Product manager skills: evolution of a PM role and its transformation

Some believe that a product manager’s job is to formulate and prioritize hypotheses, and then turn them into knowledge through A/B tests and research.

Others think that a product manager’s role is to be a user advocate, make features, and improve product metrics.

And then there are those who see the product manager as the person who manages the roadmap, motivates the team, improves the unit economics, optimizes key funnel conversions, and is responsible for the product’s revenue.

In reality, depending on the team, product managers do some or all of the above.

But these are only tools that should help achieve the most important goal, a goal that product managers often forget.

→ Test your product management and data skills with this free Growth Skills Assessment Test.

→ Learn data-driven product management in Simulator by GoPractice.

→ Learn growth and realize the maximum potential of your product in Product Growth Simulator.

→ Learn to apply generative AI to create products and automate processes in Generative AI for Product Managers – Mini Simulator.

→ Learn AI/ML through practice by completing four projects around the most common AI problems in AI/ML Simulator for Product Managers.

Creating new products and productivity

Let’s zoom out for a second.

Among the main drivers behind the improvement of mankind’s well-being are new technologies and products created on top of them. Here are few examples:

• A hundred years ago, it took days or weeks to transfer information from one city to another. Now, it can be done in a fraction of a second. Previously, a large proportion of the world’s population had to work in agriculture to feed everyone. But thanks to the emergence of more efficient tools (technology, fertilizers, product varieties, industrial agriculture), a relatively small number of people can now provide food for the whole world.
• In many sports, junior athletes are achieving the level of Olympic champions of a decade ago thanks to more effective training methods.
• Infant mortality is declining, and life expectancy is growing rapidly with advances in healthcare, society, and culture;
• Searching for a date with a mobile app is much easier than going to a bar and looking for someone to date.

The main driver of progress is the emergence of new technologies that give rise to products that simplify and improve people’s lives.

If a product team manages to find a more effective solution to a common problem for a group of people, then their product replaces the alternatives—or otherwise said, steals the “job” of those alternative solutions. This redistribution of the “job” leads to the growth of the company’s business. But at the same time, it improves the well-being of the people who use it and the efficiency of solving the problem.

The cumulative effect of these processes is expressed in the growth of overall labor productivity. The graph below shows the dynamics of this indicator for the UK over the past 250 years.

The goal of a product manager is to increase the efficiency of solving a user problem

The goal of any company is to create maximum value by using available resources, and then turn part of this value into profit.

Value is created when you improve the efficiency of solving the task of target users. This is the product manager’s main goal.

This, of course, is a simplification. But it is precisely the increase in the efficiency of solving problems that drives growth in individual businesses, productivity and quality of life across the world.

Role and skills of a product manager

Value chains vary across different problems that people face in their lives. Accordingly, the tools that a product manager and team will use will depend on the problem they are tackling:

• In some areas, creating value will require the invention of new breakthrough and complex technologies (e.g., developing new Apple devices, working on Google search, developing Databricks products, working on Siri).
• In other fields, product work will mainly consist of finding ways to apply new technologies to a specific use case (e.g., Uber, Google Maps, WhatsApp).
• In some domains, value is created through building user-friendly interfaces, optimizing funnels, tailoring the product to the needs of different user segments, and integrating new business models (e.g., Revolut, Splitwise).
• And in some categories, products create value through community building or network effects development (e.g., Reddit, Clubhouse, Product Hunt, Tinder).

The skills a product manager needs for success vary greatly from company to company, industry to industry, product to product, task to task.

Product managers will need different skill sets and competencies when working on a teamwork product for Enterprise B2B clients, a mobile match-three game, or a high-load database.

But all product work have some common requirements. In almost any organization, product managers should perform the following three basic functions:

• Determine the vector of product development to achieve maximum effect with available resources: Based on the available data and input from users, teams, stakeholders, the product manager formulates goals, defines a strategy, and turns it into a roadmap.
• Turn plans into reality: Delivery is an important part of product work. Even the best plan is meaningless without high-quality and timely execution.
• Motivate and coordinate people in the team: Product managers achieve results by motivating team members, collaborating with other departments, and effectively interacting with stakeholders.

These skills are the foundation of product work, but they are not enough. Each field of work has its own special skills requirements that a product manager must learn to be effective.

That is why it is impossible to unambiguously define and standardize the requirements for the skills of a product manager. That is why having deep expertise within the domain of a company or product is often a more important factor in hiring than advanced knowledge of specific product management tools or frameworks.

A Brief History of Product Management

Let’s take a look at the history of the product manager role. This will help you to see that the goal of the product manager’s work has not changed, while the ways of achieving it have changed depending on the context of the world around.

