How to Create an Effective Product Management Organization

by Saeed Khan

Last week, I had the pleasure to host one of the BrainMates Product Management talks on Twitter. These are a series of weekly 1 hour open discussions on Twitter on topics of interest to Product Managers.

The title of my discussion was Creating an Effective Product Management Organization. Brainmates have published a summary of the discussion here.

Last year, I wrote a general article entitled 5 Steps to Building a Great Product Management Organization. It served as background reading for this topic.

There was healthy discussion and the hour went by very quickly. And while Twitter is a great medium for certain types of communication, it’s difficult to get deep into any topic given Twitter’s limits.  And the topic of how best to build and organize a Product Management organization deserves deeper discussion.

We discussed the following 5 questions:

  1. How do Product Management organizations start and how do they grow?
  2. What are the main problems affecting small and growing PM organizations?
  3. What is the overall impact on the department and the company?
  4. Is there a recommended way to structure Product Management organizations?
  5. What roles should be included in the Product Management organization as the company grows?

Now I won’t go into all these in detail, but I will cover the first 3 briefly and focus on the last 2 questions, WRT structure and roles in more detail, as that is where I see most of the confusion.

How do Product Management organizations start and how do they grow?

Product Management orgs usually start when the CEO or Board of Directors decides that a Product Manager should be hired to help manage incoming requirements because the current method (by CTO, CEO, committee etc.) is not working. i.e. in response to a problem as opposed to proactively for more strategic reasons.

What are the main problems affecting small and growing PM organizations?

Small and growing PM organizations typically suffer from lack of resource/bandwidth, scalability, ability to work across organizations, ability to impact change and in some cases, overall domain knowledge. All of these can be traced to a lack of understanding of the overall objectives of the PM role and the reactive nature in how the PM organization was created.

What is the overall impact on the department and the company?

There are a number of impacts including lack of market understanding and lack of business agility. Fundamentally the company can end up thrashing by releasing products with poor fit within the market, thus increasing overall sales, marketing and support costs, while reducing revenue and company growth.

Is there a recommended way to structure Product Management organizations?

My glib answer to this question is: Yes, structure the organization for success; that’s why I’m writing this blog post. 🙂

Let me explain.

Structuring for success means structuring to be able to achieve set goals.

For example, a sales organization without the right number of sales reps would find it impossible to achieve a sales target. If each rep is expected to deliver $1,000,000 of sales per year, and the overall goal is $10,000,000, then they need at least 10 sales reps, otherwise, they just wouldn’t have the  capacity to reach the goal.

Additionally, if the product requires significant pre-sales support, then a small number of Sales Engineers would be needed based on some ratio of sales reps to sales engineers. There may be other roles needed as well — e.g. a sales manager or VP for the overall team, and perhaps 1 or 2 direct response reps to follow-up with and qualify leads for the sales team.

In this example, both the numbers AND the roles need to be present so that the sales team can reach it’s goals. The same is true for Product Management. Even though Product Management organizations are much smaller than sales orgs, numbers and differentiated roles are critical.

So, yes there is a recommended way to structure Product Management teams. Ensure they are structured to reach their goals — with enough people in the right roles :-). But there is no single model because the goals can vary, the type of company and products and markets can vary.

What roles should be included in the Product Management organization as the company grows?

Another question with many answers. Going back to the sales team described in the previous question, I mentioned 4 roles: sales rep, sales engineer, direct response rep, VP or sales manager.

In Product Management, the different roles can come from any of the following:

  • VP/Director Product Management
  • Technical Product Manager
  • Product Manager
  • Product Owner
  • Product Marketing Manger
  • Business Analyst
  • Solution Specialist
  • User Experience Designer

I will go into this list in a future post, but the point here is that there can be MANY different roles within a single Product Management organization. It will vary from company to company based on the history, culture and political structure in that company. But the focus should always be to ensure the goals of the Product Management team are clearly defined and the team is staffed and structured to achieve those goals. Easier said than done of course, but what other option is there?


