Business

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If you enjoyed my recent attempt to explain just what exactly a product manager does, I think you’ll really like Stratechery, a blog published by a very clever guy named Ben Thompson. I only know Thompson through his writing, which is consistently smart and incisive.

Unlike me, Thompson actually studied strategy and marketing at business school and, beyond that, he’s spent time working at both Apple and Microsoft, so he’s got the bona fides. Consistent with his background, Thompson’s posts are primarily focused on the tech sector, but I find that his insights are, more often than not, relevant across industries.

One example is a piece he published this past October titled “PayPal’s Incentive Problem,” which was the most memorable business article I read in 2014. As the lead suggests, the post focuses specifically on PayPal, but I can tell you from first-hand experience as a start-up co-founder and as an employee at some very large corporations that Thompson’s observations hold truths that apply well beyond PayPal alone, or tech companies as a cohort for that matter. Here’s the core of his analysis:

Something I’ve learned over time—and believe today more strongly than I ever have—is that nothing matters more than incentives. It doesn’t matter how much money or experience or developers you have if your incentives are not aligned to solve the right problem. This is the big advantage that startups have vis a vis corporations: a startup starts with the problem and then creates the incentive structure under which their company operates…
A big company, on the other hand, has already solved a different problem—the problem that defined them back when they were as a startup. Now that the big company is facing a new problem, they have the wrong set of incentives—incentives that are defined by the old problem, not the new one.
This means that all of the advantages a big company has—their money, their experience, their developers—are all pointed in the wrong direction, leaving an opening for the new startup who has defined themselves by the new problem.

This dynamic has existed for as long as large corporations have existed, but the advent of the Internet and, more recently, the mass availability of the always-on, always-connected pocket computer (aka the smartphone) have amplified its effects to the point that a tiny start-up like Airbnb or Uber can single-handedly disrupt an entire industry.

Thompson illustrates the pitfalls of mis-aligned incentives through the lens of PayPal, which has been the leader in peer-to-peer digital payments since the early 2000s, yet is struggling to remain relevant in the face of disruption (as catalyzed by the rise of mobile payments—there’s that pesky smartphone again!).

This is a good case study, but the core challenge he outlines—the ability to align incentives towards solving the right problems—goes well beyond PayPal and is, in my experience, the central challenge faced by every company that survives beyond the start-up stage. For the physics nerds in the house, it’s akin to a “theory of everything” for the universe of business in that it’s as applicable at the quantum level of the individual employee as it is at the Newtonian level of the corporation. And a business leader’s ability to establish and maintain the right incentives is the most consistently accurate predictor I’ve seen for future success—whether that’s at the level of a functional manager, a divisional GM or a CEO.

This is a topic I’d like to dive into more deeply, but the point of this post was not for me to pontificate! Instead, my intent was to turn you on to Ben Thompson’s consistently smart observations on the world of business at Stratechery.

Before ending, however, I should note that I wasn’t completely truthful at the top of this piece when I wrote that I only know Thompson through his writing. In fact, I’m also an avid listener to Thompson’s weekly podcast, Exponent, which he co-hosts with James Allworth, another clever bloke who, amongst other things, writes for the Harvard Business Review. Their august qualifications might lead you to presume that these guys communicate in gobbledygook business-speak, but the show is actually quite accessible to non-MBAs. What I enjoy most about it is that Thompson and Allworth aren’t afraid to forcefully debate ideas, but their conversation never devolves into chest thumping hyperbole or ad hominem attacks. Given the sad state of business commentary these days—particularly when it comes to tech—both Stratechery and Exponent are welcome aberrations.

WTF is a product manager?

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It’s a good question. Before joining Nike back in 2007 as a product line manager, or PLM, within the company’s Running Footwear category, I had no idea that such a job existed. What a designer does is pretty straightforward: he or she designs a product, which includes a strong say into how that product works. What an engineer or developer does is also largely self-evident: he or she figures out the best way to realize a product concept, whether it’s with bits or with bolts. But a product manager: WTF?

