The History and Evolution of Product Management (Part 2)
Read the first part of this article here.
The 1950s
In post-war Japan, cash-flow issues forced different companies to develop just-in-time manufacturing or just-in-time production. It is also often referred to as the Toyota Production System (TPS) since it was developed in Toyota. The TPS was invented to reduce response times between suppliers and customers in Japanese companies, particularly in Toyota.
The brains behind the Toyota Production System and the Toyota Way were Taiichi Ohno and Eiji Toyoda. The latter was the nephew of Toyota’s founder, who later became the chief executive and chairman of Toyota Motors. The TPS d focused on two essential principles: kaizen and genchi genbutsu.
Kaizen — continuously improving the business while driving innovation and evolution.
Kaizen (改善) is the Japanese word for “improvement.” It was perceived both as an action plan and as a philosophy in Japanese companies. The main aim for practicing Kaizen was to create a culture of continuous improvement where all employees are actively engaged in improving the company.
A typical Kaizen event would contain the following steps which make the parts of the so-called PDCA (Plan, Do, Check, and Act) cycle :
- Plan (develop a hypothesis)
- Do (run an experiment)
- Check (evaluate the results)
- Act (refine the experiment; then start a new cycle)
Genchi genbutsu — going back to the source to find the facts and make the right decisions. Genchi genbutsu translates into “go and see for yourself.”
Jeffrey Liker had an interesting description of this phenomenon, which Eric Ries cites in his book “The Lean Startup:”
“In my Toyota interviews, when I asked what distinguishes the Toyota Way from other management approaches, the most common first response was genchi genbutsu — whether I was in manufacturing, product development, sales, distribution, or public affairs. You cannot be sure you really understand any part of any business problem unless you go and see for yourself firsthand. It is unacceptable to take anything for granted or to rely on the reports of others.”
Ries then goes on to discuss the production of the Toyota Sienna minivan. He explains that the 2004 Sienna was assigned to Yuji Yokoya which meant that he was responsible for the design and development of the new model. Yokoya had to oversee the entire process from concept to production while having little experience in North America, Sienna’s primary market.
To resolve this problem, Yokoya started a road trip throughout all fifty US states, all thirteen provinces, and territories of Canada, and all areas of Mexico. Overall, he ended up driving over 53,000 miles. Yokoya would drive the current-model Sienna and would observe Toyota’s real customers. It turns out that what he learned let to significant improvements in the new Sienna model. The improvements brought more sales.
Going back to Hewlett-Packard, it’s important to note that just-in-time manufacturing was embraced in this company first as soon as it came to the West. And from there, product management spread all over hardware and software companies and became a globally recognizable role.
Nevertheless, a question might arise — how the Japanese managed to implement the just-in-time manufacturing approach? The answer is that they used a special methodology called Kanban. It all started in the early 1940s when Taiichi Ohno developed the first Kanban system for Toyota automotive in Japan. It was a simple planning system, the goal of which was to control and manage work and inventory at every stage of production.
The number one reason for developing Kanban was the unacceptable level of productivity of Toyota as compared to its American competitors. With Kanban, Toyota managed to achieve a flexible and productive just-in-time production control system.
Ideally, a Kanban system controls the whole value chain from the supplier to the end customer. It makes sure to avoid supply disruption and overstocking of goods at different stages of the process. Kanban requires constant monitoring of the manufacturing process. Over time, Kanban has become an effective way in a variety of production systems.
The 1960s
The 1960s marked the birth of a lot of new brands. There was a time when company success would be guaranteed only by producing good quality products. For example, if you offered good chocolate, people would come to your shop and buy it. That’s it. However, in the 1960s, consumers were already savvier, and they could easily distinguish between good and bad products.
And yet, most companies would produce high-quality goods, and it would be harder for them to be noticed by consumers. Hence, a handful of companies started to take into account not only the quality of their goods but also branding and marketing. Companies and brands like Tide, Lipton, Kraft excelled in marketing activities. These were among the companies whose “winning” was determined by understanding the specific consumer needs.
A brand manager in such a company had to give the product an identity that would distinguish it from their competitors. To do so, the brand manager was required to have an understanding of the target consumer to be able to offer the so-called “branded proposition.” The latter involved not only functional but also emotional value for the consumer.
Eventually, the brands that seemed to be offering superior value to their consumers as compared to similar other companies would charge a little more for their products. If this extra amount of money was bigger than the cost of building the brand, then the company succeeded.
How did this branding work? It involved not only the logo and the price of the product but also its packaging, promotions, advertising, and brand messaging.
Can we say that product management or how they called it earlier “brand management” was in its early stages during these years and in these companies? Yes, we can. Let’s now see when product management appeared in the software world.
The 1970s
At Fast-Moving Consumer Goods (FMCG) companies, the role of the product manager was very much like the role of a marketing communications manager since it was mainly concerned with packaging, pricing, brand marketing, and promotions. The development of the product itself was left to other people in the company.
However, as the role moved into the tech world, there was born the need to separate the product development from product production since the product development process was becoming more complicated. In addition, many of the tech companies were inventing entirely new products that had no rivals. They couldn’t just afford packaging and promotions to succeed. It became more important to not only understand the customer and their needs but also to align them with the product’s development cycles. Thus, the product management role went back to the product development processes.
Till this day, marketing and product management have certain overlaps. However, the marketing department is more concerned with brand awareness and customer acquisition, while the product team takes care of the value proposition and product development.
The 1980s and Beyond
To be continued…
Feel free to comment below. If you enjoyed this article, please hit that clap button to help others find it.
Follow me: Medium | Twitter | LinkedIn
Related articles by me:
