Not just the domain of finance managers
At last year’s Product Camp Melbourne I was asked to deliver the keynote presentation, specifically in relation to financial management for product managers.
In the plethora of product management related posts and discussions around agile, UX, roadmaps and the like, managing product portfolio financials seems to have taken a back seat. Don’t get me wrong, the ability to prioritise, design products using customer led design and get to market quickly and effectively are all critical skills for today’s product manager. But equally, knowing your product financials intimately is something that product managers cannot, and should not, shy away from.
Core to product management is value creation – value to the customer and value to the business. Knowing your product financials is essential in identifying where the opportunity exists to realise benefits and deliver optimal value… at scale, and in knowing what may dilute or detract from that value.
Many product managers struggle with defining their product financials. While an overly complex dashboard only serves to distract, I am also not a proponent of the ‘single, magic number or metric’ that is espoused by some. Instead I am an advocate of a product dashboard which enables the product manager to understand in a snapshot how their portfolio is performing across a range of key measures and then drill down within each measure.
Whatever the case, your product portfolio dashboard needs to reflect the core value drivers of your product proposition:
- Your metrics must be measurable – you need to be able to track them back to business/value driver
- They must align to your product and business objectives
- They must be actionable – i.e. you have to be able to do something about them; to intervene and make an impact
Eric Ries, entrepreneur and author of The Lean Start Up, cautions against the use of ‘vanity metrics’ – portfolio metrics which make you feel good but which are not actionable. Ries advocates a per-customer, per-segment focus to drive actionable insight. The ability to action and do something in response is key.
Financial management skills are also key to a product manager’s ability to influence and engage key stakeholders across the business. A strong understanding of portfolio financials enables you to build trust and confidence in your product strategy – it buy’s stakeholder capital and credibility.
It’s encouraging to see product management training increasingly including a focus on financial management. As a product manager, you have to be financially literate.
Product financials are not something to fear or avoid. ‘Lean in’ to them; own and manage them; use them to take control and grow and lead your portfolio.
You can access a copy of my keynote presentation here.