The Product Management Operating System

In the business climate of the twenty-first century, companies must hone their operations to become more strategic, agile competitors. The best approach to achieving this goal is through an enhanced utilization of the function of product management. While “product-led” has become one of the hot topics of the day, it doesn’t mean that’s the term people will use in years to come. In my opinion, the expression “product-led” is an erroneous fad that distracts from what’s needed for a successful enterprise, which is just common-sense business logic.

To me, what’s much more important is to shape the company’s structure that helps it achieve market success with its products by delivering high-value offers to chosen customers and for customers to recognize this value through their choices. A product management operating system (PMOS) is required to achieve this.

An operating system, as most of us know, is a term used in computing that refers to the management of a computer’s resources. It’s a system because it manages inputs, processes or activities, and outputs in the production of some outcome or result. Without operating systems, intended computing activities cannot be carried out. In many organizations, resources are often misused, improperly allocated, and out of step with one another. You see this when there’s role confusion and imbalances across functions. Not all companies are as inefficient as this, but if you move the magnifying glass over various aspects of your own company, I’m sure you’d see what I mean.

It’s Time

It’s time for leaders to focus on fortifying the “infrastructure” of product management—the function—Yes, it falls on senior leaders to strengthen the function and structure of product management; the product management operating system.

I’m sure that most of you have developed powerful experiences as managers and leaders. To reinforce this, my research suggests that most corporate leaders have deep functional experience and less in product management. Cross-organizational cognizance (as in goings-on across the business) is not as I think it should be. Why is this important? To develop an effective product management operating system senior leaders should possess the wherewithal to view the organization vertically and horizontally, and to understand the interplay between all its subsystems; its business functions, processes, etc.

Most of you have witnessed the effects of new strategies, leadership changes, organizational realignments, and other structural adjustments. Therefore, many corporate changes and reorganizations are fraught with challenges and unfulfilled expectations. In such cases, the changes have impacts that include the following:

A domino effect that leads to more changes: This compounds the challenges for employees (including product managers) as they struggle to clarify their roles and responsibilities to carry out their work.
A static effect that leaves day-to-day work activities unchanged due to fewer available resources.
A degradation of continuous learning, coupled with a lack of acknowledgment of past mistakes.

In the face of all of this, senior leaders can be a force for positive change by properly aligning and strengthening the function of product management in their organizations by shifting their mindset to that required to create a unique product management operating system.

Product Management is a Vital Function

Although the product management function is included on the organization chart in many companies, the roles and expectations relegated to product managers tend to vary widely. From my experience and research, I’ve learned that executives and others often confuse the functions of product development, project management, and product management. Have you ever heard people use the terms interchangeably? I have. More often than necessary.

Organizational structures also vary. In some companies, product managers work directly in the business functions; in other organizations, they work in geographic regions; in many firms, they report to a chief product officer (CPO). How you perceive product management is likely affected by the processes you’re most familiar with or your company’s business model. In other words, an executive’s view of product management is generally shaped by what they know and what they’ve done. No matter how it’s viewed, the important thing to remember is that product management is a function within the organization.

When product management isn’t properly organized, aligned, or scoped, executives won’t be able to achieve the kind of balance required that focus on people, processes, and projects. When leaders don’t “get” product management systemically, they won’t be able to integrate product management effectively into the fabric of the firm. Therefore. Therefore, organizational models need to be altered to best support the function of product management and the capabilities of product managers – again – think product management operating system.

Since the launch of my company, Sequent Learning Networks, and its sister company, the Business Acumen Institute, I have been in continuous collaboration with hundreds of companies and tens of thousands of people. This cast of thousands includes executives, managers, and individual contributors, most of whom work in product organizations.

Aside from giving me a position from which to conduct business, this situation has provided me with a genuine and unique learning laboratory in which a wide scope of ongoing practical research takes place. Through various corporate assessments and diagnostics performed, I have found common characteristics and challenges in product management implementations:

Product management is deeply misunderstood, grossly marginalized, and vastly underutilized.
Product management is treated like project management.
Product management becomes an extension of product development.
Product management is considered to be another organizational silo.

By learning to recognize these and other related issues, leaders across business functions can effectively discern the common denominators that impact the performance of the corporate product portfolio. Applying this knowledge to the product management organization will help the company become a more active competitor in chosen markets.

Product Management Operating System

Over the two decades I’ve been involved with product management training and organizational development, I’ve utilized a Product Management Life Cycle Model to represent the main areas of work associated with a product or product line across its entire life cycle. This model also sets up the most appropriate definition for product management, that is, the “holistic business management of the product” from when it is conceived as an idea to when it is discontinued and withdrawn from the market. I like to say that product management is the “business management of products.” You can view the model below and view a video that explains it in more detail by visiting: https://sequentlearning.com/product-management-framework/

The Product Management Life Cycle Model represents a product’s business from beginning to end. It provides a holistic view of what’s involved in the business management of a product. Out of necessity, the model is a linear, progressive, and static depiction of something three-dimensional, recursive, and dynamic—but for most purposes, it’s a useful approximation. I say this because many refer to a “product management process” as one set of things to do. This is why the model is the perfect representation of the product management operating system, and it’s made up of five broad areas of work, including:

Customer and Market Insights
Product Strategy Formulation
Product Planning & Prioritization
Product Development & Introduction
Post-Launch Performance Management

The Product Management Life Cycle Model represents a way to think about all the moving parts of a product’s business. It reveals the overarching instrumentation needed to assess customers and markets, formulate strategies, shape product investments, develop and release products, and manage them once they’re in the market. This integrated viewpoint should shape your mindsets around the notion of a product management operating system.