My business card from my first stint at Nike, during which I served as a global product line manager, or PLM, in the company’s Running Footwear category. FYI: My phone number has changed since this card was issued—if you want to get in touch, the be…

My business card from my first stint at Nike, during which I served as a global product line manager, or PLM, in the company’s Running Footwear category. FYI: My phone number has changed since this card was issued—if you want to get in touch, the best way to reach me is on Twitter @edotkim.

Before diving in, I should note that this piece is based largely on my experiences at Nike. But my years in the digital design and advertising worlds gives me the confidence to say that the description below applies across industries, and spans the digital/linear divide as well. In other words, the broad strokes of what I describe below are as applicable to a product manager at a physical goods company, such as Proctor & Gamble, as they are to a product manager at a digital goods company, such as Twitter.

Okay, so if a designer designs and a developer develops, what does a product manager do? The most succinct answer I can give is this: A product manager defines the job that a product must do in order to succeed.

What does this entail? Usually, this definition is captured in the form of a brief, which defines the what of the job, along with relevant information regarding the target audience, context on market positioning and an indication of success measures (e.g. brand impact, sales, downloads, engagement, etc.).

Critically, what a good brief does not do is address the how of the job. That’s because any good product manager recognizes that the how must be left to the designer and developer to define. This is an enormous oversimplification, but one way to think about this is that the product manager outlines a job opportunity in the form of a question—e.g. Can we solve problem X for customer Y?—and the designer and developer apply their domain expertise towards answering that question in the most compelling way possible.

An example I’ve used in the past is that the designers and developers at Nike are so good that they could create a shoe that looks like a boat, yet still offers the performance and comfort of cutting edge athletic footwear. But if it turns out that there’s no market for shoes that look like boats, that product would fail—regardless of its beauty or functionality. In short, it doesn’t matter if the answer is right if the question you set out to answer is wrong. It’s the job of the product manager to ensure that the product team is working to answer the right question(s).

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Now, a question you may be asking at this point is: Does a company really need a person dedicated to the product manager role? Couldn’t a designer or developer figure out the job that their product must do on their own? Well, yes and no.

Say you’re a very small operation with an equally small product line that doesn’t change very often—for example, the boutique watchmaker Autodromo, which introduces just one new product per year. In such cases it’s often necessary for staffers to wear multiple hats, and it’s also very often the case that people who start passion projects like Autodromo enter into such endeavors with a clear preconception of the products they intend to create. A dedicated product manager would be superfluous in this context.

But then you have bigger companies—e.g. Nike, Apple, Facebook, et al.—that offer a wider range of products, in higher volumes and in fast moving industries. In such cases, if a designer or developer were to try to keep up with all of the inputs underpinning the job that their product must do on a version-by-version basis, he or she wouldn’t have any time left to design or develop. It’s in these contexts that a dedicated product manager becomes essential.

Before moving on, I’d like to dispel a couple of common misperceptions about the product manager role. First, the product manager doesn’t simply hand-off a product brief and then kick up his or her heels until the designer and developer come back with a concept. Creating a product is an iterative process—a path that seems promising one day may prove to be a blind alley the next, and it’s not unusual for a team to debate the core tenets of a brief well into this journey. A good product manager will remain engaged from start to finish, answering questions as they arise, re-assessing assumptions when warranted and doing whatever it takes to get his or her team the resources they need to effectively deliver on the brief.

On the flip side, the designer and developer aren’t just passive consumers of the product manager’s brief. In every successful project I’ve been part of, the ultimate product brief was created in collaboration with my teammates in design and development. As noted above, it’s impractical to expect the designer or developer to keep up with markets and user needs to the degree that a product manager must, but it is imperative that the designer and developer believe the core question they’re being asked to answer is the right one. And the best way I’ve found to cultivate this shared belief is to formulate that question in partnership with the people who will be asked to answer it.

