Product Management responsibilities are immense. Responsibilities include, but are not limited to life cycle management, P&L oversight, market research, segmentation, competitive analysis, pricing, launch strategies, marketing plans and sales force motivation.
Recently, I had an interesting conversation with a Senior Product Manager. We discussed the changing roles and responsibilities within his position. He no longer oversees the administrative duties of his role, such as life cycle management. He has delegated this responsibility to a more junior person within his firm. He is now primarily responsible for the strategic direction of new product development (NPD) within his product category. We have also seen this trend with some of our other clients.
So what strategic NPD activities are Product Managers responsible for within the new product development process? The most important activity is the development of a product strategy. Having a product strategy is a crucial need for your product category, but the process of creating a product strategy can create great a great deal of confusion. A product strategy lays out the role and goals of new product development, the kinds of products to be focused on, the resources to be allocated to new product development and a high-level plan for development.
Notice that by focusing on certain types of products, the company chooses to ignore others, and this can be a cause of distress because people perceive this focus as throwing away potentially good opportunities. But, this focus allows the company to avoid wasting resources on scattershot opportunities and to direct all its resources toward the opportunities that really matter: the opportunities that best utilize the assets and capabilities of the company.
Four Elements of Product Strategy
The first element of the strategy is the end result – what is the company trying to achieve by developing new products? Some companies develop new products because they are looking for new sources of revenue, others do it because they are trying to grow their customer base, and others do it because they are trying to hold on to their current customer base. Be clear about the role of new product development. Then set a measurable goal such as percentage of revenue from new products, percentage increase in the size of the customer base, percentage of customers making repeat purchases. We all know that what gets measured is what gets done.
The second element of the product strategy identifies where you will focus your new product efforts: what kinds of products, what customers and markets, and what technologies. This decision requires a thorough understanding of your markets, your customers, your competitors, your own company, your environment, technologies in use and on the horizon, and more. Spend the time and effort to understand all these dimensions and determine where to focus your new product development efforts. This decision provides the direction for all your new product development efforts to follow.
The third element is resources. How much money and how many employees are going to be devoted to your product category? This is an important decision and should reflect the importance of each of the areas you want to focus on. Some companies set the total budget by matching competitors on R&D as a percentage of sales; some do more of a bottom-up budgeting approach.
The fourth element includes planning your product introductions and technology acquisitions. Based on your research, you know what kinds of products to pursue and have some idea of the technologies required. Laying out a plan on a timeline, using tools such as product and technology roadmaps, helps to communicate the plan and get the organization focused.
As a Product Manager, with strategic NPD responsibilities, the development of a product strategy is by far the most important activity you can undertake for your product category. Of course, there are other early staged new product development activities that product managers are responsible for, but we’ll leave that for a future article.