Episode 60: Answering Questions About Three Types of Product Management, Articulating Strategy, and Who Should Own P&L
In this Dear Melissa segment, Melissa answers subscribers’ questions about differentiating between types of product management depending on the growth stage of a company, how to successfully craft strategy documents that communicate your vision, and how P&L responsibilities should be distributed across teams.
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Q: Are there three types of product management? [2:11]
A: You are correct. There are different types of product management depending on your company, which depends on what the biggest pushes in your company are at that moment. Typically if you're in a startup, an early stage company is characterized by rapid experimentation and finding product market fit. Having a long term roadmap and a very robust strategy is not going to get you anywhere… When you get to the scale up stage, you have found product market fit and now you're trying to figure out what's next. Your product managers are going to be data driven; you definitely have enough data now to start making decisions, you're gonna be very strategy forward… [In] mature companies, you found product market fit, you have a very robust portfolio out there of tons of products that people love ,and now you have to stabilize and make sure that you can continue growing at a decent pace. [2:35]
Q: Any tips for writing a strategy document? [9:13]
A: I think writing down your strategy in your product vision and all of this stuff is key. As product managers, we've got to get better at writing, we have to get better at putting things down and making sure people can understand them… This is an exercise I used to do with all my clients when we were deploying strategy across the organization: I made people write about two pages depending on what level of strategy they're writing… What's the vision for the company? Where did we come from? And where are we now in relation to that vision?... We usually write this out and it gets pretty lengthy but we give details. [9:26]
Q: How does product owning the P&L impact relationships with more traditional revenue driving teams like sales and success? Has this worked out well for the companies you've worked with? [15:04]
A: I think one of the biggest issues that we look at in organizations is saying that one team is responsible for the P&L… I want to talk about this with SaaS companies. Yeah, product owns the P&L, but it's because the company is the product in SaaS companies… If you treat your executive team like ‘hey, we need to all work together on this,’ it becomes really easy. [15:51]
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Transcript:
Melissa:
Hello, and welcome to another episode of the product thinking podcast today, we're doing a dear Melissa and we are diving into your questions. I just wanted to remind you that I'm answering your questions. So please submit them, go to dear melissa.com. Uh, we go through all of these questions every week. We pick out the ones that kind of go together and then we answer three a week. So if you have any questions for me, please go to dear melissa.com and submit them. It could be about anything I will say too. If you try to ping me on Twitter or email individually, I'm not gonna answer your questions. I'm gonna direct you to dear melissa.com cuz I just don't have the time to answer everybody individually. So that's why I started this hoping that we can all learn from each other. So please go there and make sure that you get all of your questions in today.
We're gonna be talking about, uh, strategy. We're gonna be talking about writing strategy documents. We're gonna be talking about what happens when product owns a PNL. And we're also talking about three different types of product management and what those look like in different stages of company. So that's what we're gonna kick off with. All right. First question, dear Melissa. I don't have nearly enough experience on this, but I feel like there may be three different types of product management depending on the stage of your company, early stage scale up immature. Am I right? Great question. And I think you are right. Actually. I know for a fact you are, and I'm gonna tell you why right after this message.
All right, we're back. And we're talking about different types of product management. Uh, you are correct dear listener. Uh, there are different types of product management depending on your company. And it depends what the biggest push is in your company at that moment, uh, what it needs to actually accomplish with the strategy to define how you do product management. Typically, if you're in a startup in an early stage company, it's characterized by rapid experimentation and finding product market fit, having a long term roadmap and a very robust strategy is not gonna get you anywhere. You also don't have a ton of data to make decisions off of. You're not like tracking everything in data application and looking at user journeys, uh, because you just don't have it yet. You don't have enough capacity of people or enough volume of people online using your product to really use that, to make a difference and to inform strategy.
