The History and Evolution of Product Management

BY ON OCTOBER 28, 2015

Both new and experienced product managers often ask where this role came from and why it seems to have so much crossover with other roles such as Marketing and UX. While there’s no definitive history of product management, it’s often useful to consider our roots and understand how the role evolved over time. If nothing else it helps to understand the organisational trade-offs that happen as our capabilities and thinking evolve.

The History

Modern product management started in 1931 with a memo written by Neil H. McElroy at Procter & Gamble. It started as a justification to hire more people (sound familiar to any product managers out there?) but became a cornerstone in modern thinking about brand management and ultimately product management.

What he laid out in his 800 word memo was a simple and concise description of “Brand Men” and their absolute responsibility for a brand – from tracking sales to managing the product, advertising and promotions. Uniquely he outlined that the way to do this was through thorough field testing and client interaction.

McElroy got his two hires. He also got P&G to restructure into a brand-centric organization and led to the birth of the product manager in the FMCG field. McElroy later became Secretary of Defense and helped found NASA, proving all product managers are destined for greatness, but he also advised at Stanford where he influenced two young entrepreneurs called Bill Hewlett and David Packard.

They interpreted the Brand Man ethos as putting decision making as close as possible to the customer, and making the product manager the voice of the customer internally. In the seminal book The Hewlett-Packard Way this policy is credited with sustaining Hewlett-Packard’s 50 year record of unbroken 20% year-on-year growth between 1943 and 1993.

Hewlett-Packard had many other firsts – for example they introduced the division structure, where each product group became a self-sustaining organization responsible for developing, manufacturing and marketing its products. Once a division became larger than 500 people it was invariably split further to keep them small.

Meanwhile, in post-war Japan, shortages and cashflow problems forced industries to develop just-in-time manufacturing. Taiichi Ohno and Eiji Toyoda (the nephew of Toyota’s founder and eventually chief executive and chairman of Toyota Motor) took this idea and ran with it – developing the Toyota Production System and the Toyota Way over 30 years of continuous improvement, focusing not just on eliminating waste in the production process but also on two important principles any modern product manager will recognise: Kaizen – improving the business continuously while always driving for innovation and evolution and Genchi Genbutsu – to go to the source to find the facts to make correct decisions.

Of course, when just in time manufacturing came to the west, Hewlett-Packard was one of the first to recognise it’s value and embrace it. Thus Hewlett-Packard alumni brought this new way of thinking – customer centric, brand vertical, and lean manufacturing – to their future jobs, quickly permeating the growing Silicon Valley with the same ethos. From there it has spread into every hardware and software company to the global movement we know and love today.

When Product Management came to tech

The original product managers, and indeed the majority of product managers in FMCG today, were very much a part of the Marketing function. They focused on the process of understanding the customers’ needs and finding a way to fulfill those needs using the classic marketing mix – the right Product, in the right Place, at the right Price, using the right Promotion.

Their key metrics were sales and profits, but because of the slow moving nature of the development and production of new products in FMCG (imagine how long it takes to develop and test a new toothpaste, ramp up production and then bring a new brand to market) they focused more on the final three Ps: Place, Price and Promotion or Shimizu’s four Cs: Commodity, Cost, Communication, and Channel.

Thus Product Management in FMCG increasingly became a marketing communications role, concerned with getting the right mix of packaging, pricing, promotions, brand marketing, etc, leaving the development of the product to others.

As the role moved into the tech world however, this separation from the development and production of the product was untenable. Most of the newfangled companies in the tech world were inventing whole new industries and they couldn’t just rely on packaging and pricing of a commodity to succeed. This brought Product Development back to the centre of the Product Management role, as it was imperative not just to understand the customer and their needs, but to align the product’s development with them.

This schism between Marketing and Product Management can still be felt in many organisations today, where both feel they “own” the customer and understanding the marketplace. In most tech organisations however, Marketing has evolved to be more about owning the brand and customer acquisition, while Product owns the value proposition and the development of the product.

Suddenly we’re all Agile

Originally product development was a slow and laborious process, even in the tech industry. You plodded along a waterfall process, first doing research, then writing a massive product requirements document over several months, then throwing it over the wall to Engineering to build, only to get something completely different out the other end several months later before starting the process all over again.

In 2001 though, seventeen software engineers got together in a ski resort and wrote the Agile Manifesto, building on work spanning back to the seventies on light weight alternatives to the heavy-handed and process-oriented waterfall method of developing software. Though Agile and the Manifesto are heavily associated with Scrum, Scrum was actually developed before the manifesto in the nineties alongside other methodologies like DSDM and XP that were trying to achieve the same goal. Kanban, which is widely used in product development today, was developed in the Toyota Production System as far back as 1953!

Whatever the genesis, the Agile Manifesto brilliantly articulated the principles behind all these various methodologies;

We are uncovering better ways of developing software by doing it and helping others do it. Through this work we have come to value:

Individuals and interactions over Processes and tools

Working software over Comprehensive documentation

Customer collaboration over Contract negotiation

Responding to change over Following a plan

That is, while there is value in the items on the right, we value the items on the left more.

The Agile Manifesto became a watershed moment in product development not just because it freed up software engineers from being conveyor belt coders churning out exactly what was specified (no matter how dumb the specs were) but because it also freed up Product Management from focusing on deliverables like specs to focusing on customer collaboration.

This focus shift was profound on many levels.

First it changed the relationship between Product Management and Engineering from an adversarial one to a collaborative one. Scrum invented the role of the Product Owner, but really all agile methods embraced communication between the Product Management role and the Engineers as the best method to figure out how to build the best solution to a customer problem.

Secondly, focusing on the customer got rid of the artificial separation between the research, specification and development phases of a project, moving elements of the User Experience discipline from an afterthought at the end of the project to a fundamental part of the genesis of a product, and an integral part of the ongoing process of discovery and development of that product.

Finally, these principles have permeated further into the business with the development of lean practices and the development of Lean Startup and Lean Enterprise, which build on the Japanese Kaizen tradition of continuous improvement and apply the agile approach not just to product development but to the business itself.

Product Management takes a seat at the big table

Until very recently Product Management was still a part of the Marketing or Engineering functions, reporting up through those hierarchies, naturally aligned more with one or the other and inevitably embroiled in conflicts of prioritisation and focus because of it.

These days Product Management is increasingly a stand alone function with a seat at the management table and reporting directly to the CEO. This is critical because it aligns the product team directly with the business vision and goals, makes them internal as well as external evangelists of that vision, and gives them the independence necessary to make tough prioritisation calls.

What’s next?

Good product management is becoming a sustainable competitive advantage, and is continuing to evolve.

Product Management continues to absorb parts of Marketing, with many organisations making user acquisition a part of product in recognition that good product is often the fastest and cheapest way to grow. It continues to take on elements of User Experience, separating the user flows and experience from the visual design. It embraces fluid processes that adapt the way we work to what best fits the team, the product and the market, whether it’s Scrum, Kanban, something else entirely or some combination of all of the above.

But most importantly it’s something that is become more widely understood and owned within organisations. It’s becoming a discipline in which you may be an engineer, a designer, a founder or a product manager – but all that matters is that you are at the core of the product and passionately work towards the betterment of that product in service of your customers.

This may, in time, require fewer people called product managers in a company, but it puts ever more emphasis on the importance of the craft of product management. And it puts ever more emphasis on learning, sharing and working with others inside and outside our companies in the development of that craft.

Ultimately this is why Mind the Product exists – to further the craft of product management by bringing together product people of all stripes so we can all build better products for our customers.