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26 thoughts on “How to Create an Effective Product Management Organization

  1. akin Reply

    Dear Saeed, thanx for this great post. Where do you see the pricing function (in PM as well?)?

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  3. Roger L. Cauvin Reply

    I’m interested in hearing more about product management organizations within companies. Companies are traditionally oriented around departments, but I am skeptical (to say the least) about this traditional structure. Some companies have looked at alternative structures, such as orienting around product teams. So I’m not sure the focus on a formal product management “organization” is the way to go.

    • Saeed Post authorReply


      Orgs or teams — it doesn’t matter — as the principle of having the proper roles and staffing to meet overall goals still applies. Most orgs and teams that I’ve encountered have had neither — i.e. short staffed overall without differentiated roles. Add to that lack of proper experienced leadership, and it’s a recipe for failure — for any organization/team, not just Product Management.


      • Roger L. Cauvin Reply

        Agreed about proper roles and staffing to meet overall goals. My questions and skepticism are not about terminology (“organization” versus “team”), but company orientation around departments instead of products or markets.

        In many companies, the standard departmental structure (e.g. separate marketing, sales, engineering, and support departments) undermines the effectiveness of product teams, because members of the team are accountable to different departments.

        There are alternatives to, or at least very different various on, the standard departmental structure. Companies can make members of a product team accountable more to the team and its leadership than to departmental silos. In these cases, product teams are often fluid (team members change from time to time), and there needs to be some cross pollination (e.g. discussion and sharing of best practices) among teams and roles.

        But the bottom line is that creating a “product management organization” in a company sounds an awful lot like creating another department that re-enforces the same structure currently reducing product team effectiveness.

        • Nexus789 Reply

          You have to be organised simultaneously in multiple dimensions. Only a ‘matrix’ organisation works. No one works to org charts. If we did nothing would get done. The reality is an organisation is not driven by its org chart but by a constantly adapting ‘matrix’ as teams of individuals form and disband after they have achieved a desired objective that is driven by events, programs and projects. Product developments are the results of iteration and therefore you need an adaptable information environment to enable teams to form, unform, etc. This also includes the ability to invite external participants. The supporting product value chain – design, development, etc, process needs to instantiated in supporting collaborative system.

    • Stephan Hau Reply

      Hi Roger,

      I believe you are refering to the age old discussion whether a company should be organized by product/market or by function. I have seen both ways working and failing. To me there is no particular right or wrong answer.

      What does this leave us with Product Management? Surprisingly the organization does not impact Product Management as much as the particular market, the question whether it is B2B or B2C.

      The key differentiator for organizing the product management function comes with the overall complexity of the product or services in the eyes of the buyer and user environment. The more complex the latter get, the more important is a strong Product Management function including the Product Marketing side. Also there will be hardly a single person doing all the tasks required.

      There should people focusing on more on the technology side, working with engineering in particular when Agile is the development method. But those people should still be literate on the customer and market side. Let’s call those Technical Product Managers. They do get the first hand outside experience typically when interacting with Sales Engineers, at special booth duty are trade shows and when discussing issues with customers. These people will naturally focus on quality and completeness of the features set.

      The must-not-miss peer would be a Market Product Manager. They are working close with Sales, Marketing and prospects as well as potential new markets. Their aim is to find new revenue opportunities and translating them into requirements. Typically those folks should not be tied to closely to a single product as often a combination of two products, a partnership with a third party is best suited for meeting the markets needs.

      In order to have a well functioning PM team it is necessary to have those two functions regularly exchange the insights and work closely together in creating a single vision of the markets, prioritize those and provide an overarching roadmap. It is the main job of the Dir/ VP of PM to have this discussion going and becoming fruitful.

      All to often I have seen the market product managemer being substituted by external market research, a row call into the Sales organization. It is a recipe for failure, the more complex and expensive your solution is the bigger the misses.

      Cheers Stephan

      PS.: I have not touched the PM Org for volume products. Here a PM org. does look differently. Maybe one of the next posts I will complete the picture.

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