Does that mean that you shouldn't be measuring that? Absolutely not. You should be measuring that you should be plugging that in for sure. But, um, instead of doing, you know, data gathering and really looking through the data and calculations there, what you're gonna be concentrating on is, uh, customer research. So getting in front of the customers, talking to them, watching them, use your product, uh, listening to them, doing a ton of hands on customer research. That's the type of stuff that you do now. This looks different than a scale up because when you get to scale upstage, you have found product market fit. And now you're trying to figure out what's next. Do we, you know, expand geographically? Do we add another product line, another portfolio line? So your product managers in this company are gonna be data driven. You definitely have enough data now to start making decisions.
Uh, you're gonna be very strategy forward. Your strategy should be, uh, easily accomplished over a period of like three to five years, I would say. Um, and you're going to be making decisions on that strategy pretty rapidly. It may change, but it shouldn't change so much that everybody's having whiplash. It's only changing based on market conditions and what you're hearing from your customers. So when you hit scale upstage, you're definitely gonna have a more defined process. You're gonna still be experimental, but you'll also have a lot of people building longer term roadmaps, um, circulating them with your clients, circulating them with your board, um, and communicating a long term strategy. This is also where you start to put things into practice like product operations and uh, all these things help us work better together as a scaling team. Those become important too. But the number one thing that your product managers need to be able to do in a scale up is make decisions rapidly based on the strategy, get things out the door, get that feedback and, uh, you know, pivot or persevere on whatever features they're actually working on.
So here we've gotta start standardizing and we've gotta make sure that we're all working together, going in one direction. So we have to focus. There has to be really, really good focus at the scale up stage. Now contrast that to the early stage. Um, you may be changing your strategy like every day, depending on how often you're talking to customers, uh, when you don't have product market fit, things will change so rapidly. And, uh, that's okay. That's what it's there for. As long as you're changing, based on getting feedback from your customers. So it's gonna be a little bit more stable on a scale up, still gonna be moving at like break. Next speed. You gotta get things out the door. You gotta be able to ship really, really fast. That's very important. Now let's look at mature companies. Um, you found product market for it.
You have a very robust portfolio out there of tons of products that people love. And now you basically have to stabilize and make sure that you can continue growing at a decent pace. We're not going at breakneck speed anymore. Like we are with scale up, but we are adding more and more people so that we can continue to grow and continue to dominate market that we're in, uh, product management and mature companies is a little bit slower. Uh, we're not kind of, you know, changing up our strategy all the time. We may have much longer term roadmaps. We will have longer term strategies. Uh, there might not be as much experimentation going on when you hit the scale up stage. And then when you get into the mature stage, um, you may have more defined, uh, things that you need to accomplish. It's just a matter of getting them done.
You've done the research, you know what you need to be putting out there. Uh, you still need to test it, but it's not as, you know, blank space, user research that we're doing. It's more of like, let's make sure this solution is the correct one to put it out there. Um, immature companies too, a lot of the product managers are picking up older products. They're dealing with tech debt. Um, they're dealing with stabilization, so they need to understand how to do that for sure as well, uh, in a mature company process and making sure that we're all working together in the same way, becomes really important tools are very important in a mature company. I would say scale up as well, but so we can get the information about what's going on, um, out of them. So that as leaders, we can start to keep track of 500 teams across our organization.
That's really hard to, to do when you have absolutely no tools implemented or no way for you to get transparency into what's going on. So yeah, product management looks very different at each one of these companies. And that's why when you're hiring people too, you need to understand what you're hiring for, right? And what stage you're at. Now, there are mature companies that have, um, that are launching new business lines inside of them or launching new products. In that case, you may want to hire somebody from an early stage company, um, to help with that because they'll understand the rapid experimentation. But if you hire somebody who like thrives at product management in the early stage, into a mature company, and then let's put them on the backend database that we're migrating, you know, into a new platform, they're probably gonna be really bored. And that's probably not their skillset either, cuz it's not that type of work is not experimentation driven, right?
