Do we need a Chief Product Officer (CPO)?

A quick guide for CEOs, business leaders, executive search professionals, and CPOs themselves to set expectations about Chief Product Officers right.

In a recent article, I covered the concept of companies that “Think product” and why they’re in a better position than the average to create and capture value from their users. Thinking product is a company-wide way of working and not a department-silos exercise. Yet, a Chief Product Officer can go a long way in helping any CEO who wants to do products seriously to get set up for success. Also, the appointment of a CPO stands as a strong signal and as a commitment of the organization to “Think Product”. 

But is having a CPO enough? And does s/he really have to be a CPO, or would a CTO/VP of Product or Director of products be the same? Not so fast!

In the next paragraphs, we will see who a CPO is, and how s/he can support the whole organization, and we will analyze the key functions that usually come into a product organization, including Product Management, Product Design, Monetization, and Product Marketing, among others. 

This article is organized into the following sections:

• Who is this short guide for?
• Who is a CPO and do we need one?
• What does a CPO do
• CPO: is VP or Director of Product the same?
• About a CTO/CMO/CPTO acting as CPOs
• Multiple CPOs reporting into business lines
• A quick look into the Product organization

In the last article of this series, I will look into the right moment to hire a CPO and into alternative models to full-time CPOs.

Who is this short guide for?

This article is intended for CEOs and business leaders, who’re exploring options to be more customer-centric through an organization that thinks product, and considering onboarding a CPO to do so. 

It will also provide important information for executive search professionals, who will be able to better understand the “ins and outs” of this role and orient their search and attract the right new executives accordingly.

Growing product leaders and CPOs will find in the next paragraphs a common ground in the understanding of the challenges and responsibilities that come with this role, but also some “discussion points” to run through before accepting an appointment for product leadership positions. 

Finally, I am also sure that product teams (whether run or not by a CPO) can make some of these thoughts their own, and vouch internally for a sound product organization that empowers them to do meaningful work.

Who is a CPO and do we need one?

To avoid any confusion, in this article by CPO (whose acronym can also indicate a Chief People Officer, for instance), I am referring to a Chief Product Officer, which is a relatively new role.

As a business leader, you probably hear fellow executives preaching to get a CPO; you are witnessing a number of successful tech companies relying on a CPO to embrace a “product” approach for the whole company. Now, you are now wondering whether you’d need one as well. Different studies show that between 15% and 30% of listed companies have a CPO (Sources: https://www.linkedin.com/pulse/chief-product-officer-just-ggetting-started-renee-niemi, https://www.zippia.com/chief-product-officer-jobs/demographics/). The numbers are even higher for smaller companies and scale-ups, as shown by a quick LinkedIn search. The demand for CPOs is at a historically high level, with several hundreds CPO roles open right now in Europe and in the USA.

So, let’s see what they do, when you need one, and, most importantly, how to find the right setup for your organization.

What does a CPO do? 

No doubt, one of the most difficult and terrifying questions you can ask any product professional is “What do you exactly do”? And when the person is a C-level, this question becomes even more tricky: “You don’t even drive a development team, so what do you do as a CPO? “. 

While the exact role and extent of his responsibility can change depending on the company, as a general rule a CPO is responsible for the strategy and execution of all product-related activities within an organization. As a C-suite member, the main activity of a CPO resides in general leadership and running the company. This being said a CPO is well-versed in and co-accountable (to different extents) about several areas including: 

• Business:  CPO role is a business role, and as such must have a deep understanding and interest in the product being sold and making revenue. While the daily responsibility may include to a higher or lesser degree Pricing, Strategy and Marketing components, a CPO is definitely not shy of talking business and speaks with business people (eg. investors) in business terms
• Customer centricity: the CPO is there to ensure that the products meet customer demand and that customers are delighted by the solution. As such, the CPO has a strong interest in the market (rather than in abstract frameworks…) and the users. 
• Leadership: Depending on the size of the company, the CPO role may or not have a more operational facet. Nevertheless, it is a leadership role whose main deliverable is the establishment of a product culture and north star and does this through continuous and clear communication. 
• Focus: the CPO strives to keep the company focused on the customer pains to be solved (“outside-in view). He is an avid sponsor of outcomes measurability and leverages objectives to take and encourage difficult decisions to be taken, by the whole organization, all the time. 

