Software is becoming a more significant factor for businesses in many sectors. Securing the entire return on investment necessitates having proficient product management skills (mckinsey.com).
Businesses in all sectors increasingly see software as a source of uniqueness as well as an enabler of business. (mckinsey.com) Stronger product management skills are becoming more and more necessary as they invest more in software development. Nevertheless, according to our data, around 75% of businesses’ product management departments are still behind where they should be in order to maximise the return on their software investments. Around 75% of the more than 5,000 product managers we polled, (mckinsey.com) who work on both internal and external software products across a variety of industries, said that their organisations don’t use product management best practices, {mckinsey.com/industries/technology-media-and-telecommunications/our-insights/what-separates-top-product-managers-from-the-rest-of-the-pack} that the function is still in its infancy, or that it doesn’t exist at all (exhibit).
This is noteworthy since, according to our earlier research on how software excellence drives business performance, measured as “developer velocity,” product management capabilities rank among the top two drivers of business performance for organisations across industries. (mckinsey.com) Product managers who are customer- and outcome-oriented are key to empowering developers and fostering an atmosphere that encourages innovation, all of which are necessary to improve developer velocity.{mckinsey.com/industries/technology-media-and-telecommunications/our-insights/what-separates-top-product-managers-from-the-rest-of-the-pack}
Whether software is viewed as the central component of a company or merely an enabler, (mckinsey.com) the wider business implications of having a strong product management function for both tech and nontech companies demonstrate how crucial it is to develop best-in-class product management capabilities.
Top-performing product managers’ best practices
Our goal was to comprehend the daily operations of high-achieving product managers, their best practices, and how they contribute to business expansion. (mckinsey.com) We have identified seven essential strategies that can help organisations improve their product management capabilities to get the most out of their software investment. These practices are based on our in-depth research, {mckinsey.com/industries/technology-media-and-telecommunications/our-insights/what-separates-top-product-managers-from-the-rest-of-the-pack} work with over fifty product management organisations, and interviews with top product experts.2.
Before writing a single line of code for a feature, test its entire value proposition
Creating consumer behaviour hypotheses and thoroughly testing them is an essential step before developing new features. Since testing allows product managers to repeatedly revise (mckinsey.com) product and feature concepts without requiring additional development resources, it is a fundamental component of iterative development processes. Testing can be done in a variety of ways, including no-code prototypes, low-fidelity mock-ups, targeted emails, and user interviews. The important thing is to confirm the hypothesis before devoting substantial resources to development. Product managers who possess extensive domain expertise may make the mistake of taking a feature or product for granted and omitting the crucial testing phase.
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For instance, the food delivery business Caviar (mckinsey.com) believed that making it easier for customers to place repeat orders—those who typically place the same kinds of purchases—would lead to more orders overall. Caviar could have simply added that option, but as the then-head of the product team, Gokul Rajaram, noted, the business didn’t want to spend money on it until they were certain that adding a new feature would spur growth. According to Rajaram, Caviar regularly sent emails to loyal customers displaying their previous orders along with links to place new orders in order to test the idea. Not only did users click on these emails (mckinsey.com) more frequently than any other that Caviar sent, but they also went through to place larger orders, more frequent transactions, and reorders. With their investment now justified, Caviar proceeded to create a function that allows for a single-click reordering.
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Instead than asking clients what they want, pay attention to their needs
The only way to determine actual client habits and behaviour is to watch them in their “natural habitat.” Though self-reporting and customer perception (mckinsey.com) are valuable sources of information, elite product managers look beyond them. Product telemetry, such as the amount of time a user spends on a particular page, can be a valuable resource for learning about how users engage with a product. Product managers risk developing products that don’t actually solve customers’ problems by pursuing wrong hypotheses when they neglect to observe consumers’ real behaviour.