It's not uncertainty driven. It's more about get it done and make sure you get it done well. So if it's the needs of the people are gonna be consuming this new platform. So all those things you have to take into account when you go out and you start hiring product managers, like what type of product managers are we looking for? I think a lot of mature companies can benefit from, um, scale up product managers too. But you have to make sure that you're able to ship and deliver internally before you hire them. Like, can we get things out the door as a company is a really great question to ask because otherwise people are gonna be bored. They're gonna be sitting around like, oh cool. I can't actually measure anything or see if people like this or adopted it because we can't ship. So I'd say fix that first and then go look for some awesome product managers who can help you deliver a lot of value to your customers.
So those are, it's a quick overview of those three stages, but hopefully that helps. And I also tell people to think about what type of product management they like to do. Uh, sometimes people gravitate towards one of those stages more often than not. I see other people gravitate towards industries, stage type of company. Um, it's all up to you. So it's a good thing to sit back and reflect on and say, Hey, do I like one of these more than more than another. All right, we're gonna move on to our second question, dear Melissa, I often can construct a product vision in my head, but struggle to translate this into an articulate strategy document.
Any tips on how to approach this. I love strategy documents. I think writing down your strategy in your product vision and all of this stuff is so key. And as product managers, we gotta get better at writing. We gotta get better at putting things down and making sure people can understand them. This is one of the number one things I look for when trying to hire a chief product, can they clearly articulate their strategy if you can't, nobody else is gonna understand it. So you're all gonna be going in different directions and the company will fail. So really important that you can write a fantastic strategy and explain it to people. It doesn't matter if it lives in your head. Other people have to understand what you mean. So what do we do to write a strategy document? Um, this is an exercise I used to do with all my clients.
Um, when we were deploying strategy across the organization, I make people write about two pages depending on what level of strategy they're writing. So, um, I've worked with a bunch of CEOs before. Sometimes it gets a little bit longer depending on how my much work they've done already, but we try to keep it to two to three pages of going over. Uh, what's the vision for the company? Uh, where did we come from and where are we now in relation to that vision? What are we stopping? What are we gonna start doing? And then how do we wanna prioritize our new areas for growth? Right? Are, are we prioritizing, um, tech stabilization over everything? Are we prioritizing going up market? These are the strategic intent things that I talk about a lot in our, um, in our podcast and in my classes, this is where we start to prioritize them in that document.
Uh, we usually write this out and it gets pretty lengthy, but we give details. And when it gets so strategic, intents, we say like, I'm give you one example. It's like, Hey, I wanna go into the residential, uh, rental market with, you know, X, Y, and Z product. Um, I don't wanna go into the commercial market. We're not doing that this year. Just putting those lines in the sand is so important because everybody goes, oh, okay. We won't evaluate the commercial market then, uh, let's not think about that yet. Not on our plate, but let's figure out how to prioritize residential. And everybody starts to work together that way. So the more detail you can give, the more you can say, what you're not doing is actually really beneficial for everybody. Um, and I'd say you want to spell those out. So usually with those documents, we're looking at, you know, starting with the vision, um, and then explaining the vision and then talking about prioritization through strategic intents. And then each one of those strategic intents usually ends up being a paragraph. Um, and then at the end, we're talking about like metrics and goals we want to hit. So in ways working, I would say would be a good one there too. So those are kind of like the couple topics I do there. Now let's say we're going into product initiative strategy. Um, you're gonna follow a similar format, but what it's going to be is really
Explaining the opportunity for the strategy and why we're prioritizing the things we are. So we start with the product vision. Then we are going to explain what that product vision actually means and what it doesn't mean. So when I say this, this is like, who is our persona? Same persona, different persona. Like, you know, how what's the person we're going after? Where do we find them? Uh, what are are those people doing now? Why can we provide value to them through this product? How do we provide value to them through this product? Um, you know, in what ways does it matter to the customer? The value they're actually achieving here too. So those things are incredibly important. Um, then I would get into, okay, in order to accomplish this product vision, here we are. Now here's our current state. This is what it looks like.
