Product Sense: the not-so-secret sauce for successful product management
Introduction
Agile product development is the process of getting a valuable product to the right target audience as efficiently and effectively as possible. By testing critical hypotheses through cheap experiments and customer feedback, we can gradually approach the right solution. This way, development errors can be identified and corrected early on. The path from a promising opportunity to a potential product and ultimately to a successful business requires numerous decisions and even sometimes a complete change in direction. Through this process, a product becomes valuable to both customers and the company. Every wrong decision comes with unnecessary costs and, in the worst case, gives the competition an advantage that is difficult to catch up with.
As a product manager, you are repeatedly faced with the challenge of making good decisions. New, unfinished product ideas or even very specific feature requirements must be understood, sorted and assessed for their expected impact. Good Product Sense helps to quickly evaluate the desired impact of an idea or requirement. Product Sense is therefore a crucial factor for better decisions in product development and helps to save costs and time. At the same time, a strongly developed Product Sense does not replace testing product ideas. Testing ideas and hypotheses remain necessary.
According to a survey of 1,000 product managers in 2022, Product Sense was named one of the three most important skills in product management, after “communication” and “execution”. However, it is also one of the least clearly defined skills in product management. That is why we want to clarify the term Product Sense and describe in more detail how to develop this skill.
What is Product Sense?
In general, Product Sense refers to an intuition for making good decisions in product development. However, this is not an innate ability, but something that can be learned and developed over time. Good Product Sense is the acquired ability to design products or changes to existing products in a way that has the intended effect on their users or customers and also has a positive effect on the business itself.
Great product sense = generally being right about which product changes will have the intended impact.
— Lenny Rachitsky
Good Product Sense is based essentially on four factors: empathy to discover meaningful user needs, product and domain knowledge of how successful solutions in the market work, creative problem-solving to effectively meet user and business needs alike, and finally, experience gained over time in product development. The first two factors will be considered in more detail in the following, as they form the basis for subsequent creative processes and the accumulation of experience.
The importance of Product Sense
A few years ago, the decision-makers at a large German technology company decided to launch a new product for an existing target group. They had collected all the data and facts and carefully analyzed the market. The decision-makers were convinced that the product would triple the revenues in that customer segment in no time. So the product manager and her development team immediately began working on the concept and implementation of the requirements of all the necessary features. They were sure that the new product would be a huge success. After a few months, the product was finally finished and ready to launch. The marketing department launched a major advertising campaign to promote the new product to existing customers. Everyone involved was convinced that it would be a huge success. Unfortunately, the opposite was the case. The customers didn’t react to the new product at all and it sold very poorly. The team was confused and wondered what had gone wrong. Eventually, they found out that they had been too focused on implementing the requirements during product development and had little Product Sense and understanding of the impact on customers and the business. They had not thought about whether the product would really offer what customers needed or whether the sales could be influenced by the measures taken.
This is, admittedly, a purely fictional story. But it is similar to what we have experienced in many companies. It is a good example of why good Product Sense is so important for product management decisions. In organizations with little Product Sense, product managers are often responsible for the simple implementation of external requirements. There is no ability to think ahead or to question or validate the effectiveness of requirements. There is simply a lack of understanding of how products are built and how they work in general. Product management has little ability to develop an imagination of what impact individual requirements can have on users, customers, the product, and the business model as a whole. For product managers in such environments, it is difficult to make good, forward-looking decisions that are in line with the company’s strategy and that also have a positive impact on users and customers. In short, Product Sense is a crucial factor for successful product development.
A good product intuition helps product managers to …
- better understand the cause-and-effect relationships
- assess the potential effects in complex systems
- recognize risks early on
- achieve more impact on customers and their own company
- ask good, goal-oriented questions
- make the right decisions
Even though the ability of Product Sense primarily benefits decision-makers in digital product development, such as product managers, this ability can also be useful for other roles involved in product development, from engineering to design to marketing, sales, and customer support. A well-developed Product Sense can help these individuals better understand and actively participate in product development. Therefore, developing Product Sense is beneficial for anyone who needs to make product decisions or wants to help shape them.
