The Product Manager and New Product Development (NPD) Success

Product ManagerA key organizational role in the new product development (NPD) process is commonly referred to as a product manager. There are many definitions of this role, depending on the size of the company and the type of technology. Here we will focus on the position in the context of small to mid-sized firms who manufacture highly engineered products. In some organizations, a product manager may have P&L responsibility, but for the purposes of this discussion, it is assumed they do not.

The focus of this article will be to define the role of the product manager, why the function is important, specific responsibilities, key attributes and skills required, and conclude with some final thoughts on this important function.

In a recent blog article (1), I asked the question: What is the “right” definition of marketing? The point of this article was to make the case that innovation is not just about technology. Innovation is about matching technology with market needs. As I point out in this article, a broader definition of “marketing” is about defining what the customer will value. It’s about defining products, along with R&D, to fulfill both utilitarian and emotional needs. It’s about defining products that meet the business strategic and competitive strategies. Marketing is a distinct business function apart, but includes marketing communications.

InnovationA product manager, by my definition, fulfills this mediating role between technologies and the market, or customer needs, and helps define new products. Of course, this is done in an iterative fashion by involving all the internal and external stakeholders, until a consensus vision emerges. A product manager will likely not make unilateral decisions. I like to describe a product manager as someone who has “one foot in the engineering world and one foot in the sales and marketing world”. Every organization has someone who functions as a product manager, whether they call it by that name or not. For many small companies, that person might in fact be the original founder. As companies grow, there will be a need for a dedicated product manager that allows senior management to focus on other important aspects of managing the business. Having said that, since NPD is a key business function (2), senior management is still ultimately responsible and will always need to stay engaged.

Why is this role so important in driving NPD success? As with so many issues, balance is important. If definition of new products is driven solely by engineering, without a marketing influence, you may create technologically elegant solutions for a market that does not exist. Organizations that are run by senior managers who come from an engineering background need to always remember why customers buy their products. Likewise, if the sales organization drives product definition, you are likely to take the “insurance policy” approach to defining products with every conceivable feature known to mankind, and change course often based on the latest lost sale. Senior managers with a sales background obviously need to think about that. A good product manager can bring a balanced view.

A recent article in the Journal of Product Innovation Management titled “Improving Marketing’s Contribution to New Product Development” (3) points out two other important considerations. First, this study provides empirical evidence that firms with a strong marketing influence are more successful with new products. Second, a strong marketing function and a capable product manager build important tacit knowledge about a company’s specific market characteristics that is difficult for competitors to duplicate. The implication is that this deep tacit knowledge on what works and what does not work from a marketing standpoint is just as valuable as the tacit technical knowledge of key engineers.

So what specific tasks is the product manager responsible for managing? First, they should be responsible for driving the process of defining new products, both from a hardware and software standpoint. They will do this by involving all internal and external stakeholders as previously mentioned. As part of this process they will rely on their skills in understanding the market and customer needs, and how the product will be positioned against the competition. In addition, they will draw on their knowledge about how the products work “under the hood” because of their involvement in the engineering world.

A second key role is to drive the portfolio planning process. This consists of collecting and documenting new product ideas, managing the process to prioritize existing and potential projects, working with engineering on resource allocation, and developing product roadmaps. A recent blog article titled “Critical Aspects of Project Portfolio Management in NPD Success” discusses this topic (4).

Once a project is underway, the product manager would be an active participant on the project team. They would help make decisions on the multiple trade-offs that are required from the time a new product is documented to the point of introduction. There are few projects where the product that comes to market matches perfectly with what was originally documented. Importantly, they help bring the “voice-of-the-customer” to the project team.

If the project includes beta testing of the new product, the product manager is a good choice to manage that process with the customer.

As the project continues to progress, the product manager will be consulting with senior management to make important decisions on market introduction. These decisions cannot be taken lightly, and a recent article entitled “The Role of Product Launch Decisions in NPD” (5) addressed this important subject. In addition, the product manager during this phase of the project will begin working with the marketing communications organization to develop the external marketing collateral necessary to introduce the product to the market.

At introduction, the product manager would typically be responsible for training the sales organization, help them with the positioning, selling aids, etc. They would likely be involved with some early sales calls, and may continue to be involved in important competitive sales situations well past introduction. In some cases, they may in fact be a “product champion”. This role is beyond just a product manager and is especially important for the success of truly radical, new-to-the-market products. For these types of products, it may not be a simple case of transferring the knowledge of the product to the sales organization, but involve a more hands-on role building the business one sale at a time.

As the product matures, the product manager, who may have been involved during its entire life cycle would have added to his or her deep tacit knowledge about the market. This tacit knowledge then positively influences decision making on future new products.

