Product Management and Product Marketing Management | What It’s History Teaches

Why should we learn about the history of product management and marketing and what you can learn from Procter and Gamble, Hewlett-Packard, and Apple?

As Winston Churchill once said, “those that fail to learn from history are doomed to repeat it”.

(What follows is a transcript of Video of presentation on the subject to the Silicon Valley Product Management Association in 2010)

Hi, my name is David Fradin and I have been a product manager or have worked at more senior roles for over the past four decades. I was there at Hewlett-Packard handling David Packard’s personal public relations and learning about the HP Way’s set of values that guided all decision making at HP before moving into Product Management.   I was hired by Dave Kirby, who edited Mr. Packard’s book entitled the “HP Way”.

I was classically trained as a product manager at HP although, like others, my title was Product Marketing Manager.  Fred Gibbons, who is now a Stanford University professor, trained me in the basics of product management via a series of videotapes he recorded at HP’s video studios.

Over the years, thousands of trained HP product managers moved on to form thousands of companies thus spreading the way product management is done world-wide.

Apple recruited me because I was a trained HP product manager. Apple understood the importance of product management right from the beginning.

So much so the first vice president of product management at Apple was Steve Jobs. After being the first product manager for the first hard disk drive, the 5 MB Profile for a personal computer, I then become the group product manager for the Apple /// product line representing about one-sixth of the companies revenues at the time.

After Apple got the market segmentation wrong, that is they didn’t understand that the Small Office, Home Office (SOHO), and Small and Medium Business (SMB) marketplaces existed, I was recommended and asked to take the Apple /// product line off as a separate independent business unit.

I became what many say product management is… the CEO of the product.  I asked for and got the authority I needed for the product line which was commensurate with being held responsible for the product line. Which, by the way, was the authority that the original “Brand Managers” had at Procter and Gamble before it evolved into product management in Silicon Valley.  Coincidentally, that put me at the same management level as Steve Jobs at Apple. I was the Business Unit Manager of the Apple /// responsible for the CPU and about 500 other products.  He was the general manager of the Macintosh that had not yet been released.

This is a quick overview of the history of product management and product marketing from Procter and Gamble to HP and onto Apple. I discovered this when I was writing “Building Insanely Great Products” I was uniquely there as the product management field has developed from HP to Apple.

Modern-day product management started in 1931 at Procter and Gamble with the head of Brand management Neil McElroy and with his memo on brand management.  A brand manager is the same as a combination of what we call the product manager and product marketing manager today.

Pragmatic Learning who was formed in the late 1990s to teach engineering the subject of marketing calls it inbound for the product manager and outbound for the product marketing manager. But their teachings tend to focus on the marketing side with the little emphasis on the 32 parts of the product market strategy.

Neil later went on to become president of Procter and Gamble and ever since then every single president of Procter and Gamble has been a brand manager, the mini CEO of the product.

He later went on to become president of Harvard and the Secretary of Defense under President Eisenhower from 1958 to 1960.  Additionally, my research shows, he was a Stanford University advisor and that’s where he met and influenced David Packard and Bill Hewlett. That is where Dave and Bill were going to school and were influenced and encouraged to start companies by the electrical engineering professor and father of Silicon Valley Fred Terman.

In recent history, the duties of the product manager had been split into two parts. And it is given, in many cases, to two different people. One is called the product manager and the other is called the product marketing manager. Sometimes they’re called business analysts, especially in Information technology or IT departments. But it all started with brand management from Neil McElroy.

This is McElroy’s memo.   The areas of responsibility that he talked about that have today evolved into what we now call product marketing manager says “they are responsible for the product’s name, that it needs to be easy to pronounce, remember, recognize and know plus translated to other languages easily. They are responsible for pricing, sales, promotion, packaging, and advertising”.

“They are responsible for coordination with sales and for the execution of the marketing plan which is essentially a promotion plan. They analyze the sales, develop marketing plans and monitor sales using appropriate research methods with a team of market researchers and assistants”. We notice that today’s product managers and product marketing managers have to oftentimes go to others for market research and assistance. McElroy put them at the disposal of the brand manager.

Spice Catalyst recommends that management do the same today. In fact, if you want to get the authority here is a generic presentation you can modify to “Ask for the Authority”.

The product marketing manager would also be responsible to be tactical and reactive including observing what the competition is doing, what’s going on in the sales channel and the margin trends.

The areas that McElroy talked about in his brand managers memo which is currently being done by product managers and if there is no product manager this is frequently done by the president and/or by the founders of the company or the startup… is to “distinguish the product’s position relative to the competition, focus on the product versus a business function and does his work not driven by the sales force requests for features of the product but what matches to the customers’ needs and wants and is then marketed to the sales force”.

It should be noted that in the last decade or so there has been a trend towards getting close to the customer or become “customer-centric”. So a lot of companies have set up “customer advisory panels” or have focused on what their salespeople say their customer’s want.

The problem with this approach, as I point out in  “Building Insanely Great Products.” is people don’t know what they want. And salespeople, since they follow Ohms law of taking the path of least resistance, may send the product roadmap off in the wrong direction.  Especially if the product manager does not have any data to support or not support the requested “wants”.

