(1/14) History of Product Management
“Study the past if you would define the future.” – Confucius
Brief History of Product Management
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 but became a cornerstone in modern thinking about brand management and ultimately product management.
World history is not only about great inventions but also about managing those inventions by extraordinary people and turning those inventions into great products that could change the course of human life.
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.
According to the memo, the “Brand Man” was responsible for tracking the sales, managing the product, advertising, and promotions. Following is what the memo consisted of regarding the “Brand Man”:
Study carefully shipments of his brands by units.
Where brand development is heavy and where it is progressive, examine carefully the combination of effort that seems to be clicking and try to apply this same treatment to other territories that are comparable.
Where brand development is light: (a) Keep whatever records are necessary, and make whatever field studies are necessary to determine whether the plan has produced the expected results. (b) Study past advertising and promotional history of the brand: study the territory personality at first hand–both dealers and consumers–in order to find out the trouble. (c)_After uncovering our weakness, develop a plan that can be applied to this local sore spot. It is necessary, of course not simply to work out the plan but also to be sure that the amount of money proposed can be expected to produce results at a reasonable cost per case. (d) Outline this plan in detail to the Division Manager under whose jurisdiction the weak territory is, Obtain his authority and support for the corrective action. (e)_ Prepare sales help and all other necessary material for carrying out the plan. Pass it on to the districts. Work with salesmen while they are getting started. Follow through to the very finish to be sure that there is no letdown in sales operation of the plan.
Take full responsibility, not simply for criticising individual pieces of printed word copy, but also for the general printed word plans for his brands.
Take full responsibility for all other advertising expenditures on his brands.
Experiment with and recommend wrapper revisions.
See each District Manager a number of times a year to discuss with him any possible faults in our promotion plans for that territory.”
McElroy hired a “Brand Man” and an “Associate Brand Man,” thereby turning Procter & Gamble into a brand-centric organization thus leading to the birth of the Product Manager in the field of fast-moving consumer goods(FMCG) companies.
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.
in 1950s post-war Japan, cash-flow issues forced different companies to develop just-in-time manufacturing or just-in-time productioToyota Production System (TPS) since it was developed in Toyota. The TPS was invented to reduce response times between suppliers and customers in Japanese companies, particularly in Toyota.
The brains behind the Toyota Production System and the Toyota Way were Taiichi Ohno and Eiji Toyoda. The latter was the nephew of Toyota’s founder, who later became the chief executive and chairman of Toyota Motors. The TPS d focused on two essential principles: kaizen and genchi genbutsu.
Kaizen — continuously improving the business while driving innovation and evolution.
Kaizen (改善) is the Japanese word for “improvement.” It was perceived both as an action plan and as a philosophy in Japanese companies. The main aim for practicing Kaizen was to create a culture of continuous improvement where all employees are actively engaged in improving the company.
A typical Kaizen event would contain the following steps which make the parts of the so-called PDCA (Plan, Do, Check, and Act) cycle :
Plan (develop a hypothesis)
Do (run an experiment)
Check (evaluate the results)
Act (refine the experiment; then start a new cycle)
Genchi genbutsu — going back to the source to find the facts and make the right decisions. Genchi genbutsu translates into “go and see for yourself.”
“In my Toyota interviews, when I asked what distinguishes the Toyota Way from other management approaches, the most common first response was genchi genbutsu — whether I was in manufacturing, product development, sales, distribution, or public affairs. You cannot be sure you really understand any part of any business problem unless you go and see for yourself firsthand. It is unacceptable to take anything for granted or to rely on the reports of others.” - Jeffrey Liker
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.
The 1960s marked the birth of a lot of new brands. There was a time when company success would be guaranteed only by producing good quality products. For example, if you offered good chocolate, people would come to your shop and buy it. That’s it. However, in the 1960s, consumers were already savvier, and they could easily distinguish between good and bad products.
A brand manager in such a company had to give the product an identity that would distinguish it from their competitors. To do so, the brand manager was required to have an understanding of the target consumer to be able to offer the so-called “branded proposition.” The latter involved not only functional but also emotional value for the consumer.
How did this branding work? It involved not only the logo and the price of the product but also its packaging, promotions, advertising, and brand messaging.