How to develop Product Sense
When developing Product Sense, you are also developing a strong opinion. From initially incomplete information, hypotheses or arguments are derived that allow for a conclusion or new perspective. This is important for making decisions. On the other hand, this opinion can also change with new insights. Your opinion must be continuously checked for its validity: do the hypotheses still hold or are there contradictory evidence? What are the perspectives of the other team members? Have biases formed that are in the way of a more objective opinion? Once fundamental hypotheses no longer hold, previously learned information must also be deliberately unlearned. The more informed the intuition, the better. It’s a paradox — the ability to have confidence in your own ideas and the humility to doubt what you know. Product Sense is a strong opinion that should not be infallible.
The more experiences product managers accumulate in their careers, the more likely they are to have developed a deep understanding of products and good Product Sense. The presence of Product Sense is therefore one of the key factors that distinguishes senior from junior product managers. However, this ability does not come naturally but must be actively developed and continuously improved. As mentioned before, this requires empathy and a deep, holistic understanding of the product, business, and domain. We will discuss this in more detail in the next section.
Building empathy
One important ability for developing Product Sense is building empathy. Product managers must deeply understand their target audience, be able to put themselves in their position and be able to empathize with their world. Only then are they able to assess the effectiveness of new product features in terms of business potential and value for customers.
Empathy must be trained and actively developed. Product managers are not real users or customers of the product they are developing—even if they use the product themselves. Therefore, product managers must directly and regularly talk to users or customers to understand them and recognize patterns. It is not enough to be informed only by customer support or the research team. On the one hand, the opportunity to ask for a better understanding and additional context is lost, on the other hand, repeated and regular interaction is important, as customer needs and usage behaviour can change over time. A user statement that seemed interesting yesterday may already be obsolete today. In addition, observing user behaviour and measuring interactions with the product provide useful clues about the needs of the end users. Marrying qualitative observations with quantitative data further enhances empathy. Therefore, product managers must be integrated into research or conduct it themselves in order to develop Product Sense.
In order to consistently engage with users and customers, test subjects must be found for interviews and tests. Finding subjects for a B2C product with a large user base is much easier than for a B2B product for specialists. To get feedback on the interface of a B2C product, it is often enough to go to the nearest coffee shop and ask a handful of people if they know and use the product. This way, test subjects can easily be found without having to put in much additional effort. Finding users for B2B products is much more difficult. In this case, it is a good idea to start by talking to users within your own company. Your colleagues often know potential partners in other companies who can be recruited as test subjects.
Special attention must be paid to personal preferences when developing intuition. All people are biased, that is inevitable. Product managers are influenced, among other things, by confirmation bias (acting to confirm one’s own point of view and ignore contradictory evidence), the law of small numbers (the belief that small samples represent a population), or recency bias (the preference for events and results that have just occurred). In order to counteract the influence of these effects, one’s own views must be constantly checked. But product managers are not alone in this. They can draw on the different perspectives of their team and on existing data and facts.
In addition to empathy for customers and users, empathy for the internal and external stakeholders of the product is also needed. A product is value creation for customers and companies alike. Without customer value, there is no business value and without business value, there is no investment in customer value. One of the main tasks of product managers is therefore often to balance the needs of these two sides.
Strengthen product and domain knowledge
Having a good understanding of how successful solutions for your business and customers can work in the market is another crucial skill for gaining good Product Sense. To do this, products must be understood universally and product knowledge must be built up. Additionally, the domain in the respective field must be understood and sufficient domain knowledge must be built up. This means that product managers must not only understand the structure and basic elements of a product in general, but also knowledge about the specific market, competition, technology used, and the industry in particular.
Product knowledge
The most important question in product management is probably what a product actually is and how it works. A product is often described as a collection of functionalities that solve a problem. At best, this only satisfies one side, the customer side. In order to satisfy the company as well, the product must also cover its costs and generate profit. At the core of every product is the exchange of value between the consumer and provider. Providers create value for their customers, who in turn return this value to the provider, for example in the form of monetary value. A product is therefore much more.
Building a product is NOT “the product” of your startup. Your business model is ‘the product’.
