Four Steps to Product Management Excellence for B2B Companies
kHUB post date: January 27, 2020
Read time: 11 minutes
B2C companies, high tech companies, and even start-up firms place a high value on developing product management. Meanwhile, large B2B firms barely even treat it as a professional area. Why is this?
In the case of B2C, high tech, and start-ups, they have to make product management a priority. Because they can’t afford to be wrong. Solutions change quickly. Solve the wrong problem – and you may be out of business. Meanwhile, the large B2B enterprise has advantages that insulate them from such abrupt changes. However, when too much confidence in these “advantages” prevents the company from developing product management, long term success is unlikely.
The Fortress Becomes the Prison
Established B2B firms have assets that protect them from immediate destruction. They live behind fortresses. Not made of stone, but patents, of scale, and value chain complexities. Patents lock out competitors. Economies of scale keep costs low and quality high. Value chain complexities make it difficult for customers to leave.
Consider a food additive firm that makes a coloring ingredient. Why would their downstream food producers change? A switch would be risky, time-consuming, and costly. And for what benefit?
The same for the company that makes hoses for diesel engines. For one that makes copper wire for DC motors. Why would a customer change? No thanks. The status quo is fine.
Therefore, while these assets inoculate them from a quick death, they make them vulnerable to a slow one. When the protective walls prevent the company from developing product management, this fortress becomes a prison.
Like the steamroller scene from the Austin Powers movie, it’s a disaster that everyone sees. Even as it slowly approaches. And bystanders are powerless to stop it.
Investors Keep Us Honest
However, there is a group to keep B2B executives from becoming too comfy within the castle. We call them investors. They want profits. They demand growth.
While a bigger struggle for B2B, all firms benefit from improved product management. It’s time to get better. Let’s look at the four steps to product management excellence for B2B firms.
Step #1: Understand the strategic role of product management.
A company cannot develop a position if the leaders do not even understand the basics of what this position is. And unfortunately, the role is not well understood by B2B leaders. Speaking of which, how should we define the role? Here’s a definition as presented on IBM’s hiring site:
The Product Manager develops products by identifying potential products; conducting market research; generating product requirements; determining specifications, production timetables, pricing, and time-integrated plans for product introduction; developing marketing strategies.
This is a good start. To be sure, it at least helps explain why the product manager is often called the “CEO of the product.”
Let’s continue with Wikipedia’s definition:
“A product manager is a professional role which is responsible for the development of products for an organization, known as the practice of product management. Product managers own the business strategy behind a product (both physical and digital products), specify its functional requirements, and generally manage the launch of features. They coordinate work done by many other functions (like software engineers, data scientists and product designers) and are ultimately responsible for the business success of the product.”
This is more specific, with useful details. It does not differentiate between the B2C and the B2B product manager. But let’s condense product management to its core elements. And build the definition from there. Here’s our definition:
A product manager guides the strategy for new and current products by representing the customer as well as the business interests throughout product development.
To quote Socrates, “The beginning of wisdom is a definition of terms.” So, let’s explore the three main tenets of this definition:
Guiding the Strategy
“Guiding the strategy” means that the product manager works with development to address customer requirements with relevant features. To do so, the product manager must not only understand the customer, but also the competitive landscape: competitors’ businesses as well as their products. They must understand emerging trends for technologies, regulations, and global dynamics. From this basis, the product manager builds strategies. Dynamic product strategies that will remain stable. And yet, will flex with new insights over the years.
Representing the Customer
“Representing the customer” means that the product manager must understand customer needs. They must diagnose market problems. Those that products should address. A product manager must be fully committed to this task. Consequently, they will attend shows, spend time with customers, and read secondary research reports. They will immerse themselves in their customers’ world as much as possible. Researching their pain – or even better – feeling it directly by walking in their customers’ footsteps, both figuratively and literally. A product manager does whatever it takes to get this insight. Executing primary and secondary market research projects are a way of life.
The Business Interests
“As well as the business interests” means that the product manager seeks to optimize the business’s profitability, growth, and market share goals. As such, they must understand the basics of strategy, economics, marketing, operations, finance, and even accounting. They must also have a firm grasp on select individual topics such as pricing, forecasting, and data analysis.
The product manager lives within the intersection of the market, product development, and the business. It’s a strategic job. A position that demands a balanced perspective. Too much on the sales mentality will cause the product manager to forget about the long term. Too much of a product development mentality, and they’re likely to fall in love with a technology – losing the context of that technology’s purpose. And finally, too much of a financial mentality, and they’ll try to optimize profits without considering customer impact.
Step #2: Make it a priority to find candidates with the proper training. Commit to their continuing education.
First, this begs the question: What training does a product manager need? Begin with a balanced business education. An MBA should generally be a minimum requirement. A product manager needs the foundation of strategy, marketing, operations, accounting, and finance.
Further, a product manager needs specific training in product development (phased gate development, portfolio management, etc.), voice-of-the-customer methods, idea generation, road mapping, etc.
