If you ask 10 different product managers to describe strategic product management, you’ll probably get at least 10 answers, maybe more. Here’s the one thing they’ll all have in common though.
Every description will be something related to the product manager’s job responsibilities, and that’s why the definition of strategic product management varies so widely from one individual to another, and even more so from one organization to another.
What is Strategic Product Management?
In a nutshell, strategic product management is about the impact and value your products deliver. It’s the end result of a team effort. It has nothing to do with the job responsibilities of an individual product manager. Strategic product management has two primary components.
- Delivering solutions that first and foremost have quantifiable strategic value to customers.
- Taking those solutions to market in a way that returns quantifiable strategic value back to your own organization, beyond just your financial goals.
What Makes Portfolio Management More Strategic?
In simple terms, you’re uncovering and solving much bigger problems that result in customer outcomes with greater strategic value! In other words, it’s the level of value you deliver to your target customers with your portfolio, versus the value delivered by each product.
Add to that, the measurable value that’s returned back to your organization as a result of solving bigger customer problems and delivering higher-value outcomes.
For example, your accounts payable product can improve invoice processing efficiency, and your accounts receivable product can reduce DSO. But your portfolio of integrated financial management solutions gives the customer organization greater financial flexibility to fund its top strategic initiatives. Cash flow, debt to income ratios and balance sheet health are just a few of the metrics your portfolio can impact at a much greater level than any single product.
Your recruiting solution helps customers fill jobs faster with higher quality candidates, and your HR solution can improve employee engagement. But your portfolio of HCM solutions makes your target customer organizations one of the most desirable workplaces in their industry. Metrics galore to measure the resulting strategic impact to both the customer organization and yours!
Strategic Product Management and Your Discovery Techniques
Instead of looking for problems in accounts payable or problems in recruiting, your discovery lens shifts from tactical problems to strategic outcomes and obstacles.
In the finance example, your goal is to understand what your target customers are trying to accomplish that gives them greater financial flexibility (the strategic outcome) and why they can’t get there (the obstacles).
In the HR example, your goal is to understand what your target customers are trying to accomplish to become one of the most desirable workplaces in their industry (the strategic outcome) and why they can’t get there (the obstacles).
Using the customer’s strategic goals as the backdrop, your product managers now have to huddle as a unified team and figure out how to eliminate the obstacles that have the biggest quantifiable impact on the strategic outcomes. This is your portfolio strategy. Then the role of each product will become obvious in forming the solution and product roadmaps and priorities take shape accordingly.
Why Don’t More Organizations Practice Portfolio Management?
It doesn’t come down to one thing. There are a handful of reasons why a larger percentage of organizations don’t practice portfolio management. Here are my top three in no particular order.
- Have you ever seen something you never knew you needed until you saw it? Portfolio management falls into that category for a lot of organizations.
- A portfolio management discipline requires a culture shift in that quantifiable customer success has to be the starting point for everything. It’s difficult to do when the culture in most organizations starts with your own success, making customer value secondary by default.
- Most product management practices in B2B/B2B2C were born out of consumer brand management. The culture of treating each product like a business and measuring its success accordingly is still going strong. VCs and PE firms continue to fuel that mindset.
Here’s the bottom line question to consider: Is it easier, and more importantly a better use of resources, for your company (across product management, engineering, marketing, sales and customer success) to execute a strategy and tactics for each product, or is it easier to execute a single portfolio strategy and tactics to grow the organization in a few market segments where you’re best positioned to succeed?
Think of each approach as a different route to the same destination – your organization’s strategic and financial goals.
What Are the Biggest Change Management Considerations for Portfolio Management?
1. Tweaking the Product Management Organization Structure
Most product management teams are organized entirely around products. In a portfolio management structure, a small portion of the team is organized around market segments. Call them portfolio managers.
Think of portfolio managers as uber requirements gatherers and market segment managers. They have no direct product responsibilities, nor are they associated with any individual product.
Their job is to understand the top to bottom needs in key market segments, the value of those needs to the customer, and the subsequent value back to your organization of meeting those needs.
With that level of market and customer domain expertise, the portfolio managers are responsible for feeding those requirements to all customer-facing functions to ensure consistent views of the market across the organization so they can plan and execute accordingly.
2. More Collaboration Among Product Managers
This gets back to one of the main goals of portfolio management which is making the customer organization better at its business in ways they deem strategic. It’s very difficult to have that level of impact with any individual product.
When product managers collaborate to better understand the customer’s top strategic and operational priorities holistically, they’ll quickly figure out which of those customer outcomes require coordinated/integrated feature sets across multiple products versus investments in a single product.
Keep in mind, in a portfolio management model, you’re solving much bigger problems that deliver higher-value outcomes to customers. In other words, before you determine priorities for each product, you’re casting a wider net as a team to uncover and solve more critical needs that require you to help customers integrate their business processes better (with multiple products).
3. A Single Portfolio Strategy That’s Centered on Customer Outcomes
The key to your portfolio strategy is that it has to lead with WHAT you’re going to help customers accomplish, WHY those goals/outcomes are strategic to their business, WHY they’re struggling to meet those goals, and the metrics that define success.
Your product priorities are the supporting execution plans collectively responsible for eliminating the obstacles. When the priorities for each product are tied to a strategy with this level of impact and market value, it makes the whole notion of changing priorities on a whim far more difficult to justify, even for executive stakeholders!
What’s the Easiest Way to Transition to Portfolio Management?
Walk before you run. Start with one market segment where you’re already successful.
Invest the time to do a thorough top-down discovery to understand the common strategic priorities across the segment and the subsequent impact on the customer departments where your products are relevant.
In the enterprise B2B/B2B2C space, there’s a good chance you’ll be asked to help your target customers eliminate internal silos and better integrate a few key business processes that help them serve their customers, partners and employees more seamlessly.
With that as the backdrop, the role each product will be obvious in forming closed-loop solutions for that market segment. In other words, the top priorities for each product (with few exceptions) will be those required to form the solutions for this segment.
The Wrap on Portfolio Management and Strategic Product Management
Don’t make the mistake of assuming you won’t be doing smaller enhancements to each product in a portfolio management model. Those enhancements are still a big part of product management for many reasons, especially their impact on customer retention.
Think of portfolio management as a different approach for deciding on the BIG things you’re going to do to grow the company. These are portfolio-level solutions that can’t be delivered with any one product for the simple reason that the level of strategic impact necessary to drive growth can’t be achieved with siloed improvements to every product.
If you want to raise the bar on the level of strategic impact your products deliver to the market and to your own organization, contact us about portfolio management training and how it can help you accelerate your growth and become a leader in your chosen market segments.
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by John Mansour on January 2, 2024.