What separates top product managers from the rest of the pack (2023)

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Companies across industries increasingly view software not just as an enabler of business but also a source of distinction. As they increase their investments in software development, the need for ever-stronger product management capabilities grows. And yet our research shows that roughly three-quarters of companies’ product management functions are not yet where they need to be to unlock the full value of their software investments. We surveyed more than 5,000 product managers from around the world who work on both internal and external software products in a range of industries, and some 75 percent responded that product manage­ment best practices aren’t being adopted at their companies, that product manage­ment is a nascent function within their organization, or that it doesn’t exist at all (exhibit).1We polled product managers as they joined the ongoing McKinsey Product Academy Fundamentals program (launched May 2022), asking them how they would rate the state of product management in their organizations.

What separates top product managers from the rest of the pack (1)

This is quite notable, given that product management capabilities are among the top two drivers of business performance for organizations across industries, according to our previous research on how software excellence fuels business perfor­mance, measured as “developer velocity.”Improving developer velocity involves empowering developers and creating the right environment for them to innovate, which depends on product managers who are customer and outcome oriented.

The broader business implications of having a strong product management function, across tech and nontech companies alike, make clear how important building up best-in-class product management capabilities really is—regardless of whether software is core to one’s business or considered just an enabler.

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Best practices of top-performing product managers

We set out to understand the best practices of top-performing product management organizations, how top product managers operate day to day, and how they help companies grow. Based on our extensive research, work with more than 50 product management organizations, and conversations with world-class product experts, we have identified seven key practices that can help organizations elevate their product management capabilities to maximize their software investment.2All product management experts quoted in this article shared their stories at a publicly available, eight-part virtual speaker series held between May and August 2022 as part of the McKinsey Product Academy Fundamentals program. The series featured eight world-class product experts from leading organizations.

Test a feature’s full value proposition before writing a single line of code

Developing hypotheses about customer behavior and then fully testing their validity is a critical precursor to feature development. Testing is core to iterative development practices, as it enables product managers to iteratively refine product and feature ideas without requiring additional develop­ment resources. Testing can take many forms, such as customer interviews, targeted emails, low-fidelity mock-ups, or even no-code prototypes, but the key is to validate the hypothesis before committing significant resources to development. Product managers with deep domain knowledge can fall into the trap of assuming the value of a product or feature and may skip the critical testing step.

For example, when the food-delivery service Caviar looked to increase orders from repeat users who tended to order the same things every time, the company hypothesized that smoothing the path to reordering would encourage users to order more overall. Caviar could have just built that feature, but as Gokul Rajaram, who led the product team at the time, explained, the company didn’t want to commit resources to doing so until they knew whether such a new feature would contribute to growth. To test the hypothesis, Rajaram said, Caviar sent regular emails to repeat users showing them their past purchases with links to order the items again. Users not only were more likely to click on these emails than any others Caviar sent them but also clicked through to reorder, ordered more often, and placed larger orders than in the past. With their investment justified, Caviar went ahead and developed a one-click reorder feature.

Don’t ask customers what they want—observe what they need

Identifying true customer patterns and behavior can be done only by observing customers in their “natural habitat.” Although interviews can be a good source of insight, top product managers don’t rely on just customer perception and self-reporting. Product telemetry, like time spent by the user on a certain page, can be a key source for understanding how customers interact with a product. Failing to observe customers’ actual behavior can lead product managers to pursue incorrect hypotheses and ultimately build products that don’t truly solve customers’ problems.

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Kurt Walecki, senior vice president for design at Intuit, said the company relies on a “follow me home” program to observe users in this manner. The practice was started decades ago by Intuit cofounder Scott Cook, who would go to retail stores where the company’s Quicken personal-finance software was sold and ask customers if he could follow them home to observe their experience installing and starting to use his company’s product. As a result, he drew a better understanding of customers’ behaviors and experiences with the product. Walecki said visiting customers is worth ten times the effort it takes, because it yields insights that might never be discovered otherwise.

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Don’t stop at product–market fit to ensure success

Understanding the business case is as important for product managers as identifying product–market fit: top product managers invest time in developing their product’s business model and understanding competition in the market. Although product–market fit is critical to early adoption and growth, a comprehensive understanding of the business, such as market dynamics, the product’s business model, and potential partners and competition, is as important in ensuring the long-term success of a product.

Although product–market fit is critical to early adoption and growth, a comprehensive understanding of the business is as important in ensuring the long-term success of a product.

