Product Marty Cagan

Product Managers vs. Business Owners

In some companies, mostly larger companies with multiple business units, there is an additional role in the product mix.

This role typically comes about when you have a matrix organization where a common product organization is responsible for serving the needs of multiple business units. Common examples include business units by geography (e.g. US, International), by device (e.g. mobile, PC), or by function (e.g. search, advertising).

There really has never been a good title for these business owners. Sometimes they’re called business managers, business development managers, or product line managers, and sometimes they borrow the title ‘product manager’ or ‘product marketing’ which can cause another layer of confusion.

Be careful not to confuse the concept of a business owner with a ‘product owner’ which is the term used in Scrum teams for the product manager role.

In large part, the role of the business owner is a reaction to the matrix, and for the understandable desire of general managers that are accountable for revenue to have people on their staff (i.e. that they can directly control) that are driving the business forward.

Many product managers resist this model because they can feel disempowered (when the real product decisions get made by the business owners), or because of the complicated stakeholder management that comes along with trying to serve the often conflicting needs of a range of business units.

I have seen, and actually worked in, two major organizations with this model, and I can tell you that it can go either way. It can be a very effective model, or it can be a major obstacle to creating good products. Everything depends on how the role of the business owner is defined relative to the role of the product manager.

When this model goes wrong, the product manager is relegated to essentially gathering and documenting the requirements of the business owner. Those who have been reading these articles know that this is not the job of the product manager, and in fact represents the absence of product management.

However, when this model is done well you can truly drive the business forward very aggressively by the combination of business and product.

The business owner has five key responsibilities:

1. Opportunity Assessments. The business owner defines the business need. For those using the opportunity assessment that I advocate, the opportunity assessment defines the contract between the business owner and the product manager. This opportunity assessment defines the problem to be solved and the measures of success; it does not define the product solution that will address this need.

2. Revenue Model. The business owner drives the revenue model including identifying the key revenue levers, and establishing pricing and promotions.

3. Stakeholder Management. The business owner plays a major role in stakeholder management, working closely with legal, marketing, sales, business development, and execs. This is a big help to the product manager.

4. Partner Management. The business owner manages the relationships with key partners (advertisers, vendors, channels). There is a significant business development aspect to the business owner role, and this also frees the product manager further.

5. Business Analytics Tracking. The business owner closely tracks the business metrics and analytics, and works with the product manager to identify and resolve issues.

Each of these five areas are important, and in the absence of a business owner, the product manager must spend time to cover, taking away from the product manager’s primary responsibility (sometimes other roles such as product marketing and business development can help cover some of this as well).

What the business owner is not responsible for is product discovery. That is the job of the product manager. The product manager is the person responsible for discovering innovative product solutions that deliver the necessary value, are usable by the target audience, and can be delivered with the available resources in the required timeframe. Product discovery is a big enough job that there’s plenty of room for help from a good business owner to cover these other areas.

Things go wrong when these two roles are not clearly defined, especially when the business owner believes he is responsible for the product solutions. Whenever I find a business owner handing mockups to the product manager I know that there¹s a deep problem here, and either the business owner ought to move over to product management, or the product manager is not up to the job, or the roles are not clearly defined.

I said earlier that essentially the business owner role is a reaction to the matrix. If a general manager is truly empowered and accountable for the success of his or her business, and if the matrix organization is not able to deliver at the pace and quality the business feels it needs, then desperate business owners get creative about how they get product done. The first thing they do is essentially staff their own product management organization (but they are usually careful not to call it product management). The second thing that often happens is that the business unit will contract with third-party developers or outsourced engineering so that they can get what they need built more rapidly.

While this is totally understandable and a direct consequence of strong, empowered business unit leaders, at this point the organization is in serious trouble. The team will soon have a mix of software from different sources, largely incompatible and not integrated, very difficult to maintain and support, the users and customers will suffer, and everyone will be frustrated.

So if your company has a central product organization trying to meet the needs of multiple business units, you¹ll need to make very clear to everyone involved on the business side and the product side what the roles and responsibilities are, and management will need to monitor this closely to make sure that the roles are respected and that people are in the right positions based on their skills.