Product Management Life Cycle Model - © Sequent Learning Networks — Product Management Life Cycle Model – © Sequent Learning Networks

Booting Up the Operating System

Over the past few decades, I’ve benchmarked, researched, and diagnosed hundreds of companies and interviewed thousands. For any operating system to properly function, it must be appropriately coded and tested. From my research, here’s what’s done in well-run firms that help to create and sustain an optimal product management operating system. These fourteen items form the code base for successful product management operating system implementation.

Product and market success in these companies is linked to a keen – almost obsessive -focus on chosen segments and customer targets. They clarify roles in “customer companies” and associate people with needs so they have a better chance of identifying underlying problems and needs. They are also astute trend spotters and leverage these insights to shape strategic options.
These companies use anthropological and ethnographic (live contacts with customers) techniques to understand what customers do and why to create more robust solutions.
Management clearly communicates its overarching strategic intent up and down and across the organization. This contributes to reducing organizational ambiguity and, most importantly, better alignment of product portfolio and product line investment decisions.
These companies consistently use standardized product platforms. Organizations that use platforms as a part of their strategies benefit from improved economies of scale from the reuse of common architectures, technologies, and even components.
Regular rationalization of product portfolios contributes toward more efficient allocation of investments to the most appropriate, strategically important product lines. Significant go/no-go project investments are made at the divisional or corporate leadership team levels based on portfolio strategies.
Organization around products, not projects, using empowered, cross-functional product teams to run “mini-businesses” inside of these larger enterprises. When these teams are in place longer, they tend to perform better and achieve better results than teams that are more transient. In the best performing teams, Marketing is always seen as a strong member. Also, the bond between product managers and the development community is collaborative, symbiotic, and supportive. Furthermore, teams (people), not processes, are the glue that holds these organizations together.
The best of the best assign primary product or product line profit-and-loss accountability to the product teams, with appropriate reward systems that focus on product-business and financial outcomes, not functional performance.
Funding for unplanned product opportunities is not made from annual budget money, but from a separate funding pool, and is vetted using an agreed-up screening process with funding and business justifications made using business cases.
Success is linked to strong product team leaders and team members who respect one another. They have clear roles and responsibilities underscored by the consistent use of a common business language for processes and documents. Furthermore, these companies hold these product teams accountable for the achievement of business results using a small, manageable number of business metrics controllable by the team, not by individual functions.
In terms of enabling customer and market focus, these organizations have a formal, centralized industry and competitive intelligence function with data made available to product managers and their teams. These firms also generously fund customer research and continuously update their segmentation models.
They know that business, market, financial, and other data form the backbone of the majority of strategic decisions. They provide solid funding for customer and market research, create market intelligence systems and repositories, and ensure that product people and others have current, relevant, reliable data.
They create communities of practice or centers of excellence for knowledge sharing. These people gather in person or virtually. Online systems and repositories improve interactions and feedback so that cross-organizational learning can be facilitated.
They make the competition the main enemy, which tends to reduce internal conflict and draw teams together.
Chartered, involved executive leadership teams form governance councils or equivalent groups to guide the processes, methods, and tools used by product managers. They also have formal programs to recruit, select, and progress product managers.

Within these best-in-class companies, organizational structures typically have product managers reporting to the marketing department. Over the years, at the start of every one of my workshops, our facilitators ask, “Where do you report?” At this point, the majority of people indicate that they report to Marketing. The exception is in the software and technology sector, where product managers report to Product Development or a CTO function. However, an established senior leadership role of chief product officer (CPO) is often used.

Summary: Why The Product Management Operating System is so Important

Product management is, at its core, a model for a business organization. There’s no better way to look at this than through the lenses of the Product Management Life Cycle Model I described earlier.

In essence, product management alters the genetics of the organization up and down, as well as across business functions. Firms employing this model focus on identifying customer needs, segment trends, and other market movements. This market-first, outside-in viewpoint will increase the likelihood of producing better business results and optimizing the value of the product portfolio. This view implies that the business benefits when products are treated like investments in a portfolio of businesses (products), allowing for a more granular approach to strategic product planning. With this approach, the products become the building blocks of the organization. Like any computer operating system, product management can serve as the mechanism to drive the most relevant market inputs, process and rationalize those against a company’s strategy, prioritize what’s needed to achieve a competitive advantage, organize resources to get the work done, and continually optimize the product’s business operations. What could be better?

This article is written by Steven Haines and brought to you by Sequent Learning Networks.

To best serve a product managers busy schedule, our learning library is broken down into a variety of courses to encourage professional development. We offer these courses publicly (for individuals or small teams), and privately for corporate teams (customization available). For more information on our product management training library, please visit sequentlearning.com.