Jan Bosch

Jan Bosch is a research center director, professor, consultant and angel investor in startups. You can contact him at jan@janbosch.com.

26 February

The role of product management is to balance business and technology in a way that optimally serves the market and the customers and, by extension, the company.

Many, including those in R&D, may view technology as part of the R&D realm and outside the scope of product management. The thinking is that the product manager decides what needs to be built and R&D decides how to build it. In practice, however, the technology choices are so influential on the strategic options available to the company that technology selection can’t be left to R&D alone. Product management needs to be involved and actively drive suitable selection among technology alternatives.

As part of this series, I’ve aspired to clearly communicate the interdependent nature of the business side and the technology side. Unfortunately, in many companies, one side tends to dominate. In some companies, the business side is dominant and R&D is treated as a servant where you simply order functionality and then have it delivered.

The challenge in these companies is that there’s a significant amount of tension between the business side, where R&D is considered to be a bunch of incompetent morons who take forever to build anything and then make the product suffer from a quality perspective, and the R&D side, where they feel that the idiots on the business side don’t understand anything about the complexity and intricacies of the product. This antagonistic nature between the two parts of the business tends to lead to short-term, knee-jerk reactions such as outsourcing R&D for a new product to a third party and completely losing the connection between products in the portfolio.

Where the technology side tends to dominate, R&D effort gets prioritized based on technical capabilities more than on anything else. If we can build it, we should and it’s up to the business side to simply sell the amazing products we’ve created. If they fail to do so, the typically technology-savvy leadership simply replaces the sales team with a new generation who gets to prove their metal.

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The optimal balance between being business-driven and being technology-driven actually changes over time and depends on the maturity of the product and the market. In the early stages of a new technology, more technical capability simply is better and being technology-driven is the way to go. For instance, the first cameras on mobile phones were pretty awful. Any improvement of the resolution, which was technology-driven as it requires better lenses and CCD image sensors, would lead to a superior product that would sell simply because of better technical capabilities. In these situations, user experience and customer intimacy are nice-to-haves, but the main differentiator really is the technical capability.

Somewhere in the evolution of the product and the associated industry, there comes a moment when improved technical capability is no longer as differentiating or even ceases to be differentiating to customers. At this point, the technical capability of the product is commoditizing and we need to shift our attention to other aspects of the innovation landscape (see also our discussion on the ten types of innovation) to drive the company’s continued business success.

The easiest way out for many companies is to start to drive down costs. Although there’s definitely a place and time for this, I think that the primary focus should be on differentiation. If it’s difficult to differentiate through the product itself, other aspects such as the business model, brand, customer experience, complementary services and so on can become the focus of innovation and R&D investment.

One of the classic mistakes I see many technology-driven companies make is to keep investing in new technological capabilities even though the value to customers has already plateaued or has even started to become negative. For instance, modern mobile phones have extremely high-resolution cameras leading to ridiculously large images. This is great for the happy few who use these images for specific purposes, but for the large majority of us, it’s just a hassle to schlep around those large image files.

The place where we can resolve the tensions between the business side and the technology side of the company is, of course, in product management. This is where R&D brings new technological opportunities that can be used to serve customers better while sales, customer support and others can bring market-driven insights on how to serve customers better. By engaging in a constructive, curious and transparent discussion around the various options available, experimenting with these and then prioritizing effort for the next iteration, we can achieve a situation where business and technology are joined at the hip.

Product management is where business and technology meet. As technology choices are core to creating strategic opportunities for the company, product management needs to be involved and we can’t leave technology choices to R&D alone. In practice, many companies are either business-driven or technology-driven, causing challenges as they fail to identify when to shift and prioritize when needed. The role of product management is to balance business and technology in a way that optimally serves the market and the customers and, by extension, the company. To quote Bill Gates, “Information technology and business are becoming inextricably interwoven. I don’t think anyone can talk meaningfully about one without talking about the other.”