Product Management as a Service Organization

Posted by Marty Cagan on January 13, 2010

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Probably one of the most common complaints I get from CEO’s of mid- to large-sized companies is the lack of innovation and thought leadership from their product organization.   They see the money they spend on product managers, designers, engineers and QA, yet they often see only marginal improvements to the business.  Yet in most of these organizations, when I look at their roadmaps (these organizations rarely have product strategies), they’re littered with literally hundreds of specific features and incremental enhancements.

When a company is just starting out, it’s all about finding something that resonates with users and delivering real value to customers.  It’s why startups are such great places for innovation.   But for those skilled or fortunate enough to accomplish that, as the company starts to grow, very often the nature of the product organization changes into a group whose main purpose is to serve the needs of the many stakeholders across the business – business owners, sales, marketing, business development, legal, finance, operations, customer service, etc.

The job of the product manager then devolves into one of documenting stakeholder requirements, mediating conflicting objectives, and allocating the limited developer resources to try to satisfy as many of the stakeholders as possible.

Is it really any surprise that innovation stops?  Is it really a surprise when your most talented and creative people leave for another startup, while the ones that remain are willing to spend their days running from stakeholder to stakeholder trying to negotiate some kind of agreement?

Now, of course there are always very legitimate business requirements that have to be addressed and accommodated.  Supporting contractual obligations, monetization opportunities, and addressing operational issues are all very real examples.

However, many product organizations become so overwhelmed with these urgent day-to-day stakeholder obligations that two even more important responsibilities are pushed aside.  The first is the focus on the actual customers and their needs; and the second is the future of the company and what it takes to provide sustained differentiation and ongoing sources of revenue and value.

Strong product organizations work to strike a balance between those things required to keep the business operating, and innovating on behalf of the customer.

Product organizations must achieve this balance otherwise they cease to provide the role that is needed.  In some companies, especially those with strong business owners or strong senior executives, others will feel they need to step in and try to fill this void, and it’s hard to fault them for that.

After years in this situation, the problem becomes cultural and institutionalized, and the product organization is not empowered, rarely even respected, and of course they are frustrated.

Fortunately, this situation can be corrected although it’s not a simple change, and it requires sustained and strong leadership.

It starts by having the product organization earn the respect of the company and its leaders, and this won’t happen until the product managers become the recognized expert on the company’s customers and users.  And this of course means reconnecting with your customers in a big way.

Once you’ve done this, and leaders from across the company seek you out because of your understanding of the customer, then you’ve earned that seat at the table, and now you can bring the opportunities that you have discovered during your intense customer interactions.

I don’t mean to oversimplify what it takes for a product organization to regain its mojo; I’ve got another article brewing on a set of steps to achieve that, but for those of you that feel trapped in a product organization that lives to serve the company stakeholders rather than your customers, and I know there are many of you, I hope you will take a look at your roadmaps and backlogs and ask yourself which of those items are actually serving the customer and have a chance at delivering real value for your company?

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