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Product Management Organizational Placement

Introduction

A company’s organizational structure (aka org chart) depicts the relationship between the company’s entities and points to an internal workflow of activities, ownership, and authority.

This review provides a historical context and outlines the evolution of the product management function's placement in the corporate organizational structure.


The Early Days

From the late 1950s to the early 1970s, there was no formal product management function in the emerging high-tech sector.

At technology companies, product management activities, at least some of them, were done by the product developers (aka the Engineers), who reported to the Product Development department in the Engineering group.

This approach was the norm and typical of the many technology-driven companies of the time.

However, this approach was not optimal, where only partial product management was performed by non-dedicated roles with a technical, not business-oriented mindset.

More rethinking was needed.


Mid-1970's to Mid-1980's

In the early 1970s, executive management decided to formalize the product management function and the product manager role.

The backdrop for this decision was that executive management wanted someone other than the product developer to act as an interface between the Product Development department and (1)other internal corporate functions and (2)customers in the market.

This separation would allow product developers to focus on their core strengths and help build the required competencies in product management — primarily communicating market needs to the product developers.

Accordingly, during the mid-1970s to mid-1980s, a product management department was created and organizationally placed in the Engineering group.

In conjunction, a single product developer from the company's product development department was selected, their role and title converted to Product Manager, and they were reassigned to the newly-formed product management department.

This arrangement failed for several reasons.

The loss of control over core aspects of the product, particularly ownership over the product roadmap and the product's feature set — now handed over to product management, was met with solid resistance from product development.

Technical people value technical insight and product knowledge.

Product development viewed product management as ill-informed and unsuitable for guiding product developers in technology and product matters.

Executive management was unable, and engineering's management was unwilling to resolve the friction.

More rethinking was needed.


Mid-1980's to Mid-1990's

During the mid-1980s to mid-1990s, executive management moved the product management department and placed it with the Marketing group.

The move was made because of the challenges of placing product management in the Engineering group and the growing understanding that product management (actually product planning) is inextricably linked to product marketing. 

Unfortunately, this arrangement also failed.

When placed in the Marketing group, product management became a pre-sale resource (demos and conference calls) for the salespeople and a product information resource for MarCom to write product content (datasheets, website, press releases, etc.) and prepare marketing collateral and sales tools.

Product management's growing preoccupation with marketing and sales activities monopolized the product manager's time and precluded product management from their core responsibilities and working with product development.

Another rethinking was needed.


Mid-1990's to Mid-2000's

Executive management realized that product management (product planning and product marketing — see PMTK foundation rules) is an autonomous corporate entity with its first-level placement in the corporate organizational structure.

Consequently, during the mid-1990s to mid-2000s, product management was moved from either the Marketing or Engineering groups to a newly-created top-level Product Management group that reported to executive management and was led by either a VP of Products or VP of Product Management, or Chief Product Officer (CPO).


Mid-2000's — To Date

According to PMTK, first-level placement of product management in the corporate organizational structure is the correct approach.

Indeed, many modern companies with mature product practices view the Product Management group as a first-level placement in their organizational hierarchy.

However, there are still companies today where product management officially reports to the Marketing or Engineering groups.

A particular case is software development companies that subscribe to Lightweight Software Development (rebranded as Agile in 2001) practices and employ Scrum (a software development method).

At these companies, product management organizational placement is insignificant because the product manager is frequently also a Scrum Product Owner. 

Consequently, 50%-80% of the product manager’s time is spent on Scrum activities, de-facto making the product manager an integral part of product development.


Summary

The corporate organizational structure is a hierarchy and a force that defines status and shapes roles.

This review outlined how product management’s organizational placement evolved and the implication of each station on the status and role of the product manager.