One of the most common situations today is where the product manager is in one location, and the engineering team is somewhere else. I don’t only mean outsourcing to India either – the remote development team might be a consequence of an acquisition or merger, or possibly your organization is large enough where the developers are centrally located in a facility somewhere you aren’t.
I think the product spec is long overdue for a renovation. Some would argue that Agile methods accomplish this by doing away with the spec altogether. I’ve written about some of the issues and limitations of Agile methods elsewhere, but in many respects I think they were on the right track.