What about some of the key attributes and skill sets that make a product manager successful? First, they must have credibility with engineering, sales, senior management, and customers. This usually means that a good product manager will be someone who has been with the business for some period of time, in a variety of roles, and be well respected by everyone. They need to be technically competent on the technology and be able to converse intelligently with engineering staff. They need to have some understanding of how the product works “under-the-hood”, so to speak. It might be preferable that they would have had some direct sales experience that helps develop a deep understanding of the market and ability to empathize with customers. In some cases, they may be the voice-of-the-company at technical conferences. Having knowledge and an appreciation for both the technology and the market will provide them credibility with both engineering and sales organizations.

Second, they have to have the ability to perform market research. This may be in the form of focus groups, working with key customers, interacting with thought leaders, surveying customer needs, using social media, etc. The ability to understand and listen to customers is important, but so is the ability to know when not to listen to customers. Customers will tell you many things, and existing companies excel at continuing to improve existing technology past the point of value to the customer.

Translating these customer needs into technical specifications is a third critical skill set. It is not good enough to understand what customers want, but the product manager has to guide the development of the technical product specifications to match these sometimes very qualitative descriptions of new product features. For instance, what does “easy to use” really mean? How do you translate these types of customer comments to specific, technical specifications?

Finally, the product manager needs a complete set of well-honed soft skills. They need to be able to communicate effectively with the PhD engineer, the technician putting together prototypes, the finance department, salesman, project managers, senior management, etc. The point is, they will be need to communicate with just about every personality type that exists. This is where sometimes the sales experience really helps. They need the ability to persuade, but still keep an open mind to other points of view. They especially need excellent negotiation skills, as they will be taxed repeatedly throughout a project to negotiate the multiple trade-offs that are required to launch a successful product.

Now that we have discussed the role of the product manager, why it is important, what specific tasks they are responsible for, and key attributes and skills, I want to conclude with three final remarks. First, is the reporting structure. In most cases, the product manager should report to a Marketing Manager, or if that role does not exist, then directly to the senior manager/owner of the business. I do not personally like this role to report functionally to either engineering or sales. If they report to engineering, they tend to focus on that role at the expense of staying in tune with the needs of sales and the customer, and the opposite is true if they report through the sales organization.

Related to the point above, even if they report to a senior manager responsible for the business, it is important for that senior manager to maintain balance. A marketing/sales driven organization might tend to emphasize a more sales-dominate role at the expense of the product manager being involved with projects. An engineering driven organization may take the opposite approach.

Finally, how the product manager is rewarded is important. If they are rewarded strictly based on sales results, for instance through a bonus system, then despite the best efforts of management, they may still emphasize the sales-related activities. The important point is that you need to carefully consider if the reward system will strike the balance that is required for a product manager to drive innovation success.

Does your organization have a specific defined product manager role? How does their role compare to what is described in this article? If it is different, how so? Are there other reasons why having a product manager is important? What other tasks might they be responsible for? What about additional skill sets that make them successful?

Notes:

(1) For more information, see What’s The “Right” Definition of Marketing?

(2) For more information, see Measuring New Product Development (NPD) Success.

(3) Drechsler, W., Natter, M. and S. H. Leeflang, P. 2013. Improving Marketing’s Contribution to New Product Development. Journal of Product Innovation Management 30(2):298-315.

(4) For more information, see Critical Aspects of Project Portfolio Management in NPD.

(5) For more information, see The Role of Product Launch Decisions in NPD.

New Product Visions is a consulting company that helps organizations improve the effectiveness of their new product development processes. We specialize in small to mid-sized companies that manufacture highly engineered products. Contact us today about how we might help you!

Specialties: NPD consultants, new product development consulting, developing new products, new product development seminars, small business consulting, new product development expert, product development process, new product development strategies, integrating NPD for mergers & acquisitions, organizing for innovation, management role in NPD, project risk analysis

4 thoughts on “The Product Manager and New Product Development (NPD) Success

  1. As an Engineering manager, the best New Product Development experiences in my career have involved very engaged product managers that performed the responsibilities just as described in this blog. The best product managers were successful due to their powerful ability to lead and work well with people whom do not officially report to them on any company org chart. They were also very gifted at making tough trade-off decisions without alienating others.

    • Carl, your comment about being able to lead and influence people who do not report to them and not alienating others are excellent point, and should be included in the list of the soft skills a good product manager should have. Thanks.

  2. This is a flawless article so I can only comment on the section “the product manager needs a complete set of well-honed soft skills…This is where sometimes the sales experience really helps.” That’s a point to underscore in relating the role to innovation success. It’s at the stakeholder engagement phase (i.e. the concept phase) that we agree the innovation that’s to be productised. That’s hard enough to do but at least the emphasis at that stage is on consensus. Subsequent NPD stages really do require some selling skills to gain the best level of commitment from the project team while developing the specifications. Here the constraints of costs vs. returns. vs. schedule begin to challenge the innovation concept itself and the NPD team must take guidance from the executive team. On the launch date, have we actually delivered what the market considers to be innovative? Sometimes, yes. Product managers provide the best guidance they can to inform the strategic business decision and then execute as required.

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