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The Business Value of Product Management — an Object Lesson

By Saeed Khan

As much as we may focus on the role of Product Managers in building great products, it’s equally important to focus on the role Product Management plays with other groups in the company and top-line revenue overall. This was underscored recently when a friend told me about something that happened earlier this year at her company.

A classic Product Management mistake
She works in a company with a number of products and product lines. During a reorg last year, one of their product lines — an older mature one — was left without direct Product Management oversight. Very little new product development was being done on it and the executives decided that Product Management should focus on newer products where more R&D focus was required. Additionally, it was believed that the sales force knew how to sell that mature product — “it virtually sells itself” (famous last words IMHO) was one line she said that was used to justify the lack of PM focus.

About 9 months later, it turned out that sales of that older product line had fallen significantly. After an internal debrief to understand why, it turned out that the lack of any Product Management focus had some other unintended implications in other parts of the company.

  1. Sales and Marketing took it that the legacy product was no longer important and didn’t warrant focus.
  2. There was no one to call during tricky sales situations so deals were delayed or lost
  3. No product management = no roadmap. What were they supposed to tell prospects who asked?
  4. No one to coordinate marketing activities with, which led to reduced lead generation overall
  5. No Product Managers were monitoring the declining funnel and sales activity so no early warning of trouble to come

The net result was a downward spiral and a real impact on the company’s top line  due to the revenue drop of the product that “virtually sells itself”.

This happened to me
I’ve seen this pattern myself in one of my earliest Product Management positions over a decade ago. And the reasons for the decline were almost identical.  At that company, when Management decided not to replace me when I moved to another (newer) product line, I asked an executive the following (rhetorical) question:

Either I did such a great job that this product can function without me, or I added absolutely zero value, so there’s no value in replacing me. Which one is it?

He smiled and said, “You know it’ s neither one of those reasons.” I knew it wasn’t, but I had to ask, because any other reason was going to be bad for the product. Keep in mind, when sales has more than one product to sell and marketing has more than one product to market, and there are no per product sales or lead gen quotas to meet, the logical behavior is to focus on what is perceived to be important.

This should be a stark reminder for any company that views Product Management as strictly, or primarily, an engineering or pure product development focused role.

Product Management has both direct and indirect influence on the business success of products and removing all product management oversight on a revenue generating product (even if it is “legacy” or “mature”)  is going to negatively impact your business very quickly.

Don’t believe me? Move all product managers away from one your mature products and wait a few quarters. I dare you. 🙂

Saeed

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0 comments
  1. Geoffrey Anderson

    Saeed,

    I suspect that this is very common. I had a product line that this was done to (slightly different, it should have been obsoleted, but the 1 order every 2-3 quarters was enough juice to keep the execs drooling).

    Alas, your #1 rings particularly true. This was a product that sales for 3 years would claim there was no forecast, no demand, and yet, about 3.5M a year in orders would appear as bluebirds. I tried so hard to kill it, but as far as I know, they still cobble those together when they come up. Sales would whine about not knowing how to sell it, I would train/retrain/pound it into their skulls, and end up doing most of the sales support. Sigh.

    Perhaps a post about how to successfully negotiate an end of sales/support/product lifecycle. It always seems to be impossible to turn it all down. Somebody has to do it well, I just have never seen it.

    1. Saeed

      Geoffrey

      Thanks for the comment. WRT end of sales/support/product lifecycle, that’s always a tough one, mostly because no one ever thinks about that and creates ground rules. People see the incremental revenue (how ever small) and rarely have a clear measure of the actual costs. “We get revenue and do nothing for it” is a common refrain. Whether it’s actually true is another matter altogether.

      Saeed

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