Why Product Leaders Need Product Operations

Written by Cheryl Michael, CPO of CentralReach

As someone who started their career with positions as a developer, project manager, implementation specialist, and pre-sales support before eventually finding my home in product management - I’ve been able to gain a unique perspective on the many aspects of designing, building, selling and delivering technology solutions.  It is this perspective that also makes the topic of Product Ops so important to me.  As a leader in product, you have likely come across situations in which your hunches or intuition weren’t enough to guide your team or company forward. Whether its due to pushback from other stakeholders, increasing competitive pressures, or a changing technology landscape - high growth tech companies require us to constantly be collecting data and insights around our product, our market, and problem-solution fit. The needs around those data & insights will likely look different for every product leader in different situations, but I’ve found that a certain framework for approaching data & insights can quickly uplevel your ability as a product leader to act and execute effectively.

Growing up in Product

Everyone has their own story of how they have come up in product. Whether you came up from a technical or from a business background, your experience shapes your approach to product leadership. 

While your specific experiences may differ greatly from the product leader next to you, product leadership overall tends to follow a pattern of growth. Based on the product leaders that I’ve worked with; this is what a typical maturity model might look like for a product leader with ultimate maturity being at the CPO level when you are focused on items that drive business growth.

In the early days, we start as subject matter experts building tactical experience in key product areas. We become evangelists in our product, striving to gain expertise by understanding what is and is not available in the market. Based on this understanding of the market and our customers, we develop roadmaps for what problems our products should solve. 

As we progress, we learn many of the intangibles like learning how to build a team, handling multiple products, managing a portfolio, gathering competitive intelligence, working more closely with sales and marketing, and getting into pricing and packaging. Going from tactical experiences to strategic vision is where product leaders learn to tie engineering and product development to business value.

As product leaders transition to maturity, evidence-based decision-making comes in (i.e., product operations). As you level up, you need to start to use data to make decisions and create alignment across your organization, executive leadership, and the board. Successfully managing a portfolio requires data-driven methods to identify how products are performing in the market, understand where to put resources, ideate how to grow profitability, and know when to sunset products. As we get more strategic as product leaders, data becomes ever more important.

Being the CEO of your Product

When I started in Product, everyone told me that you need to be the ‘CEO of your product.’ Over the years, I’ve learned that being the CEO of your product is a journey of constant learning. But back in the day, I started out by studying the best CEOs. Several traits were shared among CEOs as critical factors in driving great businesses. 

One key trait always stood out: great CEOs always had a strong pulse on their business’s operations, and used operational data and KPIs to drive results.

I took this same thinking and applied it to product leadership. In order to have a strong pulse on my product’s operations, what would I have to have a strong pulse of? My mind automatically went to certain internal and external factors.

Great leaders think critically about internal factors that may affect an organization’s ability to deliver on goals. 

For product leaders this brings up questions like: what does it take to build, implement, support clients, retain clients i.e., what do we need to do extremely well in order to support growth? This covers many deeper key questions around onboarding, customer success, training, etc – but all around four clear questions that serve major ‘purposes’ in your R&D organizations.

Outside of your R&D organization’s ability to deliver lies critical external factors like market fit, segmentation, pricing & packaging, and competitive differentiations. These all relate to your company’s ability to market and sell the product – which may intuitively fall into Sales & Marketing, but are critical to think about in terms of product positioning and direction.

So in order to understand internal and external factors, product leaders gather information from a multitude of different inputs. Product leaders talk to their customers – to understand what they need in their products. Product leaders talk to internal stakeholders like Sales, Marketing, Customer Success, Customer Support – these are the people who are out there selling, implementing and supporting the product, and understand how it positions itself relative to competitive offerings. Product leaders do their market research – they build competitive intelligence.

So after you’ve gathered all this – Is it time to act?

No!! You need the facts and data to support your insights and hunches.

Baselining your product’s operations

Building a database of facts and insights requires you to pull from sources of data across your organization. This data should come from across functions of your organization - sales, customer success, HR - I cannot emphasize enough the importance of this data being cross-functional. 

In pulling together cross-functional data, you should be able to have a perspective on your portfolio performance, your customer segmentation (i.e., where money is coming from and where money is churning), where R&D investment is going (i.e., how much it costs to keep the lights on, and what is your innovation spend), and what potential revenue and cost levers you could be pulling (e.g., where costs are rising, and what is driving future growth).

Understanding these pieces allows you to build confidence and alignment. It will provide you the evidence to support your roadmap, help make decisions around additional investment / expenditures for your products, have pricing discussions based on true value, and develop an in-depth understanding of trends to drive future growth. Having the data to back up your decisions will ensure confidence in your decision-making, whether from execs, peers, or engineers.

So what data sources should you be looking at to generate these insights? This is where product operations comes in.  Advanced product operations requires aggregating different sources of information from around the organization. You need to be aggregating your customer data from salesforce (i.e., win/loss, pipeline), general ledger for contract level data, customer support tickets from Zendesk, product usage data from Pendo, work management data from JIRA, initiatives from Aha. Below is an illustrative example of different data sources that you might look at, and what information you are pulling from each.

Now, how do you turn these data & insights into action? As a product leader, you must have a pulse on all the different views of your product operations. But for the exec team and the board, you build a story from the data to guide decision-making. Everything should answer a question – Where is our investment going today? What should we prioritize for sustained growth? Where should we look to cut costs? How should we be allocating resources? Understand the goals of your exec and board, and use this to guide how you tell your story.  Building your product portfolio strategy based on data ensures that all of your key stakeholders and your board will be able to align around a clear and measurable plan of action.

Levelling up your team’s product operations

Over time, it is necessary to also mature evidence-based decision making and product operations in your product teams. Like the maturity model for Product leaders, PMs follow a certain path for skills development.

In the early days, PMs need to be trained in backlog management (e.g., roadmapping tools, client portal, requirements documentation, feature backlog, bugs lists). These grease the wheels of the organization and ensure that you are hitting goals.

As they grow, they are starting to build teams and have a stronger sense of prioritization. This makes your organization more flexible, more agile, allowing it to quickly prioritize and shift based on changing trends in the market. For companies in the growth stage and rapid scale-up, it is critical for teams to be able to adapt to prioritize features and product improvements.

At maturity, and as your product leaders grow, the focus is building portfolio dashboards with information on market performance, revenue contribution, churn, cost allocation, and resource allocation. This empowers teams to determine what goals should look like, and provide input into product direction with execs focused on outcomes. Outcomes-driven organizations are driven by product leaders focusing on vision and strategic intents around concrete KPIs and OKRs, while allowing product managers to own initiatives and projects for product improvements.

So… those are my thoughts on enabling strong Product leadership and Product-led growth through Product Operations. What other best practices have you found to be useful around evidence-based strategic decision-making? What else do you think it takes to succeed as a product leader?

If you are a new or aspiring product executive interested in becoming a part of the CPO Accelerator Program and learning from expert CPOs, you can apply here.

Cheryl Michael is the Chief Product Officer at Central Reach the SaaS leader in Innovative Practice Management & EHR Technology for Therapists. She has over 18 years of experience in the Healthcare Industry driving innovative solutions to the Provider market.