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Product Managers: The One Thing You Absolutely Need In Your Toolbox

We Product Managers are versatile and should know almost every aspect of the job.

The three quintessential aspects are that typical venn-diagram you see which consists of Engineering, Design and Business.

Depending on where you background is, you might have different perspectives on these things but I find the number one thing that all great Product Managers need is universal.

Let's start with a recent quote that I saw on Twitter by a famous founder: 

Justin is of course the founder of which morphed into Twitch and sold to Amazon for some immense amount of $ -- so he knows a thing or two about product.  He's also a serial entrepreneur and him and his brother are both successful in that way.

It seems odd to be talking to product managers but telling founders and product leads to NOT be obsessed with product itself.

I think we intuitively know what Justin is saying here but let's break it down why it is important.

De-obsession with Product

Why Justin is saying that we should be less obsessed with the product itself has a lot to do with knowing that the product side only focuses and leans into the Engineering and Design side of three-circles of Product Management.

The traditional path to a product management career is from Engineering or Design.  I would argue that even for the Business-background folks to coming in as a PM is typically not as experienced in understand the needs to be able to think about an end-to-end strategy. 

Is it important to look at the labels, the design, the logo?  Yes

Is it important to know things about which technology to chose, how best to leverage resources? Yes

But all of these things probably won't matter if you cannot sell your product/service.

I think it's a fallacy to think of a product separate from strategy though we have informally seen this to be increasingly a division of labor among companies we follow.

The world product focuses too much on the construction of the thing but less focused on how to sell it or where best to lay out to customers.

The best sales is when you leave out your product somewhere physical or virtual and customer just come and buy things there.

After-all, a product that is not sold is not a successful product at all.

Rise, Distribution, Rise

Product-market fit as a term and as a phenomenon is important but once product-market fit is achieved to a certain degree and is maintained, distribution is the next step on how to grow it.

I think the key is that as you think about product-market fit, you must almost be scouting and know which channels, key partners to rely on already.  If you've done your homework and reached out to early users and stay in touch with your customers, it's almost certain that they will already being 'telling' you by their actions what they want and how they want to be sold your product/service.  Listen to them.

Even when we look at data from consumer packaged goods companies, one of their leading indicators of health and longevity of a product is how many Whole Foods and Walmarts is it in?  Meaning that distribution as indicated by shelf space is vital to achieving the overall goals of getting it to your customers.

It seems obvious that channels should be exploited to achieve product goals but this is where strategic thinking for product managers is super important.  It's important to do the tactic stuff, but strategy is important too.

Distribution in the Software World

Moving Proctor and Gamble shampoo from your manufacturing facility to a Wal-mart is one thing, software products have likely much more options.

We've seen the transition happen with the rise of the internet.

Software use to be sold like Campbell's soup at your local Best Buy -- there were boxes put on shelves (sometimes empty) but they had a box anyway.  Sometimes there is a CD in there, if you could imagine and you paid some large up front some for a license.

Early days of software purchasing took the existing distribution model and copied it.  It was successful and they piggy-backed on the trucks, trains, planes that carried all sorts of other things to distribute new products.

With the internet and faster computers and servers, it made it possible for software companies to be come software-as-a-service or SaaS for short.  SaaS leverages remote computing/servers and allows for the code to be hosted on a remote server and delivered remotely too.

This new channel is now the internet and the storefront was Google.  It probably still is Google for the most part.

Software vendor products can know put their products on "google shelves" or search result pages and sell it to their customers.  Salesforce was one of the early adopters of this and they are still growing at leaps and bounds.

This is nothing new to be honest.  We not take it for granted that we can software on-demand everywhere we go.  This wasn't the case just a few years ago and a decade ago it seemed crazy but is not the norm with the lower costs of computing.

Knowing this is on thing, applying this to know what choices to make for your product is what we are trying to do here.  Choose your distribution models wisely and which channels to exploit.

Taking Distribution to the Next Level

The most important thing and ties all this together for software product manager is this: strategy and execution are two sides of the same coin.  In fact, the best products would seem as if it's all blended together where you cannot do one without the other.

The mindset to start thinking about is this: great products have superior distribution but what makes them have superior distribution in the first place?  Great product makes the distribution seem easy, effortless and almost free.  That's right, if distribution is almost free then this dramatically cuts down on customer acquisition costs and marketing.  Let the product sell itself.

The other mindset to consider is retention.  If you have 2 customer leaving for every 1 new customer walking in the door, your doors are going to close in no time.  How to keep the existing customers happy so they won't churn and leave, how to ensure they make use of the product you've built and continue to strengthen the existing distribution channels and make them stronger as time goes on.  What's what good product managers should think about as well.

One of the best frameworks we are have encountered is knowing, understanding and living the phenomenon of Network Effects.

Not all networks have network effects so keep that in mind.

Network effects examples include: AT&T (phone network), Facebook (Social network).

The network effects work to get people on the platform/network and once the connection is made, helps to transact money, information, conversations on the network.

The network in these cases ARE the distribution or at least part of it for obtaining new users.  It also allows already establish distribution channels to be reused the strengthened over time.

Lastly, networks allow your product (over time) to likely own a new distribution channel for you to sell ancillary products and services too.  Think Facebook know having a Marketplace for users to buy and sell products.

There's a lot of cover on this topic and we'll be talking Product Managers and Network Effects more other articles in the future.

One of the best resources we'd found to learn more about Network Effects if from NFX and James Currier who is the managing partner at NFX.  NFX is a venture-capital fund company the specializes in making investments into companies they say having network effects.

Takeaway and Summary:

  • When you think about Product, think if people would like it and how people use it.
  • When you think about Distribution, think about how are you going to get it into a customer's hands.
  • The best way of thinking about this to understand Network Effects in all its forms and be able to leverage product design and distribution right from the outset.  This is true end-to-end product vision and strategy.