And this is what people can't do. Um, we just explained where we wanted to go. So in order to reach where we wanna go, this is what we have to prioritize. And then we get into what is usually our product initiatives, right? So first we're gonna do X, Y, and Z for this persona. And then we're gonna go over here and then we're gonna do this, you know, eventually. And you wanna set time horizons for that too? Um, I say in the initiative level, it should probably be like six months to a year out. Um, but this will help you explain in detail how you're prioritizing the biggest pushes to actually accomplish that initiative. So that's how I would really look at it. It's like, keep it short, keep it like you pages. I would try to keep it to two pages, honestly, um, include metrics at the end.
But your chance for writing a strategy document is not necessarily to like throw numbers at people it's to justify why you do, why you are doing things and sh telling people how you're gonna do them, right? Like this is the direction we wanna go. You don't wanna make it so detailed that you can never change direction from that again, right? The right level of direction in a strategy document allows people to still make choices. So it's not like you're specifying every little feature detail on it. You're just really high level telling people what we're prioritizing, which problems we're prioritizing first. And, why, and what are the aspects of those problems that we need to know about to be successful when we think about what solutions we're building. So hopefully that helps you, um, strategy writing strategy documents is hard. Uh, I've worked with a lot of VPs and CPOs over the year and it takes them need, we, we go back and forth for like five or six drafts before we actually circulate it.
So this is not something that I expect anybody to sit down and write in, you know, an hour. Um, it should be a lot of your job as a leader is writing these strategy documents, articulating them, getting the research for it and putting those together. Uh, you are gonna wanna circulate it early with your stakeholders and with your boss and with, um, any key people that will have a lot of input into it and make sure they know it's a draft. Just say like, Hey, this is a draft. Can you read it over? What am I missing? What am I not explaining? Do you understand what's going on here? And, you know, feel free to refine it until you get it right? That's the whole point of this. You just really wanna take the time
And spend the time on this so that you can get it right. So don't skimp, um, start with a brain dump, go back and start going through it piece by piece and making sure you're really hitting on those key components of vision, current state, um, prioritization of what we're gonna do to get to the vision and then explaining each one of those in great detail.
All right. Last question, dear Melissa, could you share your experience of working with, or consulting with product teams who own the P and L in a company? How does this impact relationships with more traditional rev revenue, driving teams like sales and success? Has this worked out well for the companies you've worked with? I love it when product teams own the P and L uh, typically in SaaS companies, they do own the P and L uh, we own the P and L as in a SaaS company. Like if you're an older company that has a lot of services, you won't see product directly on the P and L, but every new growth stage SaaS company out there, I guarantee you product is directly responsible for the P and L and, and people understand that, which is why CPOs are in such high demand right now. And especially CPOs who understand finance.
So how does that impact relations with relationships with traditional revenue driving teams like sales and customer success? You all work together, right? I, I think one of the biggest issues that we look at in organizations is saying that, you know, one team is responsible for the P and L like, no, if sales can't sell anything, we're not making a profit. If customer success can't like respond to people's needs effectively, they will leave like that directly impacts P and L like, why are we separating this? And saying like, one team only owns a P and L. So when I talk about this with SaaS companies, like, yeah, product owns a P and L, but it's because the company is the product right. In SaaS companies. So all of sales, all of this stuff, it all contributes into it. Now, if you treat your executive team, like, Hey, we need to all work together on this.
It becomes really easy. You're like, we're all contribute to this P and L we all have pieces to play. We see each other as a team. Those are the most successful companies that I see out there. The ones that understand like, Hey, we're all in this together. Um, I have a role to play. You have a role to play. Tech has a role to marketing as a role to play as it relates to our P and L. And if we don't all get our stuff together and, you know, drive this forward, we're, we're gonna lose, right. Our company's gonna go out of business. Um, the ones who give P and L responsibility to just one division in the company, you know, that that's where things get tricky, where we start pitten people against each other, like why doesn't the head of sales have P and L responsibility like they should. So has this worked out well for the companies you've worked with? Um, yeah. The ones who understand that, and, you know, the chief product officer in these SaaS companies I was talking about in the beginning, like they have P and L responsibilities, but they also know that everybody else has P and L responsibilities too. Like if we can't all grow together, we're just gonna go out of business. So we're tracking that sales is tracking that, marketing is tracking that all in different ways and showing that how are different contributions help increase our profit and decrease our loss? The companies that think that one team owns all of this? No, I don't see them being successful because they don't understand that we all have to work together. Now, here, here's a different example too. I was just thinking of as well, some larger corporations have a business line and they can operate with their own P and L on the one business line.
