When Is It Time to Professionalize This Function? And What Does It Mean for a CMO Job Seeker?
SaaS CMO candidates should ask about product management for insight into the management style at a potential employer and to gauge its future prospects.
As B2B marketers, we like to measure things. But some things defy measurement in the standard sense. And a couple of these things are organizational maturity and CEO leadership style. As a prospective employee at a SaaS firm, these two things are really important. You can learn a lot about what it will be like to work at a firm from how it’s built.
My observations on this topic also have impact on organizational effectiveness. Founders of SaaS firms are often visionaries in a business discipline and have unique insight that spurs the creation of the new company and its initial growth. But at some point, this advantage gets outrun by the success of the company and the founder’s distance from his or her “experience of origin.” But sussing this out is hard to do.
Just before the pandemic set in, I attended a networking event in NYC that featured a panel discussion on product management in FinTech. There were four panelists: Two founders and two professional product managers spoke about how they were guiding their companies’ feature / function development. It was the first time I had a chance to witness this topic being discussed from two such completely different points-of-view: It was the founder-visionary vs. the SME-technocrat. And a light bulb moment ensued… early stage companies need the founder’s vision and relentless drive to “bend reality,” while a more stable, successful and growth-oriented firm needs a professional product management function to build the product that will appeal to a widening prospect universe (I suggest the now-classic tech marketing book, “Crossing the Chasm” and its model of the Technology Adoption Lifecycle for a great deep dive on this if you haven’t read it already).
Skeptical and critical readers might ask, “What about Steve Jobs and Apple? Didn’t Jobs drive product development even as Apple became dominant?” And the answer is that yes, Jobs did set the vision, but he had legions of design and product management professionals to make his vision a reality. This also holds true for SaaS firms, and I’ve seen it in motion up close and personal.
As cloud delivery of software first got traction, most software companies were still selling premise based, client-server systems. Midsized software companies faced a risky proposition investing in what was to them substantial sums on an as-yet unproven distribution mechanism. Glen Manchester, CEO of our client Thunderhead, bet the future of the company on cloud and insisted that his team switch focus completely to this new way to deliver software. But once he set the direction, he left it (mostly) to his marketing and technical teams to determine what the new product would look like, relying on the intimate knowledge of his professional staff into customer requirements and the software’s core capabilities to chart the detailed course to cloud delivery.
In hindsight, Manchester looks pretty smart for the call he made when cloud was still in the early stages of adoption. But that’s the job of the founder-visionary: To see where the future might be and make the difficult bets that need to be made to get the next leg of growth.
But what happens when the founder-visionary is no longer at the company he or she created? And what if the now-CEO is a better manager than visionary? In the ideal circumstance, there’s a CTO who understands the market as well as the tech to help elaborate a vision for the product and company (assuming a single/simple product line). The CTO would possibly have been at the company since early days and could share the experience and insights that sparked the initial growth (having worked at a competitor can be workable, too). This person effectively stands-in for the founder-visionary from this point forward.
In a situation where the original team is no longer present, you need really talented product management leadership. This person or team are true subject matter experts in the business and have the skills, mandate and resources to help management prioritize the product development roadmap. This organization should sit in the marketing department and report to the CMO (maybe that will be you). Marketing would then have the lead in what the product-market fit looks like (vs co-pilot when a founder is still on the scene). Having responsibility for product along with pricing and opportunity development gives Marketing a lot of responsibility for success and enriches the CMO position and potential for compensation accordingly.
So, what’s the best scenario for an incoming CMO? Like in many things, it depends.
If the founder is present and he or she remains highly involved and effective at product management, this focus could be limiting the company’s growth. This CEO might be too involved in marketing, and I’d seek more insight into this issue (you want the CEO to fund marketing but not have fun with marketing). If the firm is relatively early stage this isn’t as big a concern. But if the firm has $15-20 million or more in revenue and the CEO/founder is leading product on a day-to-day basis, I’d be worried about other more important functions being underserved. On the other hand, if the founder sees his or her role as more of a navigator or co-pilot, this scenario could play out well for all concerned. Tapping the inspiration and insights of the founder(s) while being empowered to run product marketing with their approval is perhaps the ideal case when the founding team is present.
If the original tech lead remains without his or her co-founder, the incoming CMO could have a great partner in continuing and expanding a vision for the future of the company. This obviously depends on the chemistry between you two and the motivation the CTO has to continue in the post. But assuming all is healthy in that regard, the CTO can help you to incorporate the essence of the original vision with new insights your product management team generates through user and prospect research. Possibly nirvana.
In the case where the firm is PE-owned, no one is left from the original team and the new leadership has little domain experience, I’d pass on the job if I had other choices. These are likely professional managers brought in to wring as much revenue as possible from the asset before shutting it down. I’d certainly be asking some tough questions about the strategic plan for the business and what resources will be made available to you as CMO who now owns the product management function in its entirety. If you’re a domain expert being sought out for your vision, that also could be a great situation, even possibly positioning you to lead the company as CEO down the road. To validate this possibility, it would be fruitful to speak with the PE firm’s MD responsible for your potential employer if at all possible – and access to this person also is a test of how strategic they view the CMO role to be.
If you’re a CEO but not a founder, first, thank you for reading so deeply, and second, you might ask yourself, “What’s the best path forward with respect to product management?” The answer is to invest in the subject matter expertise needed to drive meaningful enhancements to your product and platform. This might mean you need more than one person, as there will be work-function-specific capabilities to build as well as larger-picture strategies to imagine, research and test for feasibility (a platform strategy is a good example for what I have in mind here – how can we proliferate our solution via APIs and an ecosystem?). Also, as CEO, you need to ask how much other areas of the business will benefit if you can delegate this function. Can you propel the firm farther/faster with the time you free up?
Optimizing marketing, sales and customer success is part of what we do in our consulting practice. In our SaaS360 Business Effectiveness Assessment and Report, we look at organizational structure, including roles such as product management, when we benchmark SaaS firms vs comparable entities. If you’re seeking advice on how your SaaS firm can be more effective, I invite you to book a meeting with me and let’s explore this together.