In earlier articles, especially here, we have discussed why great product management is crucial to a company’s success. It is the role that is responsible for a product as a whole, the only one that aligns what the product should do, what features it has, where to offer it, at what price points for which packages.
Yet many companies seem to do just fine for an extended period of time without product management, especially in the technology sector. To be fair, most do flounder. The first Internet wave was littered with the carcasses of companies built on a “field of dreams” philosophy: “if you build it, they will come”.
Undoubtedly, even those successes are leaving much money on the table. Without great product management:
- Your existing customers should be more profitable: some would pay more for specific additional capabilities or packaging, while others would pay less for a product that costs you even less;
- Non-customers that should be yours are not.
- Worst of all, you really do not know why this is so.
Yet, without product ownership, how do they succeed at all?
Over the last 6 weeks, I have had a series of conversations with several companies. In all of them, an underlying theme was the same: how do companies succeed up to a point despite lacking product management?
I would like to propose a theory, based on my own experiences and some of Clayton Christensen‘s writings (the father of Innovation Theory), that companies can survive without product management if a few key requirements are met:
- The market is sufficiently early and fragmented or non-competitive.
- The market is sufficiently large.
- The benefits of the product are sufficiently powerful.
Very early stage markets, especially in technology, tend to be either highly fragmented – no dominant player with large market share – or a “native monopoly.” Unlike a natural monopoly, a “native monopoly” is due to the unique offering; often the offering company is the only provider of a solution to the problem at hand.
If you are the lone provider, then the only true competition is non-consumption. While this is a serious competitor, even in a mature and highly competitive market, if the basic functionality is valuable enough, even a poorly structured, featured, packaged or priced solution will be attractive to customers.
Even if you are not the only serious provider, if the market is large and diverse enough, there should be sufficient variety that some segments will happen upon your offering as decent enough.
But all of the above only works if customers really want what you have.
Thus, due either to the law of large numbers or to a “native monopoly,” a young market can allow a company to survive and even thrive without good, let alone great, product management.
Christensen’s disruption theory shows how incumbents focus on the high end of the market. They regularly dismiss new entrants, especially those with minimal featuresets and low pricing, because “they cannot possibly meet the complex requirements of our customers!”
They are correct… except that there are large low-end unserved or underserved segments that are perfectly fine with a basic product providing basic features at a basic price. As Christensen points out, eventually the low-end product improves enough to attract the high-end, but at a much lower price, turning the existing incumbent into the has-been.
This graph shows how the disruptors are able to meet the much lower product performance requirements for the low-end of the market.
(I cannot recommend enough Christensen’s books, especially his classic “Innovator’s Dilemma” and the follow-on “Innovator’s Solution.”)
What happens, however, if no one is serving any end of the market? In that case, just about anyone with decent market sense can make their way above the bottom line, especially if the market is sufficiently new and sufficiently large. If those markets are big enough and you are the only player or there isn’t a dominant one, you should be able to grab some of that share and become a decent-sized company on the basis of those markets alone.
I will never tell a company, “ignore product management.” Even the earliest stage companies without funds have such a role. It may need to be handled directly by the founding CEO, but it is a role with clear responsibilities, and it must exist.
Nonetheless, it is possible that a company with decent market sense in new markets with high demand may survive or even succeed, if:
- The market is sufficiently large.
- The new provider has a “native monopoly”, or the market is highly fragmented.
- The need for the product is great enough.
- Eventually (which, in technology, comes very quickly) competitors will catch up to you and will take your market away.
- You are leaving a lot of money on the table, which could find a nice war chest.
Moral of the story? Get great product management!