You can read about technology breakthroughs in the green tech space nearly every day now, but my favorite has been watching the guys at Xerox PARC turn their expertise in electronics, materials science, printed circuit board technology and systems software towards the green technology market. We all owe a much greater debt to these guys than most people realize (especially if you’re reading this on a Mac or even using a mouse), but they’ve come up with some very innovative approaches to solar energy that could redefine how we generate power (check out concentrator photovoltaics). Another example is in solid-state lighting; did you realize that 22 percent of electricity produced in the US is used for lighting purposes, and that solid state lighting technology can cut this in half or more?

But most of you, like me, are in the software world, and you might be thinking that this is all great, but what does it have to do with me? My point is that much like the Internet came to touch nearly every type of business, I think green technology will do likewise. Both in how and where you conduct business, and in many cases, in the products you produce.

Virtually all of the innovations on the horizon in the green tech space have very significant amounts of system software, firmware, applications and web services. For example, new energy efficient heating and cooling systems rely on very sophisticated control software (the operating systems for these networks and devices). But even current software will be impacted, such as exchanges (probably more eBay categories) for trading manufacturing waste (one company’s waste is often another company’s raw materials), new and better access to local services, much better telecommuting and communications software and services, and new web services for resource sharing, just to mention a few.

I also fully expect that many of you will be recruited away to join these new companies that are getting venture investment now. While there is an obvious need for great engineers and scientists in the natural and physical sciences, what’s less obvious to some is the need for product management. But as with any industry, a great product is about more than just great technology. And I am anticipating that there will be an unprecedented demand for product leaders to get the inventions to market in the form of usable, affordable, compelling products.

In addition to best practices in product management, I think this wave is going to need all of the resources and capability of our “flat world” (as in, “The World is Flat” by Thomas Friedman) - the best research, engineering, manufacturing and distribution. In fact, I’m betting this product wave will be the first one to truly leverage the flat world that in large part the internet has enabled. And the market for these products will be virtually everyone everywhere on the planet.

While I don’t expect technology to solve all of the problems of the world, I do believe technology and great product leadership can solve our energy and environmental problems, and that we’re on the threshold of a wave of products that will literally redefine the landscape, in a very good way.

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The single most frequent question I get from product leaders in companies both large and small, is where should product management live? The choices are most often engineering or marketing. While if you have the right personalities, it can work in either place, I’m actually not a fan of it residing in either.

In this note I’d like to lay out the considerations and my views on where product management should live organizationally.

The most common situation I find is that product management lives within the marketing organization. The problem with this organizational design is based on the misconception that you get products from talking to your customers, and that it is marketing’s job to talk to customers. I won’t repeat all my arguments here, but suffice it to say that there are several key reasons why you won’t find successful products just by asking your customers, and further, what usually happens is that the product marketing role and the product management role get combined. These roles and the skills required are so different that what usually ends up happening is that one or the other (or both) gets poorly executed.

The next most common situation is that product management is put in the engineering organization. While this has the benefit of putting the people that invent and design the product next to the people that actually build the product, this can also be problematic because engineering organizations are really designed to focus on building a product right, rather than building the right product. It takes a different mindset and different skills to come up with the right product to build. Moreover, it’s easy for the product management team to be consumed in the details and pressures of producing the detailed specs rather than looking at the market opportunity and charting a winning product strategy and roadmap.

So if not the marketing organization, and if not the engineering organization, then where?

I am a believer in raising the level of the product organization to be on par with engineering and marketing. Ideally, the product organization includes the design team, because the interaction between product management and design needs to be absolutely as close as possible. Increasingly, you’ll see an organization with the name of “Product” or “Product Management” or “Product Management and Design” and often with a VP of Product or even a Chief Product Officer running it.

There are several benefits to this organizational design, but the biggest reason is that I believe that the head of product needs to have a seat at the table on the executive team. Companies are all about products, and marketing and engineering each have other considerations that typically supersede product. Additionally, this organizational structure makes it clear that the product is not being driven by the technology, and not being driven solely by the sales or marketing needs either.

One special case exists in many larger companies. Often large companies have a centralized engineering function and decentralized business units. This lets the company focus on multiple business lines, while potentially enjoying efficiencies in common engineering services. In such organizations, the product management and design function might be located in the centralized engineering/product development organization, or it might be in its own organization, or it might be a part of the business units themselves. Often in such an organization, the business unit managers must play a major product management role, so it can create problems if the product management team isn’t part of the business unit. In these situations, I usually prefer integrating product management and design into the business units.

While I’ve explained my reasons for the ideal locations, it can be very hard to implement organizational design change, and your company may not be willing or able to go this route. This does not necessarily mean that you’re destined for problems. It still boils down to the people involved and the skills they bring. If you can develop your product team’s skills and demonstrate their value across the company, any of these organizational structures will succeed.

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