—Ash Maurya
The business model is the blueprint of the product. It describes, on the customer side, the target group(s), the corresponding value promise, which is described by problem-solving, and the channels through which customers and users become aware of the product. On the business side, in addition to the financial model, consisting of cost structure and revenue streams, the competitive advantage of the company is described. Viewed holistically, a product is more than just the sum of its functionalities. A successful product combines a solution for the customer, for the business, and for the technology. A general understanding of the business model, the customers, the solution, the technology, and the resources that can be used is the basis for all product-related decisions. These decisions also correspond to the four major risks in product development: the risk of usability, feasibility, business success, and added value for users and customers.
To better understand the business models of products, it is recommended to learn more about their structure. A nice exercise is to deconstruct or decipher everyday products. It is always worth being curious, trying out new products, breaking them down and analyzing them based on product knowledge. The findings can then be shared and discussed with other product enthusiasts or colleagues.
Domain knowledge
In addition to product knowledge, domain knowledge is also essential for good Product Sense. This means, on the one hand, to know and understand the company, product, business model, and customers in depth — on the other hand, to know the market, industry, trends and technology developments, as well as competition and competitors.
To understand the vision and strategy of the main competitors, it can be helpful to use their products regularly and talk to their customers. This can help to better identify weaknesses and strengths. In addition to competitive analysis, there are other ways to build up domain knowledge: collaborating with subject matter experts, who are real experts in a domain, is very valuable according to experiences to gain own expert knowledge. These can be existing customers or external consultants. Often, experienced experts can also be found among your own colleagues. To learn more about the product, customers, and business, it is always worthwhile to ask other departments of the company. Whether it is sales, customer success, marketing, or business development, they all have valuable insights that can give product managers a better understanding of the domain.
Quick Start to Product Sense
Regardless of whether you are very experienced or completely new to product management, product managers initially have little or no empathy for customers or stakeholders in their new job — perhaps even in a new industry. Knowledge of business, industry, and product is also not very extensive at this point. Product managers face the challenge of developing Product Sense within a short period of time in order to make good decisions. Ultimately, Product Sense provides security. And that is especially important from the start of a new job. The sooner Product Sense is built up, the sooner you will feel confident in making decisions. In our view, building Product Sense should therefore be considered as part of onboarding and planned from the beginning.
Product Sense Checklist
The following list describes the activities that, based on our experience, can help to quickly build up Product Sense. The order of activities may vary from case to case. Of course, the list can also be supplemented with the individual needs and requirements of each individual.
First
- Regularly block off time in your calendar to talk to users and customers
- Read product and team documentation
- Understand the business model and value proposition
- Review general analytics data and performance data of individual functions
- Understand the technical landscape and possibilities or limitations.
Next
- Conduct stakeholder interviews to understand needs and find pain points
- Learn about the perspectives and needs of adjacent areas such as sales, marketing, business development, and customer support
- Set up product KPIs and check them against other areas
- Learn more about customer needs from other product managers, UX design, customer support, sales, marketing, etc.
- Research the company’s vision, mission, goals, strategy, positioning, and differentiation.
- Subscribe to relevant newsletters and podcasts, or visit conferences, webinars, communities of practice, and meetups on product topics.
Later
- Evaluate first prototypes with users or customers
- Talk to experts to build domain knowledge
- Exchange with competitors and/or industry experts
- Deconstruct and analyze foreign products
- Investigate data collection and usage data in the industry
- Keep an eye on the market, competition, trends, and venture capital investments
- Read industry reports and attend industry fairs.
Acknowledgements
Special thanks for your constructive feedback, which helped us write this article, goes to Nina Halbich, Alireza Shahbaghi, Tim Herbig, Christian Becker, Simon Kondermann, and Jan Milz. Thank you so much! ❤️ Without you, this article wouldn’t have been possible.
About the authors
- Robert Schulke is a Senior Product Manager from Germany. robertschulke.de
- Nikkel Blaase @JAF_Designer is a Product Lead & Discovery Coach from Bremen, Germany. www.nikkel-blaase.com