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Okay, so a product manager defines the job that a product must do in order to succeed, and his or her primary deliverable is a product brief. What kind of knowledge base is required to deliver on these responsibilities? I’m glad you asked. The product manager role demands expertise across a few key domains, as illustrated below:

The product manager role sits at the intersection of three key domains of knowledge and expertise: your marketplace, your target end-user and your company’s brand.

The product manager role sits at the intersection of three key domains of knowledge and expertise: your marketplace, your target end-user and your company’s brand.

I know, I know, Venn diagrams are très cliché, but it’s a useful construct to illustrate the fundamentally multi-faceted nature of the product manager role.

Know Your Market
As mentioned above, a product brief typically includes context on market positioning. In some cases a product may create an entirely new market segment, but, most of the time, it will compete against other, similar products within an existing segment. For example, as innovative as Apple’s iPhone was on its introduction in 2007, it was entering a pre-established smartphone segment within the larger mobile phone marketplace. Steve Jobs’ original iPhone keynote made it clear that he recognized this, as his argument for the superiority of iPhone was built atop a dissection of the shortcomings of the existing market leaders, with Jobs specifically name-checking products from Motorola, Blackberry, Palm and Nokia.

This is a screengrab from Steve Jobs’s introduction of iPhone at the MacWorld exposition in 2007. Jobs was a fan of the 2x2 segmentation matrix and used it to great effect here to illustrate—some might say exaggerate—the benefits of iPhone relative …

This is a screengrab from Steve Jobs’s introduction of iPhone at the MacWorld exposition in 2007. Jobs was a fan of the 2x2 segmentation matrix and used it to great effect here to illustrate—some might say exaggerate—the benefits of iPhone relative to its competition.

While a company’s sales and merchandising teams typically develop the deepest marketplace expertise, it’s essential for a product manager to understand the overarching dynamics of the segment that their product will occupy. For example, what are the leading brands and products in a given market segment, and why are those players succeeding? What are the opportunities within that segment—i.e. are there needs that aren’t being met, price points that aren’t being served? Are there key gatekeepers within the segment that stand between your product and your customer? A good brief will be informed by answers to questions like these because marketplace dynamics can play a huge role in the ultimate success or failure of a product.

Know Your End-User
Next, a product manager must develop a deep understanding of their target user. Why do they buy the type of product you intend to create? What job does it fulfill in their lives? Do they have functional or emotional needs that aren’t being met by existing products in the marketplace? This may all sound a bit fluffy, but small nuances in the motivations of your end-user can mean the difference between success and failure.

I can provide an example here from my own time as a product manager, or PLM, in Nike’s Running Footwear category. I was the PLM for what would eventually become the Nike LunarGlide+ and, in the early stages of that project, my team and I struggled to deliver on our shared brief for a no compromise running shoe targeting a new generation of runners.

The fundamental insight that enabled the success of the original Nike LunarGlide+ was the outgrowth of countless hours of engagement with our target runner. As an aside, I mention in the accompanying piece that the product manager’s primary delivera…

The fundamental insight that enabled the success of the original Nike LunarGlide+ was the outgrowth of countless hours of engagement with our target runner. As an aside, I mention in the accompanying piece that the product manager’s primary deliverable is a brief, but that is by no means his or her only responsibility. For example, as the frames above depicting me in “talking head” mode illustrate, the product manager must serve as the evangelist-in-chief for their product, both inside their organization and out.

Our “Aha!” moment finally arrived after several months of on-the-ground research: We realized that, when our target runner told us she wanted a “simple” shoe, she actually meant she wanted a shoe that was “understandable.” We then had to dig into what “understandable” meant in the context of a running shoe, but this seemingly subtle distinction in the meaning behind a word completely changed our design direction and—I’m not exaggerating here—enabled us to progress from prototypes that runners hated in one round to samples they loved in the next.

