What is Product Strategy and Why Does it Matter? — Part 2
Greetings everyone! Welcome back to the continuation of our discussion on Product Strategy(Blog 1 on What is Product Strategy and Why Does it Matter?). In this blog, we’ll delve deeper into the correlation between product strategy and company sizes, explore Product Strategy in CPG (Consumer Product Goods) Companies, shed light on Product Strategy in Professional Services Companies, and much more. Let’s dive right in!
Product Strategy in CPG (Consumer Product Goods) Companies
Product strategy isn’t one-size-fits-all. It varies based on context, industry, and company size. In consumer packaged goods (CPG) companies, brand strategy is key, while technology-intensive companies focus on product strategy.
In CPG, brands are crucial because products are less complex compared to tech products. Brands like Procter & Gamble are managed independently, collaborating with various departments for product development.
In tech companies, product owners work closely with development teams within the engineering organization. This shows how product strategy adapts to industry dynamics, company size, and organizational functions.
Product Centricity:
- Products are crucial for growth and require significant investment and time due to their complexity.
- Brands are managed centrally with a unified branding strategy.
- Product managers focus on revenue but don’t handle costs directly.
- Managing ecosystem partners is as important as managing channel partners.
Brand-Centricity:
- Brands are crucial for growth and are managed individually.
- CPG products are less complex and require less investment and time for development.
- Brand managers oversee costs and revenues, often with P&L responsibilities.
- Channel partners are the main focus for management.
Partnerships and ecosystems play a crucial role in technology companies, whereas consumer packaged goods (CPG) companies mainly rely on retail and distribution channel partners. This is a key difference between brand strategy and product strategy.
Project Strategy and Company Size
Another distinction is seen in the context of company size. In startups, product management isn’t clearly defined, and often one of the co-founders takes on the role informally. As a company grows to around 50–100 employees and launches multiple products, it begins to establish a dedicated product organization. This involves creating a product management team to oversee product strategy across the portfolio.
In larger companies, product strategy becomes highly specialized, with separate departments for product marketing, technical product management, channel management, and product planning. These roles typically report to the Chief Product Officer or a similar senior executive, reflecting the evolution of product management as the company scales.
Small Company/Start-Ups
- Founder/Entrepreneur is the first PM
- Product strategy is managed by the Founder
Mid-Sized Company
- Product management organization created
- Product managers drive strategy for individual products
Large Company
- Product strategy led by Chief Product Officer or VP of Product Management in collaboration with Executive Management
- Product strategy managed across specialized PM (Product Management) and PMM(Product Marketing Management) organizations
Product Strategy in Professional Services Companies
An intriguing distinction lies in product strategy within professional services firms. Despite the primary focus on services, firms like legal, management consulting, creative, or IT services are discovering opportunities to automate and optimize certain aspects of their processes using analytics. This leads to the development of embedded products within their service solutions. For instance, consulting firms such as Deloitte or Accenture identify repeatable processes and create products out of them, integrated seamlessly into their service offerings. This approach, known as embedded products, allows for scalability and enhanced profitability.
In contrast, in a product-focused company, products take center stage, and services are viewed as complementary or supplementary to the product strategy. Professional services firms, however, are leveraging product strategy by automating aspects of their processes to enhance efficiency and profitability.
Additionally, it’s essential to distinguish product strategy from other related roles, such as product planning. Product planning primarily focuses on long-term strategy at the corporate level, overseeing the entire portfolio of products rather than individual products at specific points in time.
Product planning is a strategic function that typically falls under corporate strategy. It involves long-term planning for the entire product portfolio, focusing on overarching goals and direction.
Program management, on the other hand, is often confused with product management. Program management is essentially project management. It resides within the engineering organization and is responsible for executing product development and delivery. Program managers work closely with various departments like R&D, finance, marketing, and sales to ensure successful project completion.
As a product owner or strategist, you collaborate closely with the development organization, project managers, and program managers. While they operate within the engineering organization, your role involves aligning product strategy with the overall business objectives and coordinating efforts across different departments.
These distinctions in product strategy emerge based on industry dynamics, company size, and how it integrates with other organizational functions.
Related Topics
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