Right. But what they do is they put that P and L with the GM, and then they have a separate sales team and a separate marketing team. And that gets a little bit confusing because it's like, how, how do we know how sales is prioritizing? You know what they're doing over there for our profit in loss? Like if our whole company strategy doesn't have a lot to do with our business line this year, and, you know, sales isn't prioritizing our selling, like that affects our profit and a loss. Um, those types of things, I just see not work out super, super well, if that's how we're measuring success, you wanna measure the success of each one of your business lines and product lines. But it's really hard to do that without the context of the overall company strategy, right? Like we can't just look at one business line or one line and be like, oh, you know, that's got a great profit and loss statement over there.
It's fantastic. It's like, cool. Well, was that the darling that we sold this year, because it was a new product and everybody wanted to buy it. Like, of course it's sales are gonna be fantastic. Everybody wanted it. Um, and you know, maybe they didn't want the old product that somebody got stuck with over here, who own that person who owns that P and L that's not great if the strategy's not prioritizing them. So these are the things that we, I think we have to think through as an organization, I don't have like a specific right answer about it, but I would say like the companies I see who are successful, understand that a lot goes into P and L and it's not just, you know, every product for themselves. It's, it's about working together as a team. And it's not just about product owning it, or, you know, sales owning it.
It's about everybody owning it. I think it's good when P and L live close to the product, because people start to recognize that product is such a game changer in the organization. Um, but I would say don't block out your revenue, driving teams like sales and success, right? Like make sure they're involved in it, make sure they feel like they're part of the team too. See if you can build some relationships with them and incorporate them into your strategy, planning and prioritization and everything like that, because it's gonna go a, a very long way for them. And they're still getting compensated as well. Uh, sales usually by the revenue that they actually drive. So you have to join at the hip with them. You have to make sure you're keeping in touch, and that's really important. So you don't wanna just be like, oh, you don't own the profit and loss goodbye.
You wanna work together as a team. And I think that's the biggest thing that I could tell you is like, make sure everybody's working together. And everybody's concerned about the P and L and working towards that, uh, product can drive P and L. And it does in SAS companies, like it is directly responsible for your P and L in SaaS companies. Um, but other companies too, it's a huge driver of your profit and loss and of your revenue. And the more we appreciate that and tie it back to financials. I think the more power people see in product as being a strategic advantage to these companies. So hopefully that helps, like I said, don't have like a specific right answer. I think it gets nuanced with every company that I've seen about how they set up and just the dynamics of how everybody works together.
But I do think one of the biggest pitfalls I see is executive teams not working together as a whole team. Like if you are pitting your executives against each other and measuring their numbers differently, um, and being like, oh, products better than sales and blah, blah, blah, which I, I have seen, I have seen, and it is toxic. It fails. It will fail and your company will fail. And I have watched that happen in real time. So something to think about too. All right, that's it for dear Melissa this week. And again, if you have a question for me, please go to dear melissa.com. Uh, submit it there. I like reading your questions. I like seeing what's on your mind. It can be about anything. Um, also we have another product operations workshop coming up, uh, through produx labs. If you are interested in getting in on that, go to produxlabs.com, and under our training, you could see the new workshop for April and you can sign up there. We're doing these, um, very often. So the, if you don't see this one, if it's sold out by then, uh, don't worry. We'll have another one coming up soon. And if you are interested in the book that Denise and I are writing, uh, it will be out later this year, but go to productoperations.com and you can sign up to be notified when that happens. We'll see you next time.