The Growth of Product Management in Enterprise Companies

In Japan, a movement is emerging, centered around the concept of Digital Transformation (DX). Significant transformation of the basic operations, processes, and value delivery methods of organizations and businesses are being developed in various places through the use of digital technology. In addition to internal processes, this trend is now being applied to existing products and services, and is beginning to bring about qualitative changes. One of the offshoots of this trend is the shift away from outsourcing development and toward in-house production.

In this article, we focus on enterprise companies and summarize product management as a starting point for promoting DX.

Necessity of Product Management

In a rapidly changing environment, user issues and needs change gradually. In this era, products and services must continue to change their form from moment to moment in order to accurately grasp these changes, as well as their missions and visions. Furthermore, in the technology that supports products and services, various technological innovations are sweeping the market, centered on Generative AI, and the speed of solution innovation is accelerating day by day.

In this environment, even well-established enterprise companies need to continuously strive to maintain and increase their market share. Product management is a central concept that supports these efforts.

It is the opposite of project management, which has been the mainstay of business operations, in terms of goal setting and delivery. In project management, goals are clearly set, resources and timeframes are designed to achieve them in the shortest possible time, and various adjustments are made to achieve the goals and complete the project. On the other hand, in product management, the issues and needs of users and the solutions to be provided are in flux. Therefore, the goal itself is constantly reviewed and defined, and the goal is brought as close to the goal as possible with the given resources.

In the past, project planning and execution were differentiating factors in situations where goals were relatively easy to set. Nowadays, however, it is important to have a mindset that can constantly review and define the goal, and to have the agility to utilize limited resources to promote the optimal solution for a fluid goal at all times.

Enterprise Challenges in Product Management

Enterprise companies face three main challenges when implementing product management. They are: increasing agility, creating a full-stack workforce, and problem-based product design.

1. Creating Full-Stack Talent

In order to rise to the level of an enterprise company, it is necessary to divide the business, subdivide roles, reduce the difficulty of hiring, and create a training environment. In this process, it is more efficient to have the same roles as much as possible in terms of learning, which leads to silos compared to startups.

Under these circumstances, it is more difficult to start up a business as a product manager who is responsible for the success of the product, a position that requires a relatively broad range of performance without focusing on the domain of the business. The first step is to train and hire people with full-stack skill sets, especially those who can drive new business.

2. Problem-based product design

Next, enterprise companies have a strong core business, and as a matter of course, are often collaborating with peripheral players, sometimes even being recognized across industries. Therefore, when they try to launch a new business, they tend to focus on product-out solutions to generate sales with a go-to-market strategy, instead of focusing on user issues and needs.

Of course, cross-industry recognition and a track record of working with peripheral players are valuable assets. From the startup community's point of view, all of these assets are highly desirable. However, because of this strength, discussions tend to focus more on go-to-market strategies and less on questions such as what users are having problems with and how to solve them. Before asking consultants or research firms to conduct market research, it is necessary to interview 100 companies by yourself, for example, to get the information into your mind as primary information.

3. Improve agility

Finally, it is important to improve agility. As mentioned in the previous chapter, "Necessity of Product Management," user issues, needs, and the technologies that make up solutions are changing very gradually. Therefore, it has become very difficult to provide products and services based on the assumption that these three factors will remain unchanged. Therefore, it is important to understand that things will change, and to bring them as close as possible to the goals that we consider ideal at that moment with the resources we have at the moment. In other words, we need to increase our flexibility for change.

Strategies for Implementing Product Management in the Enterprise

Enterprise companies typically have large organizational structures, robust governance, and well-established operational processes. Therefore, while one approach may be to gradually start a movement from the field, the key driver is for the top management to correctly recognize the situation and begin to drive the implementation of product management. The top management here does not refer only to the management team, but also to those who are responsible for some business, such as business managers and those who launch new businesses, and who have authority over certain budgets and resource allocation.

I think it would be good for them to expand operations to incorporate the essence of product management, for example, by formatting PRDs and development roadmaps, and building a process to design solutions based on solid thinking from the user's issues and needs. Operational excellence in enterprise companies is a great advantage in learning and implementing new concepts.

Finally, introducing a new concept to a core business that has been built up until now may raise various concerns and anxieties. However, it is not necessary to introduce the concept company-wide, but rather to start with new businesses that are easy to introduce, and then introduce the concept company-wide after getting a good feel for it. In the startup world, the CPO class is hired first, and then the product and organization are built, but enterprise companies have their own way of proceeding, so there is no need to take the same approach.

Adobe's move to SaaS

As confirmed in the article "The Core Principles of XaaS: Insights from Adobe's Cloud Strategy", Adobe has successfully shifted from selling traditional packaged software to the cloud in about two years.

The five key points of Adobe's shift to the cloud are as follows

• Viewing the shift to XaaS as a top-tier business transformation and firmly promoting it as a project directly under management
• Unlike a packaged solution, we built a system that allows us to continue to catch up on issues and identified needs by building ongoing relationships with users.
• Introduce agile development to provide cloud services, not only for technical issues such as security, availability, DR, etc., but also to keep evolving the product to achieve user value.
• Build business operations in line with subscriptions.
• Finally, by moving to the cloud, we will assess risk from a financial perspective and communicate this risk both internally and externally.

As you can see, Adobe's shift to cloud computing also shows that the company has faced the hurdles that enterprise companies face when introducing product management, such as issue-based product design (building continuous relationship values with users) and improving agility, and has implemented them. We can also confirm that Adobe, perhaps due to its large organization, is also changing its product management strategy in a top-down fashion all at once, just as enterprise companies do.

Future Prospects for Product Management in the Enterprise

In the US and other countries with advanced software industries, product management has become widely adopted across various sectors, similar to Adobe's experience. The participants were not from software companies, but from other industries such as securities, consulting, etc. At that time, product management was treated like a general education in the US, just as logical thinking was democratized in Japan.

I believe that we will probably see a similar situation in Japan in the near future. Recently, when I go to events and conferences related to product management, I feel that people from companies that did not participate at all five years ago are now coming to these events and conferences. When I exchange business cards, I see firsthand that there are already departments related to product management and that the number of people who call themselves product managers is gradually increasing.

Until now, it seems that the startup community has often entered existing industries and used technology to bring about innovation. However, I think that now they are beginning to understand and implement product management in enterprise companies and are starting to build a foundation to bury innovation. Going one step further, I think this will put pressure on startups, and a good rivalry will be built as we both hone our strengths.

Conclusion

Beyond the term DX, enterprises are also starting to address user issues and needs. I believe this is the edge of product management. As enterprise companies begin to understand and penetrate product management in the future, it has the potential to change its formation in a flash. Product management, which has been the exclusive domain of the startup world, is changing its form, and this may be the turning point when it widely permeates the software business.