Bloomreach, an e-commerce personalization company that was an early mover in the search engine optimization (SEO) business, learned the value of this practice the hard way. Cofounded in 2009 by Raj De Datta, who is still CEO today, Bloomreach used in-depth customer research to establish clear product–market fit for one of its first predictive SEO software offerings. Initially, it enjoyed success catering to businesses eager to create SEO-friendly content more easily. However, De Datta said, Bloomreach had not considered the significant platform risk of the product, given its dependence on other companies’ search engines and algorithms. If a search engine changed its methods, Bloomreach’s product could be left flat-footed. Bloomreach learned a valuable lesson that initial product–market fit alone is not enough to ensure sustained, long-term success and went on to find success with other products. A singular focus on product–market fit is flawed, De Datta said, because the business itself and its structural underpinnings also matter significantly in the long term as well.

Focus on holistic impact, not just product adoption

Balancing value created for both internal and external stakeholders (end users and functional partners, for example) is critical to creating great products. Top product managers, especially at nontech companies, go beyond adoption metrics, such as daily active users, and collaborate with stakeholders across a product’s value chain to develop a more comprehensive definition of success. Defining holistic impact is a decision unique to each organization, but ensuring a balance between all affected stakeholders across the value chain—for example, consumers who view content, creators who make content, and engineers who leverage available content through APIs—is critical to creating great products.

At The New York Times Company, for example, journalists are embedded in product management teams to help build the various formats available for publishing digital news, which extend well beyond the constraints of a traditional article web page. The teams work together even in real time on breaking stories to choose the right combination of digital modules to use—video, text feeds, and graphics, for example—that best conveys a particular story, said Alex Hardiman, the Times’s chief product officer. By working together to continually refine display formats, the Times is able to consider the impact not just for readers but also for reporters seeking to report quickly in whatever format the story requires, as well as for editors looking to package the elements cohesively while maintaining editorial standards. Ultimately, Hardiman explained, this approach allows the publisher to give readers greater reason to return to the company’s website and app more often, deepening the value it gets and further bolstering the company’s direct-subscription business model. To make it work, she said, the Times’s product managers have to be flexible and need to understand what’s editorially important to encourage real engagement.

Shorten time to value for customers to less than an hour

Making core use cases simple and focusing on quick time to value for the customer is critical to enabling growth. Top product managers have the technical acumen and deep enough understanding of their product’s technology stack to design easy and simple onboarding processes for critical customer use cases. Creating these short onboarding processes allows customers to quickly realize the value ofthe product, which propels organic adoption and use. Failing to make core use cases simple can hinder organic adoption and require more investment in sales and marketing.

What separates top product managers from the rest of the pack (2)

Responsible product management: The critical tech challenge

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The business communications platform Twilio aims to make its onboarding and integration process ultrasimple, targeting time to value for the user to just a few minutes. Twilio’s chief product officer, Eyal Manor, said one of the tests the company used to measure ease of onboarding was to see how long it would take his 13-year-old daughter to onboard onto Twilio’s API platform. The company knew it had perfected the process when it took her only a few minutes. This approach is central to Twilio’s strategy of having products themselves spur adoption; some of its most successful products don’t even require dedicated sales resources. Manor acknowledged that achieving ultrasimple onboarding to a complex platform can be very difficult but said ease of use almost always wins, to the point that he keeps an eye on adoption metrics at all times.

Look beyond the expected to identify unintended outcomes

Identifying unforeseen product outcomes is as important as validating intended behaviors for creating value. Top product managers proactively look for unexpected outcomes or feedback of the products they develop to better understand how they can meet their customers’ needs. These unintended outcomes can extend beyond the tenets of responsible product management—privacy, sustainability, and inclusion, for example—to include operational or business impacts, such as physical-operations bottlenecks. All of these potential unintended outcomes can be opportunities as well as challenges, so failing to consider them can leave value on the table, limiting realization of a product’s full potential.

Wepow, the cloud-based HR recruitment technology platform provider, was concerned that its asynchronously recorded videos of job candidates answering interview questions might disadvantage job seekers facing unconscious or other bias, the company’s cofounder and former CEO, Imo Udom, explained. The company prioritized this concern when it achieved a level of scale and revisited the product it had initially gone to market with. But when the company spoke with customers—recruiters and hiring managers—it was surprised to find that the videos could actually serve as a tool to counter the bias Udom’s team was concerned about. Further, the team learned that the videos also provided a source of value to recruiters that Wepow hadn’t foreseen: both benefits hinged on the videos giving recruiters a tool to move their conversations with hiring managers past each party’s impressions of separately conducted interviews—now they could refer to the common assessment the videos offered to discuss a candidate’s strengths and weaknesses. This helped recruiters see hiring managers’ needs and preferences more clearly; for instance, they could better understand why a hiring manager might seem uninterested in a candidate who appeared strong to a recruiter. By identifying unintended outcomes early, Wepow was able to address this newfound source of value and adjust future product strategy accordingly, including by adding an auto-share feature that sends a recording directly to hiring committees.

