As digital tightens its grip on business models, new ways of working and organisational practices are migrating from the tech world into the wider business community as it undergoes the often fraught process of digital transformation. Enter the chief product officer, the executive charged with making sure it all runs smoothly.
Answering to the CEO, the CPO typically has a broad purview at the intersection of tech, user and business requirements.
A key characteristic of the role is the ability to transcend organisational silos: to speak the language of designers, engineers, marketing and user research in order to see a product through from conception to development and finally distribution.
Product management is a broad and ever-evolving discipline that ultimately needs a leader to pick the right thing to build and bring it to market. It also requires understanding engineering, identifying and advocating for customer needs, and the business aptitude to tap into lucrative markets.
“CPOs tend to have a pretty varied background. It’s more of a business all-rounder with a very, very strong product sensibility,” Jeetu Patel, CPO of Box, tells Which-50.
NYSE-listed Box has a market capitalisation of $US3.4 billion and is a leader in the world of cloud content management and file sharing. Its software is a critical piece of workplace collaboration infrastructure to thousands of companies around the world.
Patel argues great technology companies are “obsessed by product” – that is, creating digital products that better align with customer needs is central to their business models.
“The CPO-CEO tend to be tight partners. [Box CEO] Aaron Levie and I spend 15 – 20 hours a week in different meetings together because we are driving a lot of collaboration between how are we building the product, how it is actually going to be distributed and going to market.”
At technology companies like Box, the role of the CPO is a mature one, but it is also being embraced by companies that are going through a digital transformation.
“Over time every company will become more and more of a digital company and what is starting to happen is, the business model and the way that a tech company operates is starting to seep into a lot of different industries,” Patel says.
Patel said CPOs are emerging in industries that are delivering value through digital products such as financial services.
“You don’t see as much of a chief product officer role in very, very traditional business that have not decided to transform digitally,” he said.
The CPO is becoming more commonplace in Australian organisations, says Bridget Gray, the Managing Director of executive recruiter Harvey Nash, which places c-suite executives into Australia’s leading companies.
“There is an increasing demand for highly product literate executives, with product itself, now carving out its own seat in the c-suite,” Gray told Which-50.
“The creation of this mandate is primarily to ensure optimal customer experience and product journeys, but equally to look globally at the competition, to research what global market leaders are doing well, analyse market trends, distil down their customers behaviour in order to delight them, and ultimately build that into the overall business strategy.”
Craig Bartholomew, CPO of prepaid mobile recharge app Topme explains, “Just like most other exec roles it’s to provide a vertical — or expert approach — to a key component of the business which used to be owned by multiple areas of the organisation.”
That in turn, that frees up “the other members of the executive team to focus on their key deliverables.”
To better understand the role, Which-50 spoke to several chief product officers many of whom are the first to hold the title and are pivotal in their business’s transformation projects.
Take Fairfax as an example. Jess Ross joined the media group in 2016 as its first chief product officer, she is responsible for delivery high value digital products, in other words, ones that consumers will pay for in a world of where news is freely available online.
While the media industry has always had products like newspapers, radio shows or evening television bulletins, the move to online media means product management principles have found a home in newsrooms.
“While the heart of our business will always be quality journalism, the digital service we wrap around that to deliver the news to customers is of enormous importance to the future of our business,” Ross told Which-50.
“The quality of the customer experience delivered by that service determines whether and how much people will pay for it. There are no known models in the publishing world for funding large scale newsrooms with consumer revenue alone, so we need to be prepared to experiment and above all invest in the continuous delivery of product improvement.”
At Fairfax, the product team sits side-by-side with the technology team, but it’s also marks the intersection of the traditional business functions: editorial, advertising sales, subscriptions, and operations.
“Without product, there is no one to arbitrate those different demands and constraints. On the other hand, a strong product function provides a living dynamic blueprint for the co-ordination of business outputs and their ultimate expression in the end-to-end customer experience.”
“We used to say that software is eating the world. For many businesses, software now is the world. That’s where the competitive advantage is,” Ross said.
