It’s not that Product Management 1.0 principles are wrong. They’re just not working as well as product management 2.0 principles in a B2B organization. Why? The market landscape is significantly different than it was years ago when formalized product management for B2B was much younger. If the product management function is to be influential going forward, the basic principles need to be applied more from a portfolio perspective than an individual product perspective.
Consider the following:
Product Management 1.0 – The Market Landscape Then
- A higher percentage of new products are developed in-house. Most are broad in scope with mission critical implications. Companies are structured in product silos because many product categories are still relatively immature and a high percentage of customers are buying individual products.
- Accordingly, product managers work in silos where each product manager does market analysis, competitive analysis, product roadmaps, product strategies, win/loss analysis, requirements, positioning, etc. at the product level. The high degree of redundancy across product silos isn’t much of a problem because it reflects the way buyers are buying B2B products and services.
- From a CEO’s perspective, new products get the lion’s share of resources because the revenue potential and ROI are easiest to justify. Existing products get leftovers for incremental enhancements.
- Product companies market and sell horizontally (by product) due to the relative immaturity in many product categories plus the fact that a high percentage of customers are buying single products to address tactical needs.
Fast-forward to recent years and the market landscape bears few similarities.
Product Management 2.0 – The Market Landscape Now
- Most new products today would be considered features of yesterday’s products, although functionality and sophistication of today’s products is far superior.
- Bigger product companies have made a practice of acquiring smaller product companies to integrate these sophisticated “feature sets” into core product suites to reduce R&D cycles, accelerate time to market and improve competitive position. Consequently, product portfolios have grown exponentially.
- Buyers are demanding tightly integrated, industry-specific solutions that span multiple work processes to advance strategic objectives with more impact.
- Product companies are expected to possess a wealth of knowledge as it relates to both vertical market dynamics and horizontal best practices for mission-critical work processes.
What Does This Mean For Product Management?
It means the same old silo-style product-centric product management practices are becoming less and less effective. More importantly, the influence of the product management function will gradually diminish if its practices don’t reflect current market trends.
If product management is to maintain or grow its influence, it will need to apply basic principles in a different manner. Here are five key examples of traditional product management practices and how they should be applied in today’s market in order to identify and solve bigger and more strategic problems.
- Market Analysis
Analysis of market trends, revenue potential, competition, win/loss, core competencies and the like are less meaningful at an individual product level but critical at a market segment level for two primary reasons:
- Product and portfolio management are about outperforming competition in key market segments with an aggregate suite of solutions that advance the strategic agenda of their customers. Head-to-head product bake-offs have less impact on the top and bottom line.
- Vertical market assessments are the foundation of the overall company strategy and critical to establishing non-competing priorities across all disciplines. It boils down to determining which markets are spending the most on initiatives related to your core competencies and your ability to align with those markets.
A single company strategy based on market segment priorities all but guarantees alignment across marketing, sales, products and operations. One #1 priority benefits everyone. As it relates to products, the company strategy includes a single strategic product roadmap that plots high-impact, game-changing solutions to strategic problems in key market segments. Product (portfolio) strategy and market strategy become inseparable.
- Product Management & Product Marketing Alignment
Product Marketing becomes more strategic with a stronger vertical or market segment focus with emphasis on marketing high-impact industry specific solutions that differentiate instead of “one-size-fits-all” products. Read the related article on Product Marketing 2.0 .Product Management remains horizontal with close alignment to the products, but it must function to a greater degree as collaborative solution teams since the lion’s share of revenue will come from integrated, cross-product solutions. It’s conceivable that six new industry solutions are nothing more than two business solutions derived from the collective features of four integrated products and delivered to three market segments.
- Business Requirements
The context of business requirements doesn’t change, however their one-to-one correlation with specific products will occur far less frequently when product managers approach business requirements from a holistic view of a customer’s business activities and work processes instead of products.
- Incremental Product Enhancements
Every product may not get enhancements in every release cycle unless its revenue stream is critical to the company’s overall market goals. Economies of scale dictate incremental enhancements will occur mostly in products that are undergoing major re-work as part of the broader solution development. Exceptions still occur when squeaky wheels (big, needy customers) become justifiably deafening!
There’s never been a better time to make the transition to Product Management 2.0 as many organizations are forced to do more with less. It simplifies everything by bringing an unrelenting market focus and alignment across product, marketing and sales initiatives. Higher impact solutions for named markets result in higher market share and higher revenue.
If your organization is experiencing diminishing returns from 1.0 product management and marketing practices, contact Proficientz to learn how our framework and Product Management Training 2.0 programs can simplify your process, make better use of limited resources and deliver higher impact solutions that generate more revenue.