In another example, a large North American airline implemented a new cargo revenue management application to maximize its bookings and pricing in light of last-minute customer no-shows, variable passenger loading on each route, and overall economic volatility. The AI-based model drovea ten-percentage-point increase in cargo utilization across all 1,200 routes—a game changer. However, poor palletization procedures at key airport hubs prevented the new revenue management application from yielding the anticipated benefits. In essence, the bottleneck had moved downstream, a classic patternwhen optimizing end-to-end processes. Great product managers anticipate these problems by ensuring that potential bottlenecks upstream and downstream of their digital product are well understood and managed.

Create ten times the value for customers than what is derived from them

Product managers have the onus and responsibility to lead the conduct of their product organization. They adopt responsible product management approaches to ensure that they are taking only what they need to provide value for the customer (limiting collection of customers’ personal information, for example). Consistently reassessing how information collected from customers is used to create value for them is critical to being a top product manager.

Mozilla uses responsible product management principles, along with the organization’s unique guiding mission as a subsidiary of the not-for-profit Mozilla Foundation, to make key product decisions, said Udom, who is now Mozilla’s senior vice president for innovation. Mozilla’s mission prioritizes privacy for its free Firefox web browser (and other products), limiting the amount of information it collects from customers and forgoing the extent of personalization features available in competing offerings. However, when the company determines that a personalization feature truly brings value to customers, it identifies the minimum data required and explains to users exactly how their data will be collected and used to bring value. This ultimately helps Mozilla stay true to its core mission and attract users, Udom said. Having a set of guiding principles makes it easier to maintain transparency about the sources of monetization, he explained, by raising critical questions such as: Are we being honest about the data we’re collecting? What is the value to the customer? Are we being generative or extractive?

Getting started: Redefining the product management aspiration

While individual product managers can weave these practices into their day-to-day work, to unlockthe function’s full potential, product leaders need to ensure that these mindset shifts are part of the fabric of the organization, enabling a product management function that is more oriented to customers and outcomes.

Product management capability framework

Product managers and leaders can assess the current state of their organization’s capabilities and begin their journey by identifying areas of opportunity across five dimensions and a set of enablers.

  • Customer experience: ability to design customer-centric experiences throughout the customer decision journey
  • Market orientation: ability to deeply understand market trends, partner ecosystems, and competitive strategies
  • Strategy and business: comfort with business strategy, portfolio prioritization, go-to-market, pricing, and tracking key performance indicators and financial metrics
  • Technical skills: ability to go deep on technology trends, architectural questions, stack control points, road maps, and management of the development life cycle
  • Leadership skills: ability to lead teams, communicate with diverse groups, and influence change throughout the organization
  • Enablers: talent management, organization and governance, product planning and review processes, tools and data infrastructure, and portfolio optimization and prioritization
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By assessing product management capabilities across five key dimensions, as well as a set of important enablers, individuals and organizations can establish a baseline for the current state oftheir product management function and identify areas of opportunity (see sidebar, “Product management capability framework”).

For product leaders, establishing a baseline of product management capabilities is typically followed by two parallel paths: strengthening key enablers and investing in a broad capability-building program for current talent. For the latter, an immersive training program, where product managers can simulate a real-world customer problem and take a product from idea to execution while receiving regular coaching, can deliver dramatic improvement in product management outcomes.

As the pace of technology development increases and software continues to play an increasing role in every facet of life, developing a best-in-class product management function becomes ever more important. Strengthening product management capabilities allows companies to unlock the full potential of their software development talent, fully maximize the return on their software investment, and ultimately elevate their business outcomes.

Chandra Gnanasambandam is a senior partner in McKinsey’s Bay Area office, where Martin Harrysson and Rikki Singh are partners; and Jeremy Schneider is a senior partner in the New York office.

The authors wish to thank Nandita Bothra, Sandra Ha, Eva Li, Matt Linderman, Mini Nair, Anees Patwa, Lukas Segelmark, and Gustavo Torres da Silva for their contributions to this article.

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FAQs

What separates a good product manager from a great one? ›

1) Good PMs consistently deliver quality products and results. Great PMs consistently and singularly improve the company's trajectory through the products they work on. 2) Good PMs make metrics-driven product decisions. Great PMs make metrics-informed product decisions.