The emergence of product management

In 1931, Neil H. McElroy of Procter & Gamble wrote a document describing the functions of a specialist called the “Brand man.” This employee would be fully responsible for a particular brand or product.

This document can be considered the starting point for modern product management as an independent role at organizations. The area of ​​responsibility of the early version of the product manager in the FMCG industry was shifted to the marketing part of the spectrum. This is largely due to the specifics of the FMCG value chain.

First, fundamental technological breakthroughs and innovations rarely occur in the everyday goods segment. It is difficult to make drinking water or soap much better and more effective. Second, FMCG has a very long and rigid cycle of creating new products. Imagine how long it takes to find a formula for a new shampoo, test it, licence it, set up and scale production, and build a distribution network.

Due to these factors, product managers in FMCG did not get involved in the product creation process (R&D, licensing, production) but focused on studying the needs of customers and tailoring products to their needs. Their main tools were research and work on positioning, packaging, pricing, promotion, and brand building. That is how they could create maximum value for both users and business.

Despite the limited leverage available to influence user experience, it was at this stage that an important paradigm shift occurred for product managers in the FMCG industry. Companies began to have people who were entirely responsible for the user experience with a particular product. The main priority for these professionals was to solve the problem of clients.

Product management in the technology industry

In the late 1930s, Neil McElroy met up-and-coming Stanford students Bill Hewlett and David Packard. He told them about the brand man concept.

A few years later, Bill and David founded Hewlett-Packard (HP), one of the most iconic companies in the history of Silicon Valley. They introduced the concept of product management to the tech sector.

The responsibility of product managers at HP remains the same: to develop and change the product so that it solve’s people’s problems more effectively. But as the tech industry evolved, so did the approaches to product management and the requirements for the product manager role.

In the FMCG segment, product managers could only learn about customer needs through qualitative research. They could influence products only at the final stage of the value chain, working with positioning, packaging, and brand building.

In technology and software, product managers have new tools at their disposal both to study the tasks and needs of users and to influence their experience.

The cycle of creating and changing a product has become much shorter. This allows product managers to influence the user experience through design and development. The availability of data on how people use products made it possible to rely not only on qualitative research methods, but also on quantitative methods.

A new generation of tech companies and the transformation of the product manager role

For years, tech companies built and sold software products that only touch the surface of the physical world. During this stage, almost all value was created at the level of software design and development, which in turn determined the skills required for product managers.

But over time, the opportunities to improve the efficiency of solving problems exclusively at the software level decreased. Then, technology companies began to move deeper down the value chain. Here are some examples:

• Netflix originally simply aggregated and gave access to films and series. Now, it is producing its own original content.
• Traditionally, technology companies developed and sold software to hotels. Today, software companies like Airbnb are playing the role of a new generation hotel chain that does not own a single room.
• In its early days, Yandex simply showed you the best way to get from point A to point B (using Yandex.Maps and Yandex.Navigator). Now, it is organizing transportation itself (through Yandex.Taxi and “Yandex.Drive”). In the future, Yandex wants to exclude drivers from the process by introducing self-driving cars.
• Previously, tech companies and investors shied away from complex, inert, and regulated industries like banking, insurance, and automobiles. But now, these industries have become their new focus of interest. Examples are Revolut and Tesla.

For a long time, technology companies created and sold software products. Now, they are using technology to create their own end-user products, from banking services to electric cars. This change has affected the specifics of the work and skills requirements of product managers.

Five years ago, most of the leverage available to product managers was in the design and development of software products, websites, and apps. Today, this is just one of many components of product management, and for many businesses it is not the main one at all.

For example, for the product team of a car sharing service, the mobile application is just a small piece of the entire user experience. The main and most difficult part is how to ensure the availability of cars in the right places, their good condition, filling gas tanks, the process of booking a car, and completing the trip.

Tasks and skills of a product manager

The levers that influence the efficiency of solving a certain task directly depend on the specifics of this task—the value chain.

• The ways to improve an educational product will be very different from ways to improve a food delivery service.
• The ways to improve a mobile game are very different from ways to improve a collaboration product.
• Even approaches to the development of a collaboration product will be completely different depending on the target audience, e.g., IT teams or large companies vs non-tech industrial sectors like oil and gas, manufacturing, and healthcare. Read more about this in the first and second essays on the rivalry between Slack and Microsoft Teams.

Just as athletes from different sports develop different muscle groups and optimize their body for specific tasks, product managers in companies that solve different problems must have different skills and expertise. Understanding this will help you be more mindful of both your own development and the question of where you can bring the most value with your skill set.

But at the end of the day, remember that the goal of a product manager’s job remains the same: to find ways to improve the efficiency of solving user problems and bring them to life. Only the tools change