Where should product management be in the company?

Here is an interesting article by Steve Johnson from Pragmaticmarketing.com.


It seems that many corporations try to solve internal process problems by moving people around. But where should they put product management? Is there one perfect organization chart?
It's time for a re-organization. After all, it's been almost 18 months since the last one. But where should we put product management?

It seems that many corporations try to solve internal process problems by moving people around. And product management gets tossed around more than most. Maybe this is because few executives understand the role of product management. Because they don't know what to do with product management, executives find it difficult to find the proper organization within the company. Is there one perfect organization chart?
What is the role of product management?

The primary role of product management is to understand the market. We use field techniques such as cold-calling on prospects, win/loss analysis for recent evaluators, and onsite visits to existing customers. Listening to the market is what we should do at a trade show in addition to (or instead of) working in the booth.

How can product managers be effective without this market information? (Answer: they can't).
With market requirements in hand, we employ research to quantify what we learned in order to build a market-driven market requirements document (MRD). The MRD tells Development about the unsolved problems in the market and elicits their agreement to address those problems in product or features. These same market problems drive our communications messaging and our probing-for-pain questions in the sales cycle.
Evolution of titles
Titles evolve as a company grows. In a small company, everyone does anything and everything. Product planning is done by the president and the developers. With a product in hand, we then hire sales people to find customers for it.

We soon realize that we cannot do all that we want to do without adding some marketing professionals. Startups typically hire marketing communications (marcom) people to create promotional materials. But because marcom typically knows little about technology and the technology buyer, they struggle with messaging. So we hire product management to support marcom with content. Almost 50% of product managers report that they write copy for marcom. And since they're the product experts, the sales channel starts requesting more and more support from product managers for "special" deals, or whenever a sales support rep is unavailable.

Meanwhile, the developers are asking product management for help prioritizing the many customer and sales requests for features. As demands increase for more product management time, the product management role exceeds what can be done by a single person.
So we split the activities into Product Marketing and Product Management and marcom becomes Field Marketing. Field Marketing executes appropriate communication programs to reach the target market. The product management person takes on the role of market sensing: listening for market requirements and writing the business documents for the next products. The product marketing person is tasked to take the resulting product to market. Understanding technology is still key but now the role becomes one of "telling" rather than "listening."
So where should we put product management in the company?

The location of product management in a company is probably irrelevant. Instead, the most important organizational issue is a strong leader with a clear view of the product management role. A strong leader will not let other department heads rely on product management to fill their internal staff limitations. Product management is not sales, communications, or development. Instead, product management serves the business interests of the company by reducing the risk associated with building new products and product releases.

Where do product managers work today?
50% are in the marketing department
22% are in the product management department
16% are in Development or Engineering
only 7% are in a sales department
Marketing. We most often see product management in the marketing department. After all, the primary goal of a marketing department is to drive the product through the sales channel. That is, marketing helps all sales people, never just one. The difference between marketing and sales support is merely one of scale: Marketing helps the entire sales channel; sales support helps individual sales people. Product marketing makes sense in the marketing department.
Product management in the marketing department makes sense only if we can continue to gather requirements to build new products and releases. The challenge of this organization is that we get so close to the sales channel that we become the "source of the best demo" instead of the "source of market information." We must continue our on-going market sensing.
Development. Because product managers write requirements, it often seems logical to house them in the Development group. This creates a team spirit of building tomorrow's product based on what we know is needed in the market. The challenge is keeping product management engaged with the market instead of becoming the "gofer" for developers.

Product. Increasingly we're seeing a Product group reporting to the CEO. The products group contains Development, Product Management and Product Marketing; Field Marketing (formerly marcom) becomes part of the Sales group. The distinction between a Products group and a typical Development group seems to be the resume of the VP; the head of Products must be an advocate of the business of the product, not just the technology behind the product.
Any of these organizations can be successful as long as the product management function is accountable for understanding the market, instead of being "janitor of the product" or "demo boy or girl."
Market-savvy executives rely on product management to identify and quantify market problems. Market-driven product managers serve as the executives? eyes and ears in the market, bringing market information to product planning.