What distinguishes the top 1% of product managers? ›

Forecast and measure - A 1% PM is able to forecast the approximate benefit of a project, and can do so efficiently by applying past experience and leveraging comparable benchmarks. They also measure benefit once projects are launched, and factor those learnings into their future prioritization and forecasts.

What are the top 3 things that make a good product manager? ›

Aspiring PMs should consider three primary factors when evaluating a role: core competencies, emotional intelligence (EQ), and company fit. The best PMs I have worked with have mastered the core competencies, have a high EQ, and work for the right company for them.

What sets you apart as a product manager? ›

Product managers need to have prioritization skills and must be able to keep up with changes in their business and in the competitive landscape and stay flexible to ensure products are developed and launched in a timely and efficient manner. A crucial part of this is managing prioritization.

What are the top 3 qualities you think a good manager should and should not have? ›

Let's take a closer look at the top 15 qualities of a good manager.
  • Transparency. Energage research shows employees at Top Workplaces feel well-informed about important company decisions. ...
  • Good Communication. Good managers are great communicators. ...
  • Trust. ...
  • Empathy. ...
  • Decisiveness. ...
  • Vision. ...
  • Accountability. ...
  • Employee development.
Jun 4, 2021

What is your top quality as a product manager? ›

Of course, nobody can have all the skills and qualities mentioned in this article, but you will do well to focus on the key skills mentioned: curiosity, empathy, good communication skills, a strong business and tech focus, and the ability to prioritize.

What is the most important thing a product manager does? ›

The most important thing a product manager does is “communicat[es] a clear vision and strategy. It's the only way to help the team create a product that serves the needs of both its target market and the business.

What is the most important part of product management? ›

The key focus of product management is to create new products or develop an existing one and then present it to the target market. It simply starts with coming up with creative ideas and then executing them to market the perfect product that you envisioned for your business.

What is the most important thing in product management? ›

Every product manager must understand the market, the needs of the customer, the capabilities of the engineering team, and the vision of the leadership. Keeping all these elements in mind, a product manager must chalk out a product strategy and roadmap that is sustainable, feasible, and affordable.

What are 3 main skills every manager needs to be successful? ›

6 Essential Skills for Managers
  • Good communication. Having good communication skills is probably the most important skill of all for managers to have. ...
  • Good Organisation. ...
  • Team Building. ...
  • Leadership. ...
  • Ability to Deal with Changes Effectively. ...
  • Domain Knowledge.

What are 3 characteristics of a high performing product management team? ›

Characteristics of great product managers
  • Product taste. Product taste means having the insights and intuition to understand customer needs for a product in a given area. ...
  • Ability to prioritize. ...
  • Ability to execute. ...
  • Strategic sensibilities. ...
  • Top 10% communication skills. ...
  • Metrics and data-driven approach.

What are the two main things product managers must balance? ›

Team and stakeholders management.

On the other hand, the product manager has to negotiate with stakeholders and balance their demands and expectations.

What makes a good group product manager? ›

Because a GPM manages people, skills like effective communication and clear leadership are key drivers of success in the role. An effective GPM will have an unwavering, bottomless enthusiasm for developing skills and experience in other people. Also, of course, to developing great products.

What five qualities do you think will best help managers succeed in their job? ›

5 Must-Have Qualities of a Good Manager
  • Good managers know how to communicate. ...
  • Good managers know how to listen. ...
  • Good managers lead with confidence. ...
  • Good managers care about and take care of their teams. ...
  • Good managers are authentic. ...
  • 7 Top Strategies for Managing Employee Performance.
Aug 9, 2021

What top three qualities should a successful and professional office manager possess? ›

Here, we discuss the top five qualities to look for when hiring office managers.
  • Optimism. ...
  • Initiative and the Anticipation of Needs. ...
  • Active Interest in the Company's Well-Being. ...
  • Excellent Communication Skills. ...
  • The Ability to Be Accessible and Friendly. ...
  • Ability to adapt & learn.

What are the five key skills needed for a successful manager? ›

7 skills for a successful management career
  • Interpersonal skills.
  • Communication and motivation.
  • Organisation and delegation.
  • Forward planning and strategic thinking.
  • Problem solving and decision-making.
  • Commercial awareness.
  • Mentoring.
  • How do I develop these management skills?

What is the first thing a product manager should do? ›

Understand the Market, the Customers, and the Product. One of the most important first steps for a new product manager is to understand the market. The best way to do so is to get as close to the customer as you can.