We would not have reached this epiphany had we not spent an enormous amount of time engaging with our target user. As in the case of marketplace expertise being “owned” by sales and merchandising departments, some large companies will have consumer insights teams dedicated to the study of consumer needs and behaviors; but even in these instances, a product manager must develop a profound familiarity with their intended end-user within the context of the product they intend to create. In the case of the LunarGlide+, I had to understand the role running and running gear played in the life of our target runner, but I also had to know her well enough that I could appreciate the meaning behind her words. This connection was fundamental to the ultimate success of the product.

Know Your Brand
Finally, a product manager must maintain a deep understanding of the values underpinning their own brand. This probably sounds incredibly obvious, which may explain why so many product managers seem to forget it.

A good recent example is Amazon’s Fire Phone, which is widely recognized as having been a flop of epic proportions. Fast Company magazine was so interested in understanding why it failed that their February 2015 issue devotes 5,425 words to explaining what went wrong. They identify a number of factors, but it really boils down to this conclusion:

“Bezos, insiders say, was ‘the product manager’ on the Fire Phone [and] what makes the Fire Phone a particularly troubling adventure is that Amazon’s CEO seemingly lost track of the essential driver of his company’s brand. ‘We can’t compete head to head with Apple,’ says a high-level source at Lab126 [Amazon’s secretive R&D division]. ‘There’s a branding issue: Apple is premium, while our customers want a great product at a great price.’”

So, Jeff Bezos, a very smart man who is the CEO of Amazon and, according to many insider accounts, was the de facto product manager for the Fire Phone, failed to recognize that a successful product must embody the values of its brand. Goes to show you that this can happen to the best of ’em.

For counter examples, witness Apple’s refusal to offer a sub-$500 Netbook, which many industry “experts” insisted the company must do to remain competitive in the PC space back in the late-2000s (meanwhile, Apple just keeps setting Mac sales records, while the rest of the PC industry shrinks). Or their continued refusal to offer a cheap smartphone, again, against the entreaties of armchair pundits who exclaimed that Apple “would be stupid not to” release a low-cost phone (meanwhile, Apple just keeps setting smartphone sales records, while also growing market share).

Apple has refused these calls to go low-end because the company’s leaders know that to do so would be antithetical to the promise of their brand, which is founded on aspiration, innovation and a desire to surprise-and-delight. Tim Cook, the company’s CEO, made it very clear that he understands this in an interview with Bloomberg Businessweek:

“There’s always a large junk part of the market,” [Cook] says. “We’re not in the junk business ... There’s a segment of the market that really wants a product that does a lot for them, and I want to compete like crazy for those customers. I’m not going to lose sleep over that other market, because it’s just not who we are.”

Cook’s forthrightness is doubly impressive to me because this interview took place in September of 2013, at the height of the “Apple is doomed if they don't release a cheaper iPhone” mania. It reflects a deeply internalized understanding of the truth at the core of his brand—something every good product manager must develop and have the discipline to stick to.

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This post has ended up far, far longer than I had intended, but, for the two people who’ve actually made it this far down, I hope it’s helped you to better understand what a product manager does, and the areas of expertise that he or she must develop to be successful in the role. In a future post, I’ll answer the question I most often get from people who already know what a product manager is: How do I become a product manager?

In the meantime, I’ll leave you with a video of the best product manager of our generation brilliantly demonstrating all of the skills and domain expertise I’ve outlined above. Note how the presenter begins with an overview of his company’s target market (starts at the 1 minute mark), moves on to a discussion of user needs (starts at about the 8 minute mark) and then closes with a discusses of the attributes that set his product and brand apart from the competition (starts at about the 14 minute mark). This is going to sound terribly geeky, but I periodically re-watch this video to remind myself what it means to be a great product manager. Enjoy!

Agree? Disagree? Have questions? Let’s continue the conversation on Twitter @edotkim.