CPO: is VP or Director of Products the same? 

With Product/Product Management becoming a cornerstone of the modern way of conceiving value generation through product, over the last 10 years product leadership has made its way into the C-suite. Still, there is a large palette of product leadership titles (head of product, Director of product, and VP of product) and ladder steps. The choice of having a C-Suite executive looking after the product, however, is a specific one and we’ll look into its implications.

Companies that are not thinking product have sometimes a harder time understanding the context and motivations around the role of a product manager: this is even more true when the discussion elevates to a product executive. For this reason, one of the first misconceptions we find is that CPO is a different word for “Looking after delivery”, or that Product is a synonym for Project. And, following this reasoning, it’s not uncommon to think about (or worse, hire) a CPO as somebody who will create a roadmap, push features, or “bring project updates into the C-Suite”.

For it’s tempting to identify a role with an exact deliverable, the reality is that you’re not hiring a CPO to push your engineering team to go faster, nor to write tasks and tech specs. And even less to make a faster delivery order-taking process, from top leadership to development. 

As a company that thinks product, we’re counting on a CPO to ensure that our customers find joy in our products and that this translates into a strategic advantage and better monetization for our company. And to infuse this into the whole company. To do so, a CPO will likely play on two different and fundamental levels:

• Educate, enable, and spread user-centric culture throughout the organization. In other words, ensuring that the company (beyond the product teams) is working in a way that fosters value generation for the user (and capturing from the user/customer) through the product, in other words as an organization that thinks product. 
• Provide a product vision and strategy, and align the teams toward a “north star” that channels and drives the business impact.

It’s fair to say that you’re counting on the CPO to ensure that you’re pursuing the right product vision with the right organization, to deliver value to your users and customers. This may come (or not) with a direct line to customer success, support, and similar functions, but the ability to influence the company direction at large is the key element here (more about this later). We start seeing why we need this person to be sitting in the C-suite. In this sense, having a VP or Director product is absolutely fine… but not a replacement for a CPO.

All in all, the C in front of it is not a negligible element, and stands for “we take products as a strategic element of our value creation and capture”. And that’s also why – if you’re a start-up – many investors will ask you to get one, at the latest once you enter into a scale-up phase. Similarly, if you’re a well-established/traditional company, having the product represented in the C-suite is an important step to getting the full potential of “Thinking Product”.

About a CTO/CMO/CPTO acting as CPOs

Because in tech companies the product is often identified with a technical artifact, it is a common shortcut to consider that a CTO could be a synonym (or at least a deputy/alternative to a CPO). This may have been the case until a few years ago when technology per se was often a differentiator and the “reason to be” of many tech companies’ success stories. Despite a recent trend of trying to “fix the gap” between these roles by merging the acronyms (have you heard about CPTOs already?), the reality is much more complex and the technology component in the Product is not more important than the market component. (See also https://fortune.com/2022/01/28/the-pandemic-has-erased-the-last-boundaries-between-product-and-marketing-cmo-cpo-covid-careers-retail-livia-bernardini/ on the interactions between CPO and CMO).

Long story short, in most cases having product-aware executives among CTOs, and CMOs is a great start but not sufficient. And hybrids such as Chief Product and Technology Officers (CPTO) may be helpful, but only as long as the setup allows for a real room and product focus knowledge in the role. No shortcuts are allowed.

Multiple CPOs reporting each into a business line

Another setup I’ve encountered frequently is one where the different business lines (each one represented by the complete ownership on a business line, a P&L, etc) mimic (almost) the whole company setup and run almost independently of the other units.

In this case, can the multiple Directors/VPs of products act as mini-CPOs each one within one business unit? I’ve not found so far a unique answer to this question, but as a rule of thumb, a “global” CPO may be beneficial to the consistency of the offering among different business units, including aspects such as positioning, bundling, and a consistent go-to-market. At the same time, multiple CPOs directly into the business units can add agility and provide higher proximity between product and business.