What is the most important factor in product? ›

Desirability is probably the most important factor. If people don't need or want to use a product, it will fail. To be desirable, a product has to solve a specific problem or offer a tangible benefit.

What is the most important skill a top manager must have? ›

The most important management skill, the survey found, is the ability to build good relationships with people at all levels. For example, an approach to relationship building described in the book focuses on creating "high-quality connections" through respectful engagement.

What are the most important skills for a top manager? ›

Best skills of a good manager
  1. Communication and interpersonal skills. ...
  2. Listening skills. ...
  3. Relationship building skills. ...
  4. Emotional intelligence. ...
  5. Organization and project management. ...
  6. Strategic thinking. ...
  7. Decision making. ...
  8. Trustworthiness and respect.
Feb 15, 2021

What is the top reason managers fail in their role? ›

Research conducted by CEB shows that 60 percent of new managers fail within the first 24 months of their new position. And according to Steve Smith, the author of Managing for Success: Practical Advice for Managers, the main reason why most new managers fail is because they were never properly trained to manage.

What are the four 4 critical skills of a Product managers? ›

Skills Required to Become a Product Manager
  • Writing Technical Requirements and Specs. Coming up with product optimizations and new product ideas is an integral part of a product manager's role. ...
  • Conducting Market Research. ...
  • Strategic Thinking. ...
  • Excellent Oratory and Communication Skills. ...
  • Excellent Negotiation Skills.
Apr 22, 2022

What are the 4 P's of product management? ›

The four Ps are product, price, place, and promotion. They are an example of a “marketing mix,” or the combined tools and methodologies used by marketers to achieve their marketing objectives.

How do you identify a talented product manager? ›

Offer a case study

Many companies use a case study to see how well a product manager understands the market, can identify opportunities for growth, and how well they gain insight from customers. An A/B test is one easy assessment that enables job applicants to show their skills.

How important are product managers and what are three things they manage? ›

Product managers are responsible for crowdsourcing, developing, and curating ideas that will deliver value to customers. You own the organization's idea management process and determine which ideas should be promoted to your backlog in order to propel the product strategy forward.

What separates you from the rest of the candidates? ›

6 Ways You Can Differentiate Yourself from Other Candidates
  • Demonstrate That You are a Leader. ...
  • Show That You are Capable of Solving Problems. ...
  • Exhibit Strong Work Ethic Skills. ...
  • The Ability to Be Able to Work with a Team. ...
  • Excellent Communication Skills. ...
  • The Bottom Line.

How do you answer what sets you apart from other candidates examples? ›

Examples for answering 'what sets you apart from other candidates? '
  • Example one: highlighting a unique or impressive experience. ...
  • Example two: Explaining a unique talent. ...
  • Example three: Detailing a relevant skill set. ...
  • Example four: Highlighting a special qualification.
Nov 30, 2021

What are the 3 qualities of a good product? ›

What makes a product of high quality?
  • Reliability.
  • Safety.
  • Quality of design.
  • Proper Storage.
  • Quality Conformance.
  • Efficient marketing.
  • Great positioning.
Dec 31, 2021

What are the four 4 critical skills of a product managers? ›

Skills Required to Become a Product Manager
  • Writing Technical Requirements and Specs. Coming up with product optimizations and new product ideas is an integral part of a product manager's role. ...
  • Conducting Market Research. ...
  • Strategic Thinking. ...
  • Excellent Oratory and Communication Skills. ...
  • Excellent Negotiation Skills.
Apr 22, 2022

What makes a product good vs great? ›

Good products must have a solid value proposition and solve a real problem, be understandable by users, perform their task as easily and efficiently as possible, and become better and harder to part with the more they are used.

What are good strengths of a product manager? ›

Some of the top strengths that product managers should possess include strong communication skills, the ability to think strategically, the ability to prioritize and manage multiple tasks effectively, the ability to work well in a team environment, and strong problem-solving skills.

What makes the product successful? ›

For a product to be successful it should solve a user need. Users should get significant value out of the product. Either you could be solving a user need for which a solution already exists but you have a better solution, or you have found a new user need. The value a product delivers can be in different forms.

How do you describe a good quality product? ›

A good product description should give all relevant details, convince the buyer of its benefits, and pack an emotional punch. Emotions influence buyer behavior, so your product description is the perfect place to elicit emotions.

What is your superpower as a product manager? ›

Superpower 1: Intellectual curiosity

Great product managers are incredibly curious. If something isn't working, they are relentless in trying to understand why. They continually ask questions and zero in on the problem like a heat-seeking missile, but they are rarely satisfied with face-value answers.

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