Whereas the product manager role was little known just a few years ago, the Chief Product Officer (CPO) function has become a staple of the c-suite team in recent times. Hence, in this Knight blog edition, we wanted to cover the basics of the function, and when it might be the right time to start looking for your CPO.
The Rise of the CPOs
When you think of the members of the C-Suite, you likely think of CEOs, CFOs, and COOs. However, the demand for a Chief Product Officer has continued to increase, so it is necessary to understand the benefits they can bring to your organization.
The increasing demand for having a CPO function in the organization has become clear from the general hiring market. In a pre-covid study for Product Management Insider, author Neil Eyer showed that the product manager role has outpaced the growth for similar functions by over five times. In fact, the 2yr growth in job openings for product managers has grown by over 30%.
At the same time, the supply of talent in the product field is also increasing. More business students are looking to take management roles in startups that relate to product management and development. Prestigious programs like those offered at Harvard and Cornell University are even creating new coursework that allows students to prepare for a career path that leads towards the CPO role.
Likewise, with the increasing pace of digital transformation (especially post-covid), the product role is becoming increasingly relevant. Having the right product design at the right time can make or break the pace of growth for a starting organization.
A CPO must inspire and motivate employees across the organization since product design, development, and distribution are not dependent on one department. In other words, they need to ensure that everything from product development to the customer experience runs smoothly and seamlessly!
The Role of a CPO
So, what exactly does a Chief Product Officer do? They wear multiple hats from recruiting the right people to creating a roadmap for developing & growing the product, researching customer needs, and ultimately leading the product team.
As for the core responsibilities, the CPO is foremost a strategic leader, responsible for developing your product strategy and vision. These key deliverables allow team members across your organization to understand exactly how your products will drive the business forward. In turn, the key task as a strategic leader is to create cross-functional alignment on where the product should go.
Maintaining Product-market fit
To understand where the product needs to go and ensure product/market fit, the CPO should have a clear understanding of customer questions such as; Why should customers buy your products? What is the value proposition, and how can we articulate that to our target audience?
The Chief Product Officer has a deep understanding of your offerings, so they will work alongside your marketing and sales teams to answer those questions. In other words, you need someone that can understand the pain points of your customers so they can communicate the right solution: your products.
This requires expertise with customer engagement and buyer personas. Their goal is to figure out the best way to obtain new clients – and retain them. A CPO accomplishes this by thoroughly analyzing client satisfaction, what drives conversion, and factors that lead to churn.
Design and roadmap planning
The CPO is also responsible for setting the product roadmap. Not only does a CPO need to understand the why behind your products now, but they also need to be considering what to build next. They ensure that the features and upgrades you work on align with the overall goals of the business and no resources are wasted on little-used functionalities.
Look for a candidate that has experience with cross-functional teams, since they will need to partner with everyone from product designers and developers to the marketing team and CEO.
The person in the CPO role should also be comfortable collecting and analyzing data. They must measure KPIs like churn rate, retention, and user engagement with each product to make strategic decisions. Similarly, these analytical skills will be essential when evaluating the product/market fit for a new offering.
How This Position Stands Out in the C-Suite
As the CPO ultimately communicates the product vision and guides the product roadmap, their function often works closely with the Chief Marketing Officer (CMO) and Chief Technology Officer (CTO) roles. The distinction between the roles is not always clear to all, but they are very different and focus on distinct areas of strategic management.
Getting the customers in
A CPO will indeed work closely with the CMO for growth marketing, and a CPO needs to have a clear understanding of customers and buyer personas. However, the distinction lies in that the CMO is focused on getting the customers through the door. Whether it is managing ad campaigns or fine-tuning the buyer personas, this role is responsible for consistently growing the sales funnel.
The importance of the CPO, however, comes in after the customers have been brought in. They are the ones that must prevent churn and demonstrate consistent product value.
Putting plans into action
Likewise, being so closely involved with the design of the product, the CPO works closely together with the CTO. The functions might look similar at first glance (and indeed, in some early-stage companies the functions are sometimes combined). However, the CPO focuses on what needs to be done and why, while the CTO figures out how to put those plans in action.
To this end, the CTO has more technical responsibilities since they oversee how products are developed. For instance, they determine what technology is needed to design and create new products. CTOs also take ownership of how those products will perform once released. However, they must always coordinate with the CPO to make sure that the products they design are meeting the needs of your target audience!
All three of these positions must work together to maximize the value for all of your stakeholders.
When to Hire a CPO
As a series A or B startup having reached product-market fit, the question becomes all about maintaining this fit whilst scaling the business. At this point, it becomes more important to have a dedicated product vision that the CPO position provides. As with any C-level position, the hiring process is quite long so you’ll have to prepare ahead of time.
Challenges faced by startups
In particular, the scaling question is one that is addressed by having a dedicated CPO role. Particularly as your business grows and starts to look at expanding across geographies or verticals, the product runs the risk of becoming increasingly complex and costly to maintain.
The CPO will help to maintain the balance and select the right direction. Particularly as development costs become higher with added complexity, it is important to have a dedicated function to prevent this. Whereas the CEO or CTO might do this themselves at first, the added requirements in a growing business might detract from their ability to oversee the product development.
Some early signs of needing this CPO role
Some early signs that you need to hire a CPO include:
There is a mismatch between the product and customer expectations
The product is missing a development strategy & roadmap
Customer experience is affected by conflicting strategies between departments
The burn rate is increasing, but growth is not
Here, a Chief Product Officer can step in and help your business move from a single product to an effective portfolio of offerings. Just because your founders were able to find success with their initial product does not mean that adding more to your portfolio is easy. You want someone experienced to guide your business into that new level of growth!
A CPO is an essential role that can help your startup expand its market and evolve its product offerings. Start preparing to add one to your team when you’ve secured substantial funding and tested your initial business plan – they can guide you the rest of the way to accelerate growth!