Product Managers — More Strategic as Product CEO or Portfolio Executive?
The product CEO analogy for product managers has been around forever, but when you think about it, does it really make sense for B2B software?
Every product manager wants to have a reputation for being strategic. The question is, can you have a greater strategic impact as a product CEO or as a member of the portfolio executive team?
Let’s have a look see!
What is Strategic Product Management?
Before we dive in, let’s define strategic product management. Simply put, strategic product management is defined by the quantifiable strategic value your customers and your organization receive from the products you manage.
Why Product CEO Makes Total Sense
It’s a short list.
- The product CEO analogy makes sense only from the standpoint that every product needs an owner and a champion to lead it to success. Without that leadership, products can and will flounder at every turn.
Why Product CEO Makes Zero Sense
- Let’s say your company has 10, 20 or even 50 product managers. Now imagine that your company has more than one CEO let alone 10 or 50. Does the word disaster come to mind?
- If a CEO is the head of a business, 10 product CEOs mean you have 10 competing businesses inside of a single company that can cannibalize each other before you even realize it. Would you rather be the CEO of a wildly successful product at the expense of your company missing its financial and strategic goals? The two aren’t mutually exclusive but when it does happen, it’s like celebrating the shiny bell on a ship that has a lot of holes to be plugged to keep it from sinking!
- The CEO of a company has the authority to be the final arbiter on every decision if he/she chooses. Product CEO, not even close!
- The CEO of a company is ultimately responsible for leading the company strategically. It’s the ultimate strategic role. If you look at each one of your products individually (modules on your platform), their strategic value to the customer and your own company, pales in comparison to the strategic value of your entire platform (the portfolio). That means your ability to be strategic as a product CEO has a pretty low ceiling.
- A CEOs job is to return value to shareholders, investors, customers and employees. See #4 above. A Product CEO has minimal impact at best.
- We’ll have to go 80/20 on this last one! 80% of CEOs don’t need or want to get involved in the minutia of every aspect of the business. Product CEOs, this is your job (80/20 rule still applies here).
The Strategic Value of One Portfolio CEO Leading a Group of Product Executives
Everything about this analogy makes perfect sense and managing every product in the portfolio is about to get a lot easier. BTW, the Portfolio CEO is the Chief Product Officer or the manager with the most senior role in product management.
Portfolio CEO, the first and most important thing you’re going to do, just like the CEO of a company, is establish a “north star” vision for the portfolio. Think of it as the ultimate reason customers hire your portfolio!
Each member of your senior executive team, a.k.a. product managers, will do the same for their products. The important thing here is that each product vision supports the portfolio vision.
For example, if the portfolio vision is “to make our customers indispensable to their customers,” the vision for each of your products will be something that advances or moves the needle on that vision.
Here’s the great thing about this vision structure. Following the example above, your customers will never ever be 100% indispensable to their customers. There will always be obstacles standing in the way of fully realizing that vision. That means from now until the end of time, your portfolio will always have a strategic purpose, and each product, current and future, will play a critical role.
Feeling good? Let’s keep going.
Back to the portfolio CEO. It’s time to do strategic planning. Just like the company strategy prepared by your CEO for the board and investors, your portfolio strategy has to paint a picture of success beyond this year.
A rolling 24-month portfolio strategy is a good rule of thumb where the first 12 months is firm (assuming no drastic shifts in the market) and the next 12 months is more fluid since it based on the current market conditions which we know are likely to evolve in the coming year.
The headline for your portfolio strategy now and forever is your portfolio vision, e.g., make our customers indispensable to their customers. The parts of your portfolio strategy that change every 12 months should mirror the business investment priorities of your target customers that are most relevant to what you do.
Here’s an example. Let’s say your target customers are investing strategically in their technical support area as a way to differentiate in an otherwise commodity market. Your 12-month portfolio roadmap will outline the things you’re going to do to make a quantifiable impact on the support experience your customers give their customers.
The dots between your portfolio vison and 12-month strategy connect perfectly. A superior support experience helps your customers become more indispensable to their customers.
Portfolio executives, a.k.a. product managers, the next layer is all yours and focuses on the customer jobs that have the biggest impact on their support experience. Your collective product roadmaps will outline how you’ll improve those jobs to improve the customer support experience, all in the interest of making your customers more indispensable to their customers.
The final piece to the puzzle is making sure the solutions on your 12-month portfolio roadmap support your own company’s strategic and financial goals. 99.9% of the time strategic value to the customer usually results in strategic value to your company as long as the time and cost of taking those solutions to market is reasonable!
Portfolio Investment Priorities & Product Prioritization
Back to the analogy with your company CEO and the corporate strategy. Once your CEO finalizes the 12-month strategic and financial goals for the company, each member of the executive team is responsible for a prioritized operational plan that makes a quantifiable contribution to the company goals.
Now it’s time to divide the annual budget. In most cases, the areas of your organization that need the most improvement relative to your corporate goals will get more budget than those that are functioning well enough.
For example, if HR and marketing are the two areas of the company that need the most improvement, they’ll get a greater share of the budget than IT, sales, operations, etc.
Product investment decisions will be made using the exact same approach. The products with the biggest gaps in functionality that also have the biggest quantifiable impact on the customer’s goals will get more funding than other products.
One of the most important things to keep in mind in a portfolio model is what’s best for every product isn’t always the best or most valuable thing for the customer, or your own company for that matter.
Here’s another thing to keep in mind when it comes to product investment priorities. In any 12-month period, the investment levels in each product will vary based on the business priorities of your target customers relative to the functionality gaps across your portfolio.
Just like your corporate strategy and the annual department budgets, in some years your product will get more investment than others and in other years it’ll get less depending on the product’s impact on the portfolio strategy.
The Bottom Line on Product CEO or Portfolio Executive
If your product managers are the CEOs of their products, they’re like golfers on the professional tour. Everyone is competing for the best score (product success).
If your product managers are members of the portfolio executive team, you’re playing a team sport. It’s all about the company winning in its chosen markets year in and year out. Like players at each position on any sports team, every product has a role. Sometimes your role (product) will be the featured role and other times it will be a supporting role.
Back to the question we started with. Can you have a greater strategic impact as a product CEO or as a member of the portfolio executive team?
There may not be a clear yes/no answer to the question and there a lot of variables in every organization, but it sure seems easier to have a greater strategic impact on your customers and your own organization as a member of the portfolio executive team versus the product CEO.
Portfolio management exemplifies strategic product management. If you want to learn how to adopt portfolio management practices in your product organization, contact Product Management University about a personalized product portfolio management course for your products, your markets, and your company.
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