Kwan’s Hierarchy of Product Needs: The Four Levels of Product Managers Connie Kwan
For a young company, the value of a VP of Product or CPO can be difficult to ascertain. Many argue that a senior PM with 3-8 years of experience would satisfy the business’ strategic needs. And that’s indeed true for the first PM hire as I outlined in my 0-1 article. On the other hand, a CPO brings a deeper and more strategic product perspective that can help companies build a vision for the future and optimize their current focus.
The dilemma is that while CPOs add significantly greater value than junior and senior PMs, they are expensive resources.
To successfully navigate this dilemma, let’s break it down by understanding the product needs your business is likely to encounter. First off, know that your PM’s job is to drive decisions. The higher stakes your decision, the more experience you’d want in your PM to help drive those decisions. Before product-market fit, many hypotheses are being tested, so each decision has minimal impact as you only have 5 customers. But most successful businesses will outgrow their initial product staff and need experience at the table as their audience grows. So by understanding your future needs today, you can find ways to get what you need without overspending.
The real question might not be how long can you survive, but how soon will you start benefiting from the contributions of an experienced product leader. Thus I have broken it down into Kwan’s “Hierarchy of product needs” below. In my experience, the best way to judge whether or not your company needs to hire a CPO, or a fractional CPO, is by assessing where you stand on this hierarchy of needs.
Kwan’s Hierarchy of Product Needs
Much like Maslow’s Hierarchy of Needs, a business has a hierarchy of product management needs. These are displayed in the chart below. The product titles associated with each hierarchy are estimations, and provide an easier way to think about the framework. Clearly a CPO at a large enterprise has a different role to play than in a small company. But regardless of the title under consideration for your hire, laying out these points helps clarify the product scope that you need.
As business needs progress so do the skills, experience, and network needed to perform them. Different businesses will grow each need differently. But each lower level need must be met before a higher level need can be addressed. Let’s start at the bottom of the pyramid.
Level 1: Shipping ⛵
The most basic need that a PM satisfies is shipping features. At smaller companies, your tech lead and/or your first PM will handle this need. At larger companies a project manager may satisfy this need, especially when cross-product features are involved. This involves day-to-day tackling of large and small decisions that block the successful release of a new feature.
This can range from debating with design on the right feature specifics, to testing some of those specifics with customer input. From communicating the feature on a specification to engineering to working with engineering day-to-day to ensure a successful release of the new feature. It involves informing customers of the new release and managing the success metrics of the release. Your PM is showing up at team standups, weighing in on JIRA and Invision (or equivalent), and often participating in retros.
Level 2: Planning 🚂
The role of a more senior PM is to continually challenge product-market fit and keep the team aligned on a 3-6 month, mid-term vision, of the product. This role requires considerably more EQ on both the customer and the stakeholder management front.
On the customer front, the PM needs to be able to creatively draw out real customer needs. This survey and interview technique is more of an art than a science, and comes with experience. The PM also needs to build the vision for the product using multiple inputs, then rally your team on this vision. Major EQ needed here. The vision needs to continue to drive product-market fit, and adjustments are elegantly made along the way.
At small companies your PM at this level also handles the Shipping function. When paired with a strong technical lead who can take on the burdens of engineering team operations, this senior PM would more fully take on both competitive analysis, and pricing and packaging decisions.
Level 3: Strategic ✈️
At this stage of the company, you are taking off. You have product-market fit and enough runway to survive 2-3 years. So it makes sense for your PM to start visioning for the 2 year mark. Don’t confuse this with the overall company vision, which is a BHAG (big hairy audacious goal) laid down by the founder that can be as far out as 5-10 years. That company vision is meant to be a rally-cry, blood-stirring, moonshot.
Your Strategic PM, usually director level or VP level, will take that company vision, and lay out the pathways that pave your way towards that BHAG. This PM will raise a debate on the validity of each of those pathways, and explore ways to test and de-risk each. For example, a decision to use cloud or on-prem deployment, to build vs. buy certain features within the product, or to invest in a new product area to win market share. These decisions move the company down a very different path, and rallying stakeholders through these decisions is what your Strategic PM will do.
Level 4: Strategic Partnering 🚀
If you’re considering a full time CPO-only PM, meaning a PM dedicated to only CPO level functions and not other earlier level functions, then your company is likely experiencing rocketship growth. You’re looking to bolster your moat with product bets while designing an organization that will sustain your growth.
Your CPO will help set and reinforce that culture for your product organization. You might be courting very lucrative and strategic enterprise accounts beyond a basic customer relationship. These can require roadmap commitments and multi-year contracts. Your CPO needs to flank your VP Sales on customer visits to tell the product story, close the deals and make sure you can deliver without compromising your product strength in your market.
Partnerships from outside the company become important, and your CPO needs to bring these opportunities to the table alongside your CEO and CFO. Your CPO will take your BHAG moonshot and lay out the 5 year plan to it, identifying key product holes that you must fill with product bets or M&A opportunities before getting to the moon.
Finally, your CPO tells your powerful product story, for your board, for your customers, for your team, and helps you keep the funding or revenue flowing.
The Right Startup CPO
You might find yourself needing some of the functions of a CPO before you are in rocketship stage. Consider what you need specifically before making this hire. It is more economical and flexible to retain the services of a fractional CPO for certain needs.
For example, fundraising, assessing product bets, winning key enterprise accounts, designing the organization for growth, and product vision facilitation are often better accomplished with a well-networked part time CPO who has an outside perspective. On the other hand, ongoing board relations, carrying the product vision and building culture are better handled with a full time dedicated hire.
The luckiest scenario would be finding a PM with Level 3 capabilities who can stretch to Level 4. Then you can backfill specific needs with a fractional CPO until you’re ready to expand. The appointment of a CPO indicates readiness for more sophisticated strategic planning and execution. And ultimately the founder and board would have to determine the right timing based on the circumstance. Good luck out there!
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