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Industry Experience: How Important Is It?

In the latest Pragmatic Market BlogFest, Steve Johnson wrote about the importance of domain expertise. Steve's two main points are:
  1. Developers need to understand the domain and not merely code to specs.
  2. Product managers need to understand technology
I can't disagree with Steve on these points. However, more interesting to me is:
How important is it that a product manager have prior knowledge and experience in the domain?
I have written on this topic in the past. In fact, it was one of the first entries in this blog. Below are some more thoughts.

Should a company hire a product manager with years of experience in, and knowledge of, the industry? How about a capable and experienced product manager with little or no prior domain knowledge?

The key to understanding the importance of domain knowledge lies in recognizing a product manager's most important skill: learning about the market.

Thoroughly understanding a market necessarily entails being intimately familiar with the user and buyer experience, and therefore requires grasping the domain in which they operate. So yes, domain knowledge is fundamentally important.

But "learning" means acquiring knowledge, not having it already. A product manager who is knowledgeable about an industry solely as a result of lengthy prior experience is much less capable - and much less valuable - than a product manager who can quickly master a market and domain.

After all, markets change. New competitors enter the landscape, and user and buyer psychographics evolve. Don't you want a product manager who knows how to keep abreast of, or anticipate, these changes rather than relying on the way things used to be?

Thus we see that prior domain experience, while helpful, can be a crutch. An insistence on prior industry knowledge amounts to a concession that product managers are not capable of performing their primary learning function.

If you're an executive looking to hire a product manager, I recommend de-emphasizing domain experience and focusing on the skills that enable market mastery:
  • Interviewing prospective and existing customers.
  • Identifying and quantifying the problems that customers face.
  • Analyzing the competition and their positioning.
  • Framing survey questions and interpreting survey results.
  • Observing customers in their native environments.
A product manager performs many other important duties, but the point is that domain knowledge is no substitute for these skills for achieving market mastery.


Roark Pollock said…
In theory I agree with your comments. But all else being equal, a product manager or product marketing manager with the necessary industry technical understanding will certainly come up to speed more quickly than someone without that technical understanding.

So the optimal new product manager or product marketing manager is one that has both (1) industry specific technical understanding, and (2) functional customer mastery skills.

However, when that combination is not available, I agree that the functional skills out weigh the industry experience. In fact, a product manager with good functional skills that also knows your company's target markets well is extremely valuable.
Unknown said…
Hi Cauvin,

Thanks for this post. I am not a product manager, although I am definitely setting this as my future career path. I will be moving to a new job, doing pre-sales which include industry that is totally new to me.

Definitely, there are a lot of things for me to catch up on the industry knowledge. I hope to prove you right on this posting.
Mike Woelfel said…
I would argue that excellent functional skills (ability to define the market and customer needs) is significantly more important than domain expertise. My reasoning is based on the observation that most people's domain expertise is usually limited to experiences with a subset of the target market. If your interpretation of customer needs is based only on past experience, you are likely to have a narrow view of the market's unmet needs. Functional expertise would also be essential when targeting a market outside of the persons domain expertise.
Mike Lunt said…
Like so many things in life, there is a range of importance/significance. In general, we’d like to hire fast-learning, adept critical thinkers for all positions, not just product management, but due to the low number of “superstar” candidates, we often have to rely on other qualities. Some industries like biotechnology, nanotechnology and even enterprise IT require years of knowledge just to be able to have a conversation with the correct acronyms, while I can imagine that ventures in social media require much less indoctrination.

Depending on which side of this range a company falls, CEOs are going to always look for mentally astute product managers, but given the need for immediate productivity, having the background to begin conversations with customers in complex industries on day one is going to often win out.
Roger L. Cauvin said…
Mike, it appears you haven't read Buckingham and Coffman :-)

You touched on two separate issues. One is whether companies should seek out product managers with prior industry experience. The other is what companies actually do in their hiring practices.

Most companies and hiring managers do emphasize prior industry experience. No disagreement there.

In my view, this practice is symptomatic of a general unwillingness or inability to carefully define and consider the talents required for positions. How many companies define the talents - not just skills or experience - needed for a role? Very few. Yet Buckingham and Coffman contend that talents should be the single most important factor in hiring, and that most managers overestimate the importance of experience.

I'd also point out that you and I share a friend who rapidly rose to become the CEO of a biotech company without any prior experience in the industry.
Mike Lunt said…
In some ways, I think we are talking past each other a bit, so I’ll be less subtle in my response.

• Your assessment and qualifications for hiring a product manager are spot-on, and when someone with these skills applies for the job, make them an offer immediately.
First, Break All the Rules also has some great points on hiring for talent and the ability to learn over industry experience. This is precisely why I think it’s ineffective when companies give language-specific syntax tests to hire developers.

What I’m saying specifically for product managers is the following:

1) The number of people that will apply for a product management job with these skills (market assessment, strategy determination, etc.) is few and far between, in my experience. If I understand your points, the reasoning may be because the job descriptions aren’t worded properly, and maybe you’re right. Admittedly, it’s not immediately apparent to me at this juncture.
2) “Product managers” have varying roles at every company, regardless of the title, and in many cases, companies don’t even know how to how to describe the combination of release manager, business analyst, pseudo-architect, and inbound marketing strategist that would fit all the urgent needs, especially at an early stage company.
3) Given #1 and #2, hiring someone that can at least have a day-one conversation with customers, internal stakeholders, and developers/engineers doesn’t seem like a bad option for many situations.

p.s. Our mutual friend has an unusually high range of skills in my book, and the rules of normal expectations don’t apply to him. If all the candidates that applied for product management positions had his talents, we might not even have this as a topic of discussion. :-)
Roger L. Cauvin said…
Thanks for the lucid thoughts, Mike. Your three points all make sense to me. I think point 1 is a self-fulfilling prophecy. In companies where I've worked, I've seen 90% of candidates rejected on the basis of their resumes. You can't recognize talent - the most important hiring criterion - from a traditional resume. If you reject 90% of candidates up front, you're not likely to find a lot of candidates that have the talents ideal for the job.

Buckingham and Coffman recommend that every hiring manager and recruiter should be able to enumerate the talents - not the skills and experience - needed for the role.

I've enumerated what I believe to be the most important talents of great product managers and talents of great agile team members.

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