Specialized Product Manager Training
Make no mistake, large business schools are beginning to recognize this as an opportunity. Master’s programs in product management have been added at institutions such as Carnegie Mellon and the University of Texas. Others, such as NYU, have added product management as a specialty within their MBA program.
Meanwhile, even Harvard Business School has entered the fray. As a strategy, they’re utilizing independent product management gurus, such as Melissa Perri of Produx Labs, to teach within their highly-touted MBA program.
For B2B and large industrial companies, the New Product Blueprinting curriculum addresses most skill areas, especially for the B2B product manager. Likewise, for high tech and software businesses, Pragmatic Marketing has offered product management programs for many years. And though perhaps more from an academic perspective, the NPDP (New Product Development Professional) Certification through PDMA (Product Development and Management Association) provides valuable specific skills.
Regarding the specific training, here are some do’s and don’ts:
- Do commit to product management training for new and aspiring product managers.
- Do provide on-going training for experienced product managers.
- Do form long term relationships with training companies for the purpose of keeping the troops apprised of the latest approaches.
- Don’t allow engineering and technical teams to proceed without a product manager to represent the market and the business.
- Don’t be concerned about differences in terminology between Method A and Method B. No method is perfect, and the best product managers will benefit from learning different perspectives.
- Don’t be concerned about how or if the training perfectly matches with your current development system or other innovative methods that you’ve internalized.
- Don’t ever, ever, ever reduce training investments because of market downturns. No company ever went broke because it spent too much on training or because it understood customers too well. However, plenty have suffered due to poorly qualified product managers. Do err on too much training.
Step #3: Provide financial incentives to keep product managers long enough to become proficient.
It takes time to become good at anything. For example, you can’t learn to drive, to swim, to play guitar, to cook, or conduct brain surgery by reading alone. You learn to do things by doing them. It takes 3-4 years for a product manager to be truly proficient. Why so long?
Consider the upfront voice-of-the-customer work within the fuzzy front end. Afterwards, the product manager works with development to bring the product to market. Then the product launches. That’s one cycle. It takes multiple cycles for a product manager to become capable. And even more for mastery.
Additionally, product managers have little incentive to stay in the position. As compared to other careers, few companies have professional paths within product management. In engineering, you can begin as an engineering co-op student. Then you can join full-time as an Engineer I. Then Engineer II, or Senior Engineer, and so forth. You can climb the company ladder, all within the engineering function. Likewise, you can also do this within sales, procurement, finance, accounting, and operations. Pretty much any other function.
And when we have high performing product managers on staff, we tend to promote them to greater opportunities. With no financial incentive to stay in product management, they leave. And the company suffers for it.
Step #4: Ensure that product managers have the time to perform their core job.
In practice, the product manager is tasked with too many tactical duties. Instead, they should be spending their time understanding customers and working with development. And only then, as a lower priority, should they be spending time to support other parts fo the business.
Consider the strategic nature of the product manager’s core responsibilities. They are both important and non-urgent. Moreover, consider other important/non-urgent activities that people do. Brushing their teeth. Getting the required vaccines. Maintaining their cars. If a person does not brush their teeth one morning, the teeth will not all rot out that evening. Without a tetanus vaccine, you will not develop lockjaw within a week. If you neglect to change the oil in your car, it will continue to run. For a while.
What are some of these important and non-urgent product management tasks? Interviewing customers. Conducting quantitative market research. Studying the competition. Participating in brainstorming sessions. Analyzing customer data. If these do not get done in a particular week, market share doesn’t evaporate immediately. Obviously, the business will continue to operate profitably. For a while.
The Problem with Good Intentions
Unfortunately, the product manager is often asked to support other functions with shorter-term objectives. And if we’re not careful, these functions will fill the product manager’s calendar with a truckload of “urgent” matters. The sales director will insist that the product manager should participate in sales calls or work trade shows. The marketing director will ask the product manager to develop training materials for distributors. Further, the engineering manager will ask them to attend committees on warranty issues.
In truth, there’s nothing wrong with participating in these activities. However, if left unchecked, they’ll consume the entire schedule. Leaving no time for the important, non-urgent, product management tasks.
Building product management in B2B firms
B2B firms have less developed product management organizations than B2C. But remember the previously mentioned product management graduate programs? They advertise lucrative salaries for graduates – but specifically refer to placement within high tech and software. Quite frankly, B2B firms are not paying those same salaries.
However, exploit this as an advantage. Your B2B competition likely also has poor product management. Win the future by taking these four steps to product management excellence in B2B:
- Understand the strategic role of product management.
- Make it a priority to find candidates with the proper training. Commit to their continuing education.
- Develop an organization that sticks. Create financial incentives to keep product managers long enough to become proficient and longer. Everybody wins if they can contribute for many years.
- Ensure that product managers have the time to perform their core jobs, understanding customers and working with development, before filling their hours supporting other parts of the business.
About the Author
Scott Burleson is Senior Vice President of The AIM Institute. AIM provides training, software, and consulting services to help large B2B companies grow profitably.
Interested in learning more? Here are additional references to go deeper within this topic: