Something to think about this week is what happens if you don’t have product management? One of the critical areas of a company that usually does not exist is product management. I was the VP of Product Management for a fire/rescue vehicle manufacturer so this function is near and dear to my heart. I see incredible value in this function. What happens if you don’t have a product management function?

Here’s an example:

The president and the vice president of engineering hatched a plan to sell a 19” black and white display system for $1000 that would attach to a $1000 Apple computer. To get the ball rolling, they ordered 1000 of these monitors and interfaces to be ready to satisfy initial demand.

Let me tell you, 1000 monitors take up a lot of physical warehouse space.

When I first learned of this product, my immediate reaction was, “If I only had $1000 to buy a computer, why would I purchase a $1000 black and white display system to pair with it?” Apparently, I wasn’t the only one with this thought. We sold 5. Oops!

Back when this product disaster occurred, Silicon Valley did not think much of doing any market research. Engineering created products without seeking any input from customers. In the interests of protecting competitive advantage (or disadvantage as the case might be), products were developed behind closed doors and sprung on the marketplace with no advance warning. Ta-da!

My view of the world is that marketing’s role is to stimulate demand for a product and sales’ role is to capture orders based on the demand that has been stimulated. What organization in a company is supposed to determine whether or not a product should be created?

For most companies, the correct answer is product management. There’s one slight problem with that answer. Most companies don’t have an organization called product management.

In the absence of product management, engineering steps into that role and determines whether or not a product can be created, not whether it should be created.

Product management done right should, at a minimum:

  • Report directly to the CEO
  • Look at pricing and margin targets
  • Be able to provide demand estimates
  • Estimate the impact of demand for current products given estimates for new products
  • Determine launch and cut-over points for new product introduction to make sure you don’t end up scrapping significant amounts of inventory unique to existing products
  • Determine what the competition is offering
  • Look at sourcing critical components of the solution
  • Examine issues related to “voice of the customer”
  • Write requirements documents
  • Run a stage-gate product development process
  • Lead cross-functional product teams (engineering, marketing, sales, customer service (technical and support), manufacturing engineering, purchasing/materials)

Engineering will see the introduction of a product management function as invading their cabbage patch, but that’s okay. A decision to create a new product has to look at far more than if it is technically feasible. It requires coordination and collaboration across the company. It requires product management.

How do you do this? You either hire a leader who has done this before or you identify a high-potential employee who can be mentored by someone like me to take on this role. If you’ve had new product introduction failures or disappointments, don’t wait.

Thought for the week:

“Change is the law of life. And, those who only look to the past or present are sure to miss the future.” – President John F. Kennedy

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Dave Gardner

Dave Gardner is a management consultant, speaker, author, and blogger based in Silicon Valley. He's been in the front row for the birth and evolution of Silicon Valley, the innovation capital of the world. Since 1992, Dave Gardner focuses on making the complex simple around people, process and technology. Dave is the author of Mass Customization: An Enterprise-Wide Business Strategy - How Build to Order, Assemble to Order, Configure to Order, Make to Order, and Engineer to Order Manufacturers Increase Profits and Better Satisfy Customers.

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