the company understands that product management is best kept its own function and not put under sales and marketing or engineering. If put under sales and marketing, short-term customer needs will get in the way of following a long-term vision, and if put under engineering, technical needs may push aside urgent business value that is awaiting implementation.

Large German high-tech companies often lack strong product management. If there is a person of that title they often are too close to marketing, producing high-level power point architectures that can be used in customer communication, but not more. The real product management work is done by an engineering manager then with deep understanding of the market. The best product managers for technical products tend to be former engineers with customer empathy who built up business understanding. I suggest that it is easier for an engineer to pick up the business knowledge that is needed for product management than for a marketeer to pick up the necessary engineering knowledge.

The strategic product manager is at the root of many value creation chains within the company. He or she communicates with many different stakeholders. However, the most important one is building the product. To that end, the strategic product manager, who maintains the product vision, pushes to a technical product manager, who works out features in some detail, who pushes to an engineering manager, who breaks down features into tasks for their engineering department. (In practice, technical product management is often put on the plate of the engineering manager.)

Personally, I believe that a product manager is critical to business success. I’d go so far to give them revenue responsibility to make clear that business value is started by and driven from them. That’s why in startups, a good CEO is also often the top product manager. Without a clear understanding of what needs to be done (rather than how), all engineering, marketing, and sales is moot in the long-term.

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