Sunday, August 15, 2010

Owning Product P&L

This is often a highly debated question in the product management community. Should product managers own the P&L of their product? The answer is simple, it depends!

Here are some of my observations on the subject:
  • Authority - Most product managers don't have the authority to truly own P&L. Most of us don't have the product development headcount or other associated costs under our budget. Many product managers don't want that authority.
  • Time - Many Product Managers are torn between the day to day work of product development, supporting marketing, sales enablement, etc. that monitoring product P&L falls to the wayside. We just assume that the pricing is "good enough" or that someone else is monitoring how much our products cost to develop, sell, market, or support.
  • Organizational Structure - Does the organizational structure lend itself well to a single person owning the P&L. I have seen this work when the company is organized into distinct SBUs or SBUs. The General Manager of that SBU would own P&L, budgets, etc. and their P&L would roll up into the companies P&L. Ask yourself, who owns the P&L for your product. It's ok if it is not you, as long as someone does.
  • Create a basic excel dashboard that has the basics and some charts that can printed out on a single page. I use a 3x3 grid for a total of 9 charts that monitor things like bug count, internal costs breakdown, revenue, key usage stats, other costs, etc. Having a dashboard like this goes a long way when someone asks about your product and you can instantly respond with a detailed dashboard. How many of us have had to scurry to find information when someone asks. Be Proactive!
  • You may not have access to all of the data you need to create a 100% accurate P&L. That's ok. Approximate. It's ok if you call your P&L an "Estimated P&L". Guess, ask, do what you can. Most of your assumptions are probably not too far from the truth and if they are someone will inform you otherwise :)
  • Share your dashboard. Many products may have a weekly team meeting. Perhaps at the first meeting of the month you can share your estimated product P&L for the previous month. Just seeing it goes a long way! 
Just some thoughts. Let me know what you think!

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