strategy+business is published by PwC Strategy& Inc.
 
or, sign in with:
strategy and business
Published: February 26, 2013
 / Spring 2013 / Issue 70

 
 

Product Management Gets Stronger

An innovative approach to managing product portfolios—the strong-form model—can help companies stay ahead of change.

In April 2007, Research in Motion (RIM) was flying high. The BlackBerry creator was coming off its best year ever, with record revenues, record earnings per share, and record shipments. And there was a new reason to be optimistic: Apple had just introduced the iPhone, and RIM executives took it for granted that their own product—a runaway hit in the business world—would grab a huge share of the burgeoning consumer market as well. “The door to the consumer is through the enterprise, not vice versa,” RIM co-CEO Jim Balsillie said on a call with investors. “Apple has done the industry an enormous favor.”

That confidence proved to be ill founded. Although BlackBerry sales did get a temporary boost as part of the overall growth of the market, Balsillie’s faith that consumers would prefer the BlackBerry’s reliability to the iPhone’s flash, elegance, and ease of use was misplaced. The iPhone reversed the historical pattern of computer technologies flowing from the enterprise to the consumer market. Even many former BlackBerry devotees wanted a smartphone with a touch screen and an ever-growing store of apps. Today, BlackBerry’s market share has plummeted, Balsillie is gone, and the firm is fighting to survive.

RIM is compelling as a cautionary tale, but it is not unique; many companies falter in the face of discontinuous change. Their failure usually stems from their inability to keep up with technological shifts or the complexity of their product lines. These events are often seen as breakdowns at the enterprise level; the CEO and executive leaders failed to move in time. But problems like these often start at a much more granular level, with ineffective product management.

Within many companies, product managers have relatively narrow roles. They manage channel decisions, oversee incremental innovations, take account of customer needs and preferences, and use those insights to fine-tune individual products and services over the course of their revenue-producing lifetimes. Product management, in other words, is a function not unlike marketing—one that is forced to make way when decisions arise that are the domain of other functions. Thus, sales may determine which products to maintain or kill, R&D may decide when an enhanced version of a product is ready for release, and operations may have the final say in choosing suppliers.

This diffusion of decision rights may seem like a good way of keeping all of a company’s functions involved across a product’s life cycle. But it can result in limited capture of customer insights, subpar innovation, and ineffective complexity management. Worse, when decision rights concerning the product portfolio are fragmented among various functions, it can create incoherence between a company’s products and its overall corporate strategy.

What companies need is more accountable decision rights that align responsibility for results to one person who also has cross-functional decision-making authority. This realignment is at the core of strong-form product management. Under the strong-form model, the “product manager” becomes a “general manager,” driving outcomes for a major portion of the business through a clear understanding of customer needs and leveraging all available channels. To a degree that would be unheard of at other companies, product managers at companies that use the strong-form model own the responsibility for top-line growth and other financial outcomes. They have the authority to make major product changes when needed and force actions across functional boundaries. They are able to stay ahead of change and remain competitive in fast-moving markets, while still maintaining the coherence among product and service lines that keeps them competitive.

At Google, for example, experienced product managers are responsible for small, agile work teams, and hold them accountable for outcomes. The products that have resulted have been consistent with Google’s mission of organizing the world’s information—and of doing so in a way that is extremely simple and valuable from the perspective of most consumers. The company expanded successfully into smartphone operating systems by hewing close to this strategy.

 
 
 
Follow Us 
Facebook Twitter LinkedIn Google Plus YouTube RSS strategy+business Digital and Mobile products App Store

 

 
Close