Where Should Product Management Report?

By Jacques Murphy August 15, 2007

from PRODUCT MANAGEMENT CHALLENGES
A Weekly Newsletter of Tips For Companies that Develop Software

Where is the best place to locate Product Management in an organization? Bring it up at your company if you want to spark a lively debate.

It's a sign of the immaturity of the profession of Software Product Management that there doesn't seem to be a standard job function where Product Managers report. Companies are all over the map when it comes to which part of the organization is in charge of Product Management.

So often Product Management is not viewed as a vital function at a company, since its purpose and focus is poorly understood. If you read about the management team of a startup, or even a larger software company, you would be shocked if it didn't include a Finance or CFO function. You'd be pretty surprised if there were no Marketing function. But I'm willing to bet that a large number of experienced venture capitalists and entrepreneurs wouldn't notice if Product Management weren't mentioned in the job descriptions of the management team.

And because Product Management for software is as young as it is, you would find very little consensus in the industry about where the Product Management function belongs in the org structure.

Yet if you take a systematic, consistent approach to Product Management, the answer to where the function belongs becomes clear. Read below for a discussion of the various areas where Product Management reports today, with the associated strengths and weaknesses, and where the function belongs in a well run organization.

When it comes to determining where Product Management should be located in an organization, there are a number of issues to consider.


Damned If You Do, Damned If You Don't

I have been privy to conversations in a number of organizations where there was extensive debate about where Product Management belonged. For every possible option, valid objections were raised.

Accept the fact that there will be a downside to whatever decision you make. But it's important not to give in to analysis paralysis. Get past it. It's a duty to the company to place a function as vital as Product Management, which exists to move your product forward, where it can be most effective.


If You Don't Know Where You're Going ...

... how will you figure out how to get there? Part of the difficulty deciding where to place Product Management stems from the widely differing and non-standard ways that Product Management is defined in the industry today.

In today's topic, there isn't enough room to go into a standard definition of Product Management and a Product Manager. But one key point to make is that a Product Manager is the one person in the whole organization who owns the product Requirements effort. Requirements focuses on the WHAT, which means it isn't Development, which focuses on the HOW. And Marketing traditionally talks about the WHAT, but cannot necessarily decide what the WHAT should be. At least not at any useful level of detail.

Dependent, Codependent, Or Independent?

Three common arrangements crop up again and again in the software industry. They are a Product Management function that is either a) dependent; b) codependent; or c) independent.

Product Management is dependent when it reports into a single function, usually either Marketing or Development. And it's plain bad luck if it reports into Sales or Professional Services (which can happen!).

Product Management is 'codependent' when it is split across two different departments, like when there are Product Managers in Marketing and Product Managers in Development. I have heard all sorts of convoluted arguments for such an arrangement, but in my experience it creates something like codependency. Dueling sets of priorities manage to cancel each other out in a dysfunctional stasis.

Product Management is independent when it is one of the functions that reports directly to the top, on an even footing with Marketing, Sales, Development, Professional Services, and Finance.


Why Dependent Doesn't Work

When Product Management reports in to Marketing or Development, your company runs the danger of having the needs of the product overshadowed by other priorities in the department. Marketing's tendency is to ask for too much, because the product will look and sell better. Development's tendency is to advocate for too little, just to be sure that the capabilities can be completed with the resources at hand.


Why Codependent Really Doesn't Work

The codependent version can be even worse. A virtual Product Management function is spread out across Marketing and Development, with two sets of people who have divergent priorities. Priority discussions wind up as the same arguments between Marketing and Development that they would be if Product Management reported to one department or the other.

The codependent structure can work, but it takes a significant commitment from all parties to make it work. If the Product Managers can manage to form a strong, cohesive team that sees eye to eye, they can have a positive influence on the outcome of struggles between Marketing and Development. But if the heads of Marketing and Development don't want to get along, the Product Managers will never have the authority to make them cooperate.


Why Independent Is Best

An independent Product Management function has the authority to focus all its energies on the product and all its aspects. The team views it as the part of the company responsible for driving the product.

When the inevitable conflicting opinions and priorities occur, Product Management has a voice equal to Marketing or Development or Sales. Product Management won't always prevail in the debate, but the important thing is that the tie-breaking decision comes from the CEO or President, one level above Marketing, Sales, Professional Services, Development, and Product Management.

That's where key Product Management judgment calls ought to be made in most organizations. But that's not how it happens if Product Management is buried two levels or more below the CEO.


Are There Mitigating Circumstances?

As with all such guidelines, taking too purist a stance can be counterproductive. It will not always be reasonable to have a VP of Product Management as a peer of the other VPs.

Also, Product Management is generally a relatively small function at most companies in terms of number of people. If you have 5 Product Managers, you might expect your Marketing department to have at least 10 people, and Development to have at least 25 if not 40. When there just isn't room for a VP of Product Management in the headcount, see 'What if There Just Isn't Room?' below.

You may have a VP of Marketing or Development who also has extensive experience with Product Management. In that case, Product Management should be included directly in their title to make it clear they play a dual role. In such a case, Product Management still reports to the CEO, just like when it's independent. And the VP must be successful as a committed advocate for the product, in addition to his or her other role.


What If There Just Isn't Room?

Until a company grows large enough, it may be impossible to justify a Product Management person at the VP level. In this case, create a position that reports directly to the CEO. While the Director of Product Management may not have the same clout as the VP of Marketing or Development, final decisions still require the CEO.

This situation also fits well with many smaller software companies, where a founding CEO is the original product visionary, and remains highly involved in driving the product.


There Are Reasons

In fact, this last point about how Product Management is often unofficially provided by a founder or CEO is one of the reasons why the official Product Manager function winds up buried deeper down in the organization rather than given the recognition it warrants. The important thing is to first recognize that Product Management should go all the way to the top level of management. Second, design it as a discrete role separate from Marketing, Development, or any other of the major functions at the company.

Copyright (c) 2002-2004 Jacques Murphy. All rights reserved.

Jacques Murphy

Jacques Murphy

Jacques Murphy is a consultant who helps software companies develop their products faster. He does this using a focused process which quickly develops product requirements. Contact him at www.ProductManagementChallenges.com.

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