Product Manager - CEO Of The Product?

This time, we looked at whether a product manager is the "CEO of the product". In theory, it sounds appealing that as a product manager, we approach the product with the skills and mindset of a CEO. However, everyday life in product development often doesn't quite look like that of a CEO. Without the authority to issue directives, we as product managers are lateral managers. You can find out what this is and how we can use our position here.

Where does the term "CEO of the product" come from?

The term "CEO of the Product" was coined by Ben Horowitz around 15 years ago. At the time, Horowitz wrote the article "Good Product Manager/BadProduct Manager" and mentioned in it that good product managers are a "CEO of the Product".

By this, he meant that product managers, just like CEOs, have to keep an extremely wide range of facets in mind. This includes topics such as business, market, customers, UX, developers and much more. In addition, skills and qualifications such as project management, communication, creativity, analysis, technical understanding and leadership are crucial in the field of product management.

CEO vs. product manager:in - Where does this model break?

Even though Horowitz's analogy reveals many similarities between the positions, it cannot be followed through to the end. There are two central points where it begins to break down.

On the one hand, product managers are naturally very focused on the product. When we say "CEO of the product", we are not talking about the company as a whole. However, this is exactly what a CEO takes care of. In addition to the product, he or she also has finance, operations, HR and many other aspects on their radar that often play a subordinate role for product managers.

Secondly, product managers have no de facto line responsibility. This applies to all the people they work with. It doesn't matter whether they are stakeholders, business owners inside or outside the company, the development team, designers or data scientists. Product managers are so-called lateral managers. In purely formal terms, they have no disciplinary power to change things.

A Head of Product, on the other hand, has a more strategic role and is often responsible for the overall product strategy and development. This position requires strong leadership skills, strategic thinking and the ability to manage teams. The qualifications for a Head of Product usually include extensive experience in product management, in-depth knowledge of market analysis and the ability to develop and implement long-term product visions and therefore comes closer to the image of the "CEO of the Product".

Product managers have no real power

Let's take a closer look at this last point. It's absolutely frustrating when you start out in product management. You hear that you are the "CEO of the product" and think that you have everything under control and can change everything. In reality, however, the exact opposite is the case. You can change certain things, but you simply have no influence on many things as a Product Owner or Product Manager.

For example, if you are working with a development team that is simply not delivering the required performance, you generally have no authority to issue instructions. A sentence like: "Hey, make sure you get this and that under control" often falls on deaf ears. (And shouldn't be said like that 😉)

The position of product manager is rather that you lead the way as a lighthouse or signpost, without having direct authority. We call this lateral leadership. You shape the product vision and communicate the next steps within the company, for example via a roadmap. Your task is to enable everyone involved to move in this direction. Of course, this is also the job of a good CEO. However, they also have purely formal line responsibility.

A key difference between a product manager or product owner and a CEO lies in their responsibilities and authority. While the product manager and product owner focus more on operational implementation and collaboration with the development team, a CEO also has responsibility beyond the product team and ultimately bears responsibility for the organization. The necessary skills and competencies also differ, with the Product Owner often having to have in-depth technical knowledge and an agile mindset.

In large organizations, responsibility in the product is often shared across many shoulders. In smaller companies, the product owner may have a great deal of responsibility and come closer to the image of the CEO of the product.

What are lateral managers?

As previously mentioned, product managers are not line managers, but lateral managers. Lateral means "from the side". This means that you communicate differently with a team or with the people who ultimately contribute to the success of the product. You are not necessarily on a professional level or hierarchical line.

Let's take a development team. There might be a Head of Engineering, a Head of Marketing or a Head of UX. As a product manager, you are none of these things, but stand next to them as a lateral manager.

Your goal is a successful product. You show the way there with a roadmap as a possible tool. To achieve the goal, everyone has to pitch in. This means that a product manager can be much stronger. An enabler of an entire organization so that it moves in the right direction.

The challenge of lateral leadership - convincing and leading managers

As a lateral manager, you have to take the entire team with you. There are often managers in the team who are authorized to issue directives. You not only have to convince them of your own vision, but also lead the team. It is important to keep an eye on the marketing and strategic direction of the products. This is typically a challenge. The classic line hierarchy is undermined, which can lead to problems. You should be prepared for this.

Bottom Line

The analogy of the "CEO of the product" breaks down in two places. Firstly, you don't have the authority to issue directives like real CEOs. Secondly, you can control fewer tasks than the comparison suggests.

If you have any comments or input, please share them in the comments! We and other readers are very interested in other perspectives and experiences - especially in light of the fact that product management and the position of product manager are practiced differently in companies. What competence or responsibility do you have as a product manager in your company?