Startups and small businesses need the right product people in place, but titles can be confusing. A product owner will help you build a new product, but if you’re focused on building a business around that product, you need a product manager.
In recent years, the explosion of software-based products and the growing popularity of Agile methodologies have dramatically transformed the field of product management, which now includes a number of roles and specializations. This expansion has led to misconceptions about the responsibilities of product managers, as well as some confusion around where and how they can add value.
At large companies, there is often more than one person responsible for the product management function, while startups and small businesses will typically hire a single product professional. Where this is the case, leaders should ensure they have the right person for their business needs.
Identify the Need
When hiring, leaders must first consider whether they need someone with the skills and knowledge to deliver a product or to build a business around a product. If the focus is on the delivery side, a product owner will be at the forefront of these efforts. The product owner works specifically on features, user stories, backlog prioritization, and Agile sprints.
If the goal, however, is to build a business around a new product, and create and exploit growth opportunities, you’ll need someone with a broader skill set and a different approach. This person is a product manager.
A product manager focuses on determining what customers want and need, and distilling that information into a set of technical requirements, similar to what a product owner does. At this point, though, the paths for these roles begin to diverge.
Product Manager vs. Product Owner: Responsibilities
Product owner is a Scrum-specific role. The Scrum Guide defines the role as having accountability for “maximizing the value of the product resulting from the work of the Scrum team.” Product owner responsibilities include:
- Managing the product backlog.
- Communicating the product goal.
- Representing stakeholders.
- Helping the team stay aligned with the product roadmap.
In comparison, product manager is increasingly a cross-functional role. So much so that McKinsey & Co. described product management as the “new training ground for future tech CEOs.”
A product manager leads the product team during development while also:
- Developing a multi-year, three-horizons product strategy.
- Discussing technology roadmaps with R&D to be more informed about how to better use current and emerging technologies.
- Working with marketing and sales to create a go-to-market plan.
- Working with supply chain and vendor partners to devise ways to improve margins and/or reduce costs.
- Traveling to customer sites and conferences, meeting with customers to sell current products, and gathering data for future products.
- Meeting with the C-suite to discuss financial data and ways to improve business operations.
- Communicating with all departments and at all levels. This could mean, for example, discussing product strategy with executives in the morning, hammering out minute technical details with engineers midday, and clarifying the finer competitive points with sales and marketing personnel in the afternoon.
A product manager is not necessarily a technical content expert, but they are capable of deep and broad discussions with other departments about building profitable business units.
The Value of a Product Manager
Unlike the product owner, who is concerned with granular processes such as sprint planning, user story creation, and test planning, the product manager is responsible for the broader objectives around strategic thinking, research and competitive analysis, marketing, and business and financial analysis.
To be effective, a product manager must take a comprehensive and long-range view of their product lines and of the market to determine the best path forward. They must also be able to communicate, convince, and lead through the myriad processes and approvals required to get to market. This is a broader view than that of a design engineer in R&D or a logistics manager in Operations, both of whom look after relatively narrow portions of the product life cycle from concept to customer.
In addition to the strategy of a single product, a product manager must also be able to weave together the strategies of individual product lines into a collection of products that fill the market’s needs at all applicable levels for today and for the next few years.
A product manager must also be aware of the supply side, and be able to orchestrate and integrate the inputs from multiple suppliers and their schedules to maintain a product “web.” Unlike a product owner, a product manager does not focus on one aspect of the product offering but must instead think about the impact of each aspect on the total product structure.
Research and Competitive Analysis
A product manager must identify reliable sources of data, and then analyze that data to determine the current state of the market and what the future of the market may look like. This includes conducting a competitive analysis to evaluate risks and opportunities in the space and, eventually, measure product performance. To ascertain the direct competitors, a product manager examines peer companies in terms of size, products offered, customers served, and market share. They then monitor key competitors on a quarterly basis.
In addition to “hard” data—facts, figures, and specifications—a good analysis contains anecdotal and qualitative information gathered from customer interviews with those who use the product in question or its competitors.
While a product manager is not the creative genius developing the final campaign, they are the “genius” behind the customer profile(s), value propositions, and applicable market needs for those profiles—core components of any effective product marketing campaign. They are in a position to influence the marketing direction because they did the market research and analysis when the product was conceived. A product manager should guide the creative team with the messaging and application data they need to develop an outstanding program.
Business and Financial Analysis
A product manager’s role is a business role. This role affects and is affected by all aspects of the business. Accordingly, a great product manager must have the desire and ability to become a savant, to comprehend and contribute to all aspects of the business with the goal of increasing the worth of the product line.
The Product Manager in Action
A project I worked on recently demonstrates the value of a product manager. A $250 million engineering and manufacturing company was experiencing a five-year decline in the revenue and profit from its largest product line while the market grew at double-digit rates each year. The vice presidents of Marketing and R&D determined that the large disparity between industry growth and the company’s decline indicated an opportunity to improve performance if a clearly superior product could be implemented in record time. I was brought in as the product manager to lead on this ambitious project.
In partnership with the company, I worked to introduce a range of improvements, including conducting in-depth research and competitive analysis to determine product positioning, increasing sales and marketing activity, and supporting team leaders with new product development. The project was ultimately successful not only in significantly improving revenue, but also in creating internal efficiencies and systems that continue to positively impact the bottom line.
This is one instance in which hiring a product manager was the right choice, based on the scope of the project and the tasks and responsibilities involved. While a product owner focuses on prioritizing the requirements necessary for building a product, a product manager determines what should be built and why. In this particular situation, market research, competitive analysis, cross-functional collaboration, and communication with external suppliers were all needed in order to achieve the desired results.
While the market has evolved, and will continue to evolve, there remains a need for both a product owner’s and a product manager’s skills and expertise. By considering the nature and scale of a project, and understanding the skills and responsibilities associated with each of these distinct roles, leaders can ensure they hire the right person to help them develop and launch products successfully.
Understanding the basics
A product manager builds the business around the product. This cross-functional role spans strategy, research and competitive analysis, marketing, and more.
A product owner is Scrum-specific, focusing on sprint planning, user story creation, and test planning. They manage the product backlog, represent stakeholders, and help the team stay aligned with the product roadmap.
While these roles are both centered around identifying customer needs and translating those into technical requirements, the scopes of the two functions are different and demand different skills and experience. As such, leaders need to determine which of these product professionals their business needs require.