Even digital natives, such as Luxury Escapes, part of Australian ecommerce company Lux Group have found itself needing to create a CPO role.
“Generally, the product management team focuses on what we build and why we build it, while the engineering team focuses on how we are going to build it,” Shay Hamama, CPO of Luxury Escapes, told Which-50.
“Obviously, there is much collaboration and synergy between these teams, but this method is proven to be successful, especially in software development organisations.”
When Hamama joined the online travel company in 2016 as the chief product officer, the business had a long list of product ideas to “designed to maintain the business’ massive year-on-year growth.”
However the company kept running into the same problem, its underlying platform wasn’t agile enough to a accommodate new features at a reasonable cost and pace.
“We saw our potential slipping away as we could not react to the fast changes in the competitive landscape, and we were unable to deliver innovation at the needed pace,” Hamama.
The decision was made to undertake a “digital re-transformation” of the business and launching a new platform sits at the core of all internal processes which they had built from scratch.
Hamama’s product management team developed a product roadmap, executed it, completed in December 2017.
“In order to achieve this goal, we’ve created three cross-functional delivery squads, each includes a product manager, software engineers and a UX/UI designer (where applicable). Each squad focused on one type of user (i.e. end customers, vendors etc.), delivering the most suitable features in the most efficient way possible.”
“After 10 months of work, we delivered the first part of our transformation roadmap: a new platform to our customers, vendors, and internal users. It was a fantastic experience. Our goal was to break the barrier of 25 per cent growth year-on-year, and five weeks later – we did.”
James Craig was the was a technical co-founder of an ad tech company which was acquired by ASX-listed AdSlot.
“Post acquisition I moved into a solutions specialist role working closely with clients to define requirements and scope projects for custom software solutions. Seeing the amount of effort going into bespoke development the business identified the need to move to a SaaS model,” Craig said.
“I transitioned into a head of product role, established the teams and process to assist in transforming the business from enterprise development to product focus. It was a great fit for for what I wanted to do and what I could contribute to the company.”
Craig says that via acquisitions and organic team growth meant AdSlot’s product and development function expanded quickly. The CPO role was established for three reasons.
Firstly to provide executive representation for product and influence in the company and product strategy, he said.
Next to build out and manage multi-disciplinary teams across Product, UX and development.
“And finally to provide a way to constantly improve our market leading products with a strong customer-lead focus.”
Marc Englaro, joined Taggle in October 2016, as the newly created role of CPO. The company designs and manufactures wireless sensor technology, provides a wireless communication network, and data processing, software and analytics for water utilities as well as in the agtech and smart cities space.
“This was a new role when I joined Taggle, and it was primarily to help shift the business from a hardware focus to one that more encompassed software, data and analytics. But the role has evolved to encompass product and market strategy for all of the business,” Englaro told Which-50.
“My role is to work with the MD, our customers and partners, and our sales and marketing teams to understand how our existing products are solving business problems, and identify opportunities to do more. Understanding customer demand helps define our future product roadmap, and I then work with our internal R&D, engineering, IT, operations and software development teams to make this a reality.”
Like many of the CPOs Which-50 spoke to, Englaro has a varied background including co-founder and CEO of two different technology businesses and a VP of international sales role.
“I think the common element between these roles has been acting as the interface between customers and their wants and needs, and the company’s teams that work to deliver,” he said.
In his view, the role of the CPO is to ensure that the company is developing products and services that meet the demands of the current and future customer markets. That requires the ability to communicate with many different types of people, and develop a shared vision of what the customers need and why.
For Englaro, it is important not to fill the role with a product-centric person whose tendency is to focus on product at the expense of customers.
“The industry is littered with failed businesses who built the best product that no-one wanted to buy.”
Box’s Patel, meanwhile argues that being product-centric and customer-centric aren’t mutually exclusive, and product leaders are tasked with “solving very real problems for the customer”.
Picking which problems to solve – the ones so painful users will pay to make them go away – is at the core of the CPO’s role.