Elements to keep in mind in these circumstances while deciding for one setup or another include:

• How close the different business lines are to each other, in terms of market and activity.
• How many common customers do the business lines share
• Whether or not the business lines would be really fully independent on execution, or still depend on a centralized IT/development unit.
• Overall size of the company, with very large companies being more prone to have business lines acting independently

A quick look into the Product organization

Modern (tech) products are extremely complex. The easier they look to the user, the deeper the collaboration that is needed among different functions. In other words, more than the actual reporting line, what you really want to ensure is that the different people involved, from beginning to end, work together, on the same products, all at the same time. 

Let’s assume for the sake of simplicity that we’re in a model with a unique product organization. A CPO is usually the executive to whom the product management functions are directly linked. However, for the company to “Think Product”, these interactions have to span much well beyond the direct product organization. Failing to integrate different responsibilities throughout each stage, usually results in something like this (at best): we talk with a customer and get a requirement (sales), we define a product (product management), we deliver it (engineering), then we start talking about selling it (marketing) and how to monetize it (pricing).

To build an organization that wants to “think product” holistically, it is important to understand what are the key roles so that their interactions can be aligned. Although there is no magic formula and not one golden rule, a few rules are the “usual suspects” when it comes to product:

• Product Managers /Product Owners –  No, I am not entering the fight about PM vs POs here! So let’s keep it open for the moment.
• Product Operations (when present). Again, I am not entering the “shall we have product operations or not” debate here. But if such a role exists, it would very naturally fit into a product organization.
• Product Design at large, including but not limited to UX Design User Research. I am even surprised that I am writing it. Is it really necessary to clarify that modern Product design is closer to Product than to drawing?
• Product Marketing: the usual approach of looking at product marketing as a “communication artifact” that you start considering when “it’s time to launch” if … well, just wrong! The way you communicate your value, and the way you position your products, are key throughout the whole product life (including development). 
• Product Analytics & Data: no question about the fact that measuring is a mandatory element for products and product teams. However, the tricky part is that this “measurement” has to be deeply embedded in the product. Here too, more proximity between Data and Product can only be helpful, and helps ensure that products are “data-enabled-by-default”. 
• Pricing: let’s put it the other way around. You can have pricing managed as part of the product or somewhere else (say, sales? or marketing?). But again, this has to go hand in hand with the product.
• Sales: while seldom part of a product organization, the sales team is a great team to support product discovery. Having sales as an ally throughout the whole product discovery is undoubtedly a smart way to leverage their support in understanding the customer, rather than looking at them as a “customer request generator”. 

Note that some of these roles can coexist within the same person; moreover, they can be part of a product organization or not. Honestly, it doesn’t really matter. Or, at least, I don’t believe there is a golden rule that will work for each organization. I am a strong enthusiast of the idea of multidisciplinary teams, where the above functions are integrated as much as possible to follow the same rhythm. However, here are a few set-up alternatives:

• A hierarchical integration is a possibility, but definitely not the only one. In this case, the members of the product teams report directly to the product organization.
• A Matrix organization is another option, with virtual product teams “adopting” other roles that belong to separate departments (Marketing, Operations, Data,…) in a collaborative way. 
• A mix between the two previous options, where a significant part of the product team (usually, Product Managers, Designers, Data,..) reports to the product department, and the others interact “in a matrix” with the product team.
• Another (possibly less common) alternative structure that would go in the same direction is that of “circles” as defined in “Holacracy”. In this case, the product team is composed of a “circle”, with different roles contributing to it.
• Finally, it’s important to keep in mind that there may be different kinds of products, for instance, internal and external facing ones. In this case, some product teams may have “internal” customers, and other product teams. This is often the case with “platform” setups, such as a team taking care of a (more or less internal facing) component (for instance, a “mailing platform”) that may be used by other teams. 

Whatever the actual implementation, it is important to address the impact of team interactions in a way that facilitates work to happen across roles, on the same products, at the same time. Ultimately, a CPO with his peers in the C-suite is there to ensure that this is the case.

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A big thanks to Roland Sieblik and Dominique Jost, who have been so kind to pre-read some early drafts of this article. The discussions with Roland have also sparked some specific reflections and points about CPOs in start-ups and scale-ups. Thanks again.