Where does product management sit in a company?

After reading the article “product marketing and product management“, about the differences between product management and product marketing management, it may seem that the best place to put product management in a company is in the marketing department. However, in fact, it’s not that simple. The answer to the question that is the title of this article is “it depends”! It mainly depends on your main activity.

Companies that develop and sell digital products

For this type of company, until the late 1990s, the software product management function was in marketing. Some legacy software companies still place product management within this area, and among these, some do not even separate the roles of product manager and product marketing manager, described in the article “product marketing and product management“.

However, this is not the most appropriate model. The most pertinent model for companies that develop and sell software requires, first of all, the separation of the product marketing and product management roles as already explained. Next, it is important for the digital product manager to stay in a non-marketing area so that there is really no confusion between roles and not give the marketing manager the false perception that it would be possible to put the two together in a single person.

A very common area for the product management function is technology, linked to the company’s CTO (Chief Technology Officer). It makes a lot of sense because, as the product manager works closely with the software development team, it is only natural that they are within the same area of ​​the company.

On the other hand, most modern tech companies have chosen to create a third area, the product management area, independent from marketing and technology, creating the CPO (Chief Product Officer) role, as a product director. The idea of ​​this separation is to give the three areas equality, so that each one can push the topic to its area of expertise and the final product will benefit from this balance.

Usually, the UX area also reports to the CPO, staying with the product managers. Following this line of isonomy between functions, there are still some companies that have a fourth independent area, the UX area, creating the figure of CDO (Chief Design Officer) or design director.

Startups

For software startups, usually one of the founders has the role of product manager, as she is the one who has the vision of where she wants to go with that software. When the startup grows and the founder who has the role of product manager begins to be pulled into other tasks, it is common to bring someone to be the product manager.

In some cases, someone is brought in from outside; in others, it is common to choose someone from the software development team to be a product manager. This person will have constant contact with the founder of the company and will need to have a lot of skills to earn their trust.

In the first weeks and even months, it is very likely that the product manager who starts working at a startup is just a mere executor of the founder’s ideas. Gradually, the product manager should gain the trust of the founder for more strategic issues, and eventually, these decisions will mostly be taken jointly by the product manager and the founder of the startup.

I was hired at Locaweb to be a product manager in 2005, when the company, founded in 1998, had around 100 employees. During the first year, my work was focused on the process of developing new products, without major interactions on strategic issues. Gradually I gained the trust of Gilberto Mautner, Locaweb’s founder who was more focused on product and technology, for more strategic conversations. From these conversations came Locaweb’s SaaS (Software as a Service) product line, such as Email Marketing, Virtual PBX, Virtual Store, and SMTP, which by 2015 accounted for over 20% of the company’s revenue.

At Conta Azul, I was hired as a CPO after the role was performed by all the founders of the company. At Gympass I was hired after Vinicius Ferriani, Gympass co-founder decided to leave the daily operations of the company.

How does a product manager gain more autonomy?

Every product manager, unless she is the founder, or she’s starting a product from scratch, will join a team that already has a product. The first thing this PM has to do is to understand where the product she’ll manage came from. She should talk to the founders and understand what vision they have for this product. What strategic objectives do they want to achieve with this product? What problem does this product solve? For whom?

In the unavailability of the founders, there will certainly be some person, probably a manager, director, VP, or CEO, who is the sponsor of this product, that is, the person who inherited from the founders the vision of this product.

You, as a PM, have been invited to manage that person’s product to help realize the person’s vision for the product. You probably should have discussed this vision during your interview, even before you were invited to manage the product. Be aware that if you have been invited to manage a product that does not have a clearly defined vision, your work will be very difficult or even impossible as long as this vision does not exist and be clear to everyone involved inside and outside the company. In this scenario, helping to create this product’s vision is your first and highest priority.

By creating this vision alignment with the founders or the people who are the product sponsors in your company, the next step is to ensure that this vision is aligned and clear to everyone involved, both inside (employees, directors, board members) and outside your company (customers and suppliers).

Once this alignment of vision is created, now is the time to work together with this person to create a bond of trust. Then enter the normal product management discovery work with all the techniques already known. Discoveries often lead to important decisions in your product. Start making these decisions together with the founder or sponsor of the product, always bringing your decision suggestion based on your discovery. Validate these decision suggestions with others involved internally and externally.

  1. Discovery plus your decision suggestion.
  2. Joint decision making with product founder/sponsor.
  3. Decision alignment with everyone involved.

You should repeat this cycle until it becomes increasingly clear to the founders or the sponsor of the product and to everyone involved that you are making the right decisions. By doing this you will gain the confidence you need to make future decisions with the desired autonomy.

But remember what Uncle Ben said to Peter Parker, “with great power comes great responsibilities!”

Companies that don’t have software development as their core business

For companies that don’t have software development as their core business, like the ones I mentioned in the article What type of company needs a product manager?, The decision on where to put product management is a little different. It makes little sense to have an independent product management area. The software is an adjunct to the main activity.

For example, in a bank, the software serves to facilitate customer relationships; so, it may make sense for product management to be linked to the CS. A school that wants to implement an e-learning system to complement its students’ face-to-face education may consider having a digital product manager in the education department. Airlines with their loyalty programs have these programs aimed at increasing customer loyalty. This is closely linked to both CS and marketing, so it may make sense to have the digital product manager in one of these two areas. In a brick-and-mortar store with e-commerce it makes sense for the product manager, who takes care of the development of the online store, to be in marketing or sales.

That is, it depends a lot on the theme of the software and how much it is linked to the company’s core business. However, one should always seek to place product management as close as possible to the area dealing with the software theme and the company’s core business.

With the increase of relevance of digital products, some companies are starting to create separate departments to deal with their digital products. They call this area Digital, or Lab, or Innovation. I recently joined Lopes Consultoria de Imóveis, one of the biggest real estate companies in Brazil who has more than 80 years of history and wants to use technology to improve their customers’ experience. At Lopes we have a dedicated team, called Lopes Labs, focused on all digital product initiatives. This set up works well as long as the product management constantly aligns with the core business areas of the company.

Companies that develop software on demand

For companies that develop software on demand, such as those cited in the article What type of company needs a product manager?, as they begin to adopt the practice of digital product management, the most common thing is to leave this role with software developers. As this product management practice becomes important within the enterprise, it may make sense to create an independent area for this function, which may, in addition to being part of the on-demand software development service, also be an independent consultancy service, specifically focused on empowering companies in the software product management function.

Digital Product Management Books

Do you work with digital products? Do you want to know more about how to manage a digital product to increase its chances of success? Check out my new bundle Digital Product Management with my 2 books where I share what I learned during my almost 30 years of experience in creating and managing digital products.

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