“The most important part of a product person’s job is to make sure that you pick the right problems to solve,” Patel says. “The solutions will keep changing as the technologies keep changing, but you have to make sure that you are picking the problems that are meaningful problems that people feel they have an issue with and that they are willing to pay money for.”
“If you pick the wrong problems, even with a really great solution, those don’t end up becoming successful companies.”
Once they’ve picked the right problem, CPOs build a product that achieves a level of “product-market fit,” something a large number of people in a certain market want. The third step is to find a repeatable way to sell that product at scale, so each customer doesn’t require a bespoke solution. Only then do you ramp up the sales activity, Patel said.
“Don’t go and focus on growth until you’ve got the first few things solved,” Patel said.
So, how do you find someone with good products instincts, empathy for the customer, business savvy, technical understanding, the ability to motivate cross functional teams and tell a cohesive story?
At Fairfax the company is building those skill internally.
“Product is a relatively new business discipline and we don’t have a great depth of experience to draw on in the Australian market so we are focused on growing skills of our team internally using mentoring, training etc. We also give people time to work on their passion projects during regular hack days,” says Fairfax’s Jess Ross.
According to Gray from Harvey Nash, the market “is competitive for executives who are passionate about driving best in breed product experience, be that their specific product offering, or the platform that delivers their services.”
“We are most excited by executives that can articulate product success into commercial outcomes, and achieving organisational strategic objectives.”
According to Gray, there are two common CPO profiles: one is a commercial/marketing executive, who is technically astute and actively keeps current on the latest emerging technologies; and the other profile we see is a highly skilled engineering leader, who operates with a sharp commercial lens, and speaks in business language.
“Both of these profiles are in high demand, as long as they have that balance of skills, it is interesting to note that businesses who are deeply reliant on the ability to scale their platform and enhance feature sets quickly, more often than not combine chief engineering and product functions together,” Gray said.
On the other side of the recruitment process are the CPO candidates, who may find themselves stepping into newly created roles which require them to work across the entire business. We asked CPO what makes a great job and what to watch out for.
For Patel, the key issue is to determine if a company is product-centric or sales-driven.
According to Patel, there are two philosophies in product: one to constantly keep innovating, and keep capturing larger markets by making sure the footprint of the product solves larger and larger problems. The second approach is milking the cash cow. That is, develop a product, not invest in it but keep investing in sales people so introduce it to a broader base of customers.
“I personally would never want to go work for a company where all they are looking for is efficiency from the product function, because at some point in time what that ends up telling you is the very core values that you aligned with the product,” Patel said. “A product person is there to scale and innovate and that requires capital.”
One way to determine how much cash a company is putting behind product development, and therefore into the hands of the CPO, is the percentage of revenue allocated to R&D. If that number keeps getting shrinking, so too could your job satisfaction.
“When you start seeing your R&D percentage as part of the income statement being a declining percentage of revenue, year over year over year, and they are constantly trying to squeeze every dollar from that, then you know that might be a red flag. Companies that don’t innovate eventually just die.”
Similarly, Jess Ross from Fairfax says “preparedness to invest in product over the long term is a must.”
“Most businesses capitalise these kinds of expenses but when the investment level is being decided on a quarterly basis that is a red flag,” she says.
“Ultimately to create great products you really do need to believe in the vision for them. So having good rapport with chief executive or leadership team and opportunities to discuss the future direction of the business is super important.”
Craig Bartholomew, CPO of TopMe, says CPO shouldn’t be confused as a role which only coordinates product managers, at the expense of broader strategic input.
“It really bothers me when organisations feel that a CPO role should just manage the product managers in the business – that’s old school thinking and delivers a way below par outcome,” Bartholomew said.
“At a minimum, a CPO should have BD’s, UX, Design, and Product Managers, ideally in a squad-based approach to development and operations should be brought in for certain projects.”
Conversely, companies with big, meaningful problems to solve make attractive employers.
“Real challenges. And a real opportunity to make an impact,” says Shay Hamama.
“Product management is such a wide domain that it can involve many things. For me, I would say that a real challenge is a must, an opportunity to improve practices and deliver the best possible product to all ends is essential.”