In research for my book, I found that Neil discussed management many times with Fred Tierman the Stanford professor and the man who is considered the father of Silicon Valley and he was also the mentor for the six founders of Hewlett-Packard including of course Bill Hewlett and David Packard.

The philosophy of moving decision making to be as close to the customer as possible resulted in HP growing 20% a year for 50 years until 1998 without a loss. Whenever a division got larger than 500 people, HP would split the division up so they can stay close to the customer.

Modern-day HP’s problems began when they decided to reverse the decentralization that Bill and Dave insisted on, ignore HP’s founding values and took decision-making away from being as close to the customer as possible. So, with the concept of the product manager being the voice of the customer worked, for 50 years.

After Steve Jobs left Apple in 1985, I have found indications in the history that Dave Packard might have spent some time mentoring Steve Jobs.

The key learning that Jobs had that it takes more than to make just insanely great products, as he would say, but one had to build an insanely great company and at the focus, the company needs to be on the total customer experience that one has to manage by customer value not other things or KPIs (Key Performance Indicators).  HP struggled with cross-divisional products, David Packard said in the HP Way book, in part because of the conflicting priorities between divisions.

Steve Jobs fixed that at Apple by having, as Tim Cook recently said, just one profit center…the entire company.

So the field of product management developed over the years as management philosophy expanded from a top-down management approach garnered from the military and the railroads to matrix-like management pioneered by General Electric in the 1930s. The concept of management by objectives or MBO then evolved to which is the basis for many of today’s product manager’s day-to-day works.

The chairman of General Motors Alfred Sloan codified today’s accounting principles which lists inventory as an asset and people as a liability. He developed this field of accounting as society evolved from an agricultural to industrial society.  We still use it today even though we are now in the information age where people are assets and inventory is a liability.

HP didn’t strongly believe the standard accounting methods as a means of strategic management of the company. How do I know?  I was there and the history books show how they help pioneer the field of lean just in time manufacturing and helped teach the Japanese how to do it. Some of the same concepts of lean have evolved into agile product development.

When a downturn occurred, HP knew that their people were the most important asset, not a liability as Sloan’s accounting methods say and on occasion employees volunteered to work less so that all could work.

The result: when the recession ended the company wouldn’t have to go to the expensive cost of finding and training new people. HP also doubled down and invested more during a recession doing product research and development. The same thing Steve Jobs was quoted as saying in 2008 doing at Apple. Hence are seeing the results of that strategy with Apple now becoming the most valuable company in the world.

Meanwhile Wall Street, which has been trained in the post-agricultural economics of accounting, continues to judge companies by their profitability, which includes doing layoffs at the time of economic hardship. This short-term focus by Wall Street exasperates the product manager’s job and reduces the time available to truly learn about customer wants and needs and forces decision-making around profitability to customer satisfaction expense.  The only way to get around this is to become totally agile or fail.  Another thing to do is to NOT manage on the basis of profits alone as has been advocated by Ayn Rand.

There are many examples of using just profits as the KPI for performance but one that stands out recently where Pacific Gas and Electric (“Building Insanely Great Products”) mmaximized profits at the expense of safety. Its estimated that 17 of the last 28 wildfires in their service territory was caused by their power lines.  As of this writing in January 2018 PG&E is filling for bankruptcy since the damages their fires have caused has resulted in the loss of many lives, homes, buildings and cost $30 Billion.

HP product managers by the 1980s had two products in their individual portfolio.  One product would be at the beginning of its life cycle and one just before launch.  In the 1990s these two jobs split into two different positions:  Product manager and product marketing manager.

At first, product managers were in the engineering department and then many moved to marketing.  That’s where I was.  Today companies like Apple, Facebook and others have a VP of Product Management with all product managers reporting up the line to them.  The VP of product management is at the same level as the engineering, manufacturing, HR, and finance managers thus elevating their influence.  That is the way it should be.

Today some product managers and product marketing managers go beyond what Proctor and Gamble first designed and take on the additional role of project management and user interface design and other things like pre-sales support, etc.  As a result, many struggle trying to getting the voice of the customer programs going, market research,  competitive research done and the other 30 plus components of a good product market strategy.

An advancement in the field that has occurred recently is that it is now possible to teach many aspects of the job and obtain certification as opposed to in the past of picking up the skills and competencies as one works the job.  While the tension still exists between sales, engineering, marketing and manufacturing and product management and product marketing, the speed of gathering information about how well a product is doing in the marketplace is accelerating.  Yet few Enterprise Resource Planning systems designed for financial controls are giving the Product Manager and Product Marketing Manager the data they need to do their job.

It takes a team to build insanely great products and the one member of the team still responsible for knowing the customer is the Product Manager and Product Marketing Manager.  Yet there are many startups, typically founded by engineers who have none.  It makes you wonder what will happen to the company as it grows and the founders, the products first Product Manager and Product Marketing Managers, become all consumed in facilities, human resources, IPO, finances, investor relations, sales, support, partnerships…who will be focused on the customer?  I advocate that by the time the startup has 30 employees they should have someone focused on the customer…the product manager.

David Fradin, Principal, Spice Catalyst

dave(at)spicecatalyst.com