In 1970s, at Fast-Moving Consumer Goods (FMCG) companies, the role of the product manager was very much like the role of a marketing communications manager since it was mainly concerned with packaging, pricing, brand marketing, and promotions. The development of the product itself was left to other people in the company.
However, as the role moved into the tech world, there was born the need to separate the product development from product production since the product development process was becoming more complicated. In addition, many of the tech companies were inventing entirely new products that had no rivals. They couldn’t just afford packaging and promotions to succeed. It became more important to not only understand the customer and their needs but also to align them with the product’s development cycles. Thus, the product management role went back to the product development processes.
Till this day, marketing and product management are have certain overlaps. However, the marketing department is more concerned with brand awareness and customer acquisition, while the product team takes care of the value proposition and product development.
In 1980s, the role of Product Management in computer hardware and software is still young since these industries are younger than the Consumer Packaged Goods industry. And the pioneer among software companies that began incorporating “brand management” principles to software products was Intuit.
Intuit is a business and financial software company that develops and sells financial, tax preparation, and accounting software to small businesses, accountants, and individuals.
The company was founded in 1983 by Scott Cook and Tom Proulx. Scott was a former Procter & Gamble “brand man” himself.
One of the best ways to get to know how customers use your product is to observe those customers in their actual usage environment. - Scott Cook
In 1990s , companies started applying some of the same principles of consumer product management to their software products. Accordingly, the tech products started to get more consumer-focused.
Intuit started this movement, and Microsoft and other tech companies followed it.
In 1991 In the article “Marketing is Everything.” Regis McKenna described the changes that technology was bringing into marketing. He starts the article with the following words:
“The 1990s will belong to the customer. And that is great news for the marketer.
Technology is transforming choice, and choice is transforming the marketplace. As a result, we are witnessing the emergence of a new marketing paradigm — not a “do more” marketing that simply turns up the volume on the sales spiels of the past but a knowledge — and experience-based marketing that represents the once-and-for-all death of the salesman.”
McKenna describes this “new marketing” as providing choice, change, credibility, and as being an integrator, allowing the customer to be a participant and synthesizing technological capability with market needs. Even though McKenna here talks about Product Marketing, the above mentioned statement proves how customer-centric mindset becomes an integral part of various disciplines. He propagates the knowledge-(data-) and experiment-based cultures and customer-centric approach to solve business problems more effectively. What McKenna describes in his article is more of a discipline that is knowledge-based, that involves working closely with customers on product development, and that can help the company push forward and continue to grow.
In 2001, these seventeen software developers met at a resort in to discuss these lightweight development methods: Together they published the Manifesto for Agile Software Development
They all knew things could be done better.
The result was The Agile Manifesto, which sought to define a set of 4 values and 12 principles that would streamline software development end to end.
The manifesto proposed the following values:
Individuals and interactions over processes and tools.
Working software over comprehensive documentation.
Customer collaboration over contract negotiation.
Responding to change over following a plan.
These values were combined with a full list of 12 principles covering everything from prioritising customer satisfaction to regular team retrospectives.
So, how does the creation of the agile methodology tie into the evolution of the product manager?
Well, they’re almost one and the same. As you’ll know if you’re in product management, agile is now the go-to methodology for software development, and the guidelines detailed in the manifesto still apply today.
Ideas like sustainable development, regular progress reviews, the willingness to pivot in the face of new information, and the number one priority of customer satisfaction are all at the core of most modern development teams.
And that takes us, very neatly, to where we are today.
In 2010s, The Product Manager’s role has evolved organically. However, universities still lack accredited Product Management programs. There are some graduate courses for brand and product management, but they are mainly concentrated on the consumer goods industry, not the tech world. Since there is no ultimate training for Product Managers, a lot of companies have created their own rules and principles.
For example, companies like Google, Amazon, Netflix, Apple, Adobe shape modern-day product management and set the trends for its development too.In fact, the role of the Product Manager varies by company. However, it deals with three main areas which are engineering, design and business.
Where next?
Product management is an ever-evolving field — and it stands on the shoulders of giants.
With so many drastic transformations happening in the tech, SaaS, and B2B space, it’s no wonder that product management has quickly become a sought-after skill set.
