Product Management Organization Structure ★ top

How does the optimal product management organization structure in the company look like and why?

Before we answer the question, something fundamental is needed for a common understanding. Jeff Bezos, CEO of Amazon Inc. once said:

„If we have a good quarter, it's because of the work we've done three, four and five years earlier. It's not because we did a good job this quarter.“

Which department in the company is measured when we measure the work of the last quarter?

If you have now thought about sales, then confirm your and our experience from practice.

Which department in Jeff Bezos' quote did the work three, four, five years ago to make you successful today?

Was your thought product management? Then we agree with you.

The work and actions of the sales department are therefore rather short-term in nature. Product management as an organization, on the other hand, normally works on a long-term basis, as it is occupied with the analysis of the market and the resulting strategic planning of the next three, four, five years. After planning, product management is busy implementing this planning. In the end, product management makes its results available to sales as support.

This scenario shows how sales and product management work in opposite directions and in which order.

Let's get back to the initial question: "Where should product management be placed on the chart and why?"

Answer the following questions about the product management organization structure:

  1. What happens if product management as an organization is located in sales?
  2. What happens if product management is hung up in the organization chart during technology or development?
  3. What is the result if product management is located in marketing?

In our Product Management courses for learning about organization structure we work out the answers together with the participants. The following result has emerged over the years.

Product Management Organization - Advantages and Drawbacks of assignment to different departments

Advantages Drawbacks
  • Good customer contact
  • Sales arguments known
  • Market (and product) knowledge
  • Often shared role with focus on selling instead of strategy
  • Less strategically planned, more actionistic
  • Many single customer solutions
  • Large product portfolio
  • Focus on existing customers
  • Focus on market launch date and less on strategy
  • Many ideas
  • High and deep technical product knowledge
  • No customer contact
  • When customer contact occurs, the customer is immediately advised on site and a solution is developed, rather than listened to in order to take up problems
  • Products are developed out of technology
  • Without market facts
  • Very technical communication
  • Product specification instead of problem, solution and product description
  • Often more individual solutions
  • Direct customer feedback
  • Customer loyalty
  • Focus on communication
  • No customer proximity
  • Little listening
  • Simple arguments are communicated first, instead of solved problems
  • No technical understanding
  • Low product knowledge
  • Focus on market launch dates, marketing actions, instead of controlling the product
  • Backing
  • Acceptance in the company
  • Neutrality and 360° view of product, customers, market, finances
  • Product management has its own budget like other departments too
  • Neutrality towards all other departments
  • Possibly no acceptance of teamwork by other departments

Product management in organization structure

As you can see from the table above, the advantages and disadvantages are clear. A recommendation that arises:

Product management is optimally „hung“, directly on the company management in the organization chart and in the organizational structure, just like any other department.

Product Management organization structure

Product management is a central function in a company, from which almost every department needs something. Product management can deliver a lot, must deliver a lot if the product is to be successful.

Product management can take the company to the next level and act as a boost.

To do that, it is necessary that:

  1. The product managers know what they have to do in order to manufacture market-driven products
  2. Product managers master the necessary tools
  3. A budget is available as for any other department also that is used for:
    1. Travel to customers, conferences, trade fairs
    2. Special tools such as software, templates, etc.
    3. Education
  4. The tasks within product management are defined and, if necessary, divided up as follows
  5. Product managers are directly attached to the management, just like any other department!

This article is an excerpt from our Book Strategic Product Management,  which you can download free of charge and which is the textbook for our Course Strategic Product Management

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About the author

Frank Lemser is a trainer and founder of proProduktmanagement. He has been a market-driven evangelist since the beginning of the 2000s and since then has also been methodically involved with product management. He has developed the Open Product Management Workflow™, numerous tools for product managers, written and published books free of charge and was involved in the development of the Product Management Dashboard for JIRA. His personal goal is to solve many everyday and work problems for product managers, to professionalize and simplify the work for product managers.

Trainer and author of product management organization structure
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