How to Structure Your Consumer Facing Product Team

I’ve been asked a fair amount, how should product management be structured at my organization or startup?

There’s not a perfect answer, but there are some principles.

Guiding Principles

Any good product management structure should have the following characteristics:
  • There’s a singular person (a CPO, VP of Product, CEO, Head of Product) leading the organization responsible for setting direction, vision, customer focus, and metric focus
  • Each of the product owners should have tightly focused areas of interconnected responsibility. In the majority of cases, it’s easiest if each PM has 1 or 2 key metrics that they are focused on.
  • When combined together, moving these metrics advances the company towards the product vision and increases the success of the company. If you move all your metrics up and the right and you aren’t improving as a business, it’s time to pick new metrics
  • It should be obvious and apparent what area each product owner runs, what metrics they are responsible for, and how it impacts the business. If you have a PM working on special projects that don’t advance your startup, it’s time to question the purpose of the role (and you might need to fire the person if they can’t be repurposed)
  • Product organizations are adaptable. As the business evolves, they need to grow and evolve with it, either to tackle new areas of the business or to fix problems in existing areas.

What follows are different examples of how you can think about structuring your product organization.

E-Commerce

Using an E-Commerce company as an example, here’s a funnel that represents the company.
Screen Shot 2015-05-12 at 1.25.11 AM

 

There are a number of key components to this business (and I’m intentionally leaving out fulfillment and shipping for simplicity):

  • Acquisition of new customers through offsite channels like SEM, SEO, social, blogs, and other
  • Getting the user acquainted with the site and trying to get them to register or at least search for or click on a product
  • Helping the user find their first product
  • Getting the user to make a purchase through the cart and checkout experience
  • Bringing a user back through retention and re-engagement tactics
  • Getting a user to become a repeat purchaser

Let’s pretend we are tasked with building the product team for this company. At a most basic level, it might look something like:

  • A PM focusing on bringing new users to the site by focusing on SEO, social, SEM optimization with a key metric of new users brought to site
  • A PM focused on funnel conversion from top to bottom of the funnel. Once a user visits a site for a first time or a repeat time, this product manager is deep in thinking through how to recommend the right products for the person, driving adds to cart, and then endless optimization of the cart and checkout funnel to ensure minimal dropoff along the way.
  • A PM that is focused on retention and re-engagement. They will be focused on optimizing retention channels such as email, push notifications, loyalty programs, offers and offers. Their goal will be to drive users back to site who eventually convert through the funnel. Most of the time, they will be focused on measuring areas like email performance (measured through visits, OR, CTR), Push Performance (measured through push views and app opens from push), effectiveness of loyalty programs, and other areas

This structure provides a clear way for the entire company to understand the structure of the product team, what the different teams are focusing on, where resources are being deployed, and what metrics each team is accountable for.

As this theoretical E-commerce company grows, each of these areas can start to justify individual PMs who focus on retention, growth, new user experience, the homepage, the product pages, or the cart. Amazon, for example, has people focused on incredibly minute details for each part of their experience, to ensure that the proper products are displayed.

P2P Marketplace

A two sided marketplace or P2P marketplace could be very different, with specific teams and PMs focused on both sides of the marketplace and driving up the metrics for buyers and sellers.

 

Oftentimes, the real challenge with a P2P marketplace model is about being able to shift from one side of your market to the other as supply and demand ebbs and flows to make sure that each side can get what they need. If you have an incredibly strong amount of interested buyers coming to your site with no actual supply of product, then you need to adjust the structure and metrics that your product organization is focused on.

Let’s think about Airbnb as a case study (used here as an illustrative example, no one from Airbnb actually was involved in this post). The reason that much of their focus has been on growing the number of hosts (or at least it was for quite a while) is that they have a lot of inbound demand for rooms, but need to grow inventory in both existing and new cities to satisfy that demand.

Therefore, the challenge for their growth is not about bringing in more demand, but instead about how to create the supply side of their market. If you were to take this as a case study for how to structure product management or growth, you’d likely have a variety of PMs and teams focused on metrics like:

  • Organic growth of new hosts (through both marketing channels and viral channels)
  • Getting new hosts successfully through the process of setting up their home for listing on Airbnb (including adding house rules, getting the photographer to your home, and making the listing look successful)
  • Getting a new host through the process of hosting their first guest (finding them a good guest, getting them their payment, setting them up for success)
  • Getting the host to be a repeat host and retaining them and training them to have regular guests (lots of email, push, sending more users their way if they are a good host, getting them to keep their calendar up to date, etc)
As they scale up supply, they can then shift focus back to the demand side to ensure that there’s enough interest in all these new properties they’re bringing online. The focus here can be on:
  • Creation of new guests who want to use Airbnb from offsite channels
  • Getting a guest to find and book their first Airbnb
  • Ensure that the guest has a great experience
  • Getting the guest to come back and re-book with Airbnb for their next trip

How to Organize Your Product Team

So now you’ve identified your business type and metrics, how do you actually organize the team? Here are a couple ideas:

 

Product as it’s own organization

It’s quite common for the product organization to stand on its own. The Head of Product’s role is to set overall vision, strategy, and key metric and focus areas (and in smaller companies, also do the actual day to day work of product management).

 

As the organization grows, that product lead then identifies key areas where they need to scale up their team, either to focus on specific metrics or other key business areas. Each product manager should have a clear focus area and it’s best if they don’t overlap, especially early on.

 

Under this structure, technology, design, and data resources work closely with product, but they all work for separate organizations. Oftentimes, the end result of this is a matrixed organization, where a PM needs to get very good at managing by influence.

 

At many early organizations where the CEO/founder is also the product visionary, there may not be a need initially for a head of product. as many of those responsibilities may fall to the CEO.

 

Product Structured as a Growth Organization

A newer trend is the growth organization, where multiple functions roll up to a General Manager or Product Lead.

 

The head of growth creates growth teams that focus on key parts of the business, with each product person responsible for a specific area with the resources they need reporting into them: marketing, design, engineering, QA (if required), analyst, and anything else needed.

 

This team is singularly focused on a general area or metric and the role of the team is to constantly monitor, move, and improve this metric over time. Lots of companies are increasingly moving to this structure for the flexibility and focus that it provides on specific metrics and growth areas. I like this structure, but it requires top notch talent as the team lead or product manager (not junior or unknowledgeable product people or leaders to run the team).

 

This structure has the added benefit of forcing everyone to be aligned on the goals and metrics for the area. That’s why it requires a strong leader in the role – that person (normally the PM) must be the unifying force for the team to understand the goals of the team, what metrics are important for the team, the organizational structure of the team, and how those metrics are going to be moved.

 

This is by no means an exhaustive breakdown. There are many other questions that come up in the structure of product management as a company grows and evolves. If folks have other ideas for structures, thoughts on what I’ve posted, or anything, please let me know in the comments.

 

Here are some other interesting reads on the same topic:

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