Templates for internal product managers.

Not all product managers manage customer-facing, revenue-generating products. If you're an internal PM, what are two things you should do that will help you succeed?

Jun 22, 2022

Most of the content and advice for product managers don’t differentiate between internal product managers and product managers. I think this causes some confusion because product managers of internal products try to incorporate advice for product managers who manage customer-facing, revenue-generating products, which in turn, creates unintended side effects. Today, I’m going to explore this topic and present two templates.

Daimler stops developing internal combustion engines to focus on ... — An engine can be a product or a component of a product (i.e., the car). What are you managing, the component or the end product?

What is an internal product manager?

Before diving into the details, we have to define our terms. How do you know if you’re an internal product manager? There are three signs.

The product’s users are internal to your company/organization. If you have captive users and they are internal employees. Not a strong enough signal by itself because sometimes companies eat their own dog food. Nevertheless, a signal.
The product doesn’t charge money and you don’t think about pricing or maximizing profits. Not all free products are internal products, but almost all internal products are free. Even if you have some cost-sharing arrangement, if you don’t have to consider pricing above cost or maximize profits, it’s a sign your product is internal. Even startups must develop an idea of how they might make a profit with their product someday.
The voices of a few employees really matter. The opinions of founders or employees in positions of authority/influence matter. It just matters more for internal products. For product managers with customer-facing users, the invisible vote of the wallet ultimately determines winning or losing product ideas. But internal products don’t face consistent competition from the public markets and are thus influenced more heavily by the opinions of key employees.

If you are managing a product that has all three characteristics: internal users, free, and opinions of a few key employees matter, it’s almost certain you’re managing an internal product. Thus you’re an internal product manager. Q.E.D.

Consequences of applying standard product management advice to internal products.

If you’re an internal product manager, you can get yourself into various kinds of trouble applying certain standard product management advice. Take the famous AARRR metrics (acquisition, activation, retention, referral, revenue). Much of this isn’t applicable. You don’t have revenue. Unless there’s a choice, employees are forced to use your product (i.e, captive audience), and let’s forget about referrals. There isn’t paid marketing in acquisition. All of this begs the question, should growing users or usage even be a goal to measure?

Yet all too often, internal PMs will try to align their internal product to an AARRR metric because there are other parts of the product organization with product managers who manage customer-facing, revenue-generating products. These other PMs will be talking about AARRR and internal PMs often get confused. These other PMs often have a lot more influence and power because their products generate revenue. If you can demonstrate how your internal products help a revenue-generating PM, it plays well into promotions and annual reviews.

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What you should do instead.

There are tons of advice on what PMs for internal products should do. I’m going to focus on two.

Document who are the voices that matter in decision-making. Fortunately or unfortunately, internal products are more influenced by internal power dynamics, specifically who has the power to make decisions and what are the constraints on their power. Often, you’ll see people use the term, internal politics. The translation of politics in the real world is power and checks on power. This is important because internal products are usually optional. Someone at the company made a decision that it was better to hire people and build a product for its internal employees to solve a problem, that the internal product is better than those available in the public market. This decision isn’t static. Consider at one point, companies had internal products such as cloud services (killed by AWS) or internal CRMs (killed by Salesforce). Your internal product might be critical today but could be replaced by an external product tomorrow. When those key decision-makers leave, expect shifts in strategy for internal products. One way to prepare and document this information is to create a power map. In a power map, you identify people and whether they are endorsers, resisters, or fence-sitters for your product. Once documented, you can use the template to determine whom you need to influence (i.e., fence-sitters). Power Map Template
Track requested work separately from initiated work. All product managers get feature requests or idea suggestions. Yet because internal products support a specific process or service of the company, the requests you receive might be worded as requests but are frequently commands (i.e., must-do). Consider an analogy. You manage an internal product (i.e., the car’s engine). If the product manager for the car decides to increase profits by cutting engine manufacturing costs and performance for their new car, the request to you isn’t a request. It’s a command. This happens frequently:
- You manage an internal analytics product > people change how they want to view the data
- You manage an internal CRM product > sales changes the sales process
- You manage an internal testing product > software engineers change how test scripts are written
In each of these cases, you could push back and say no like product managers that manage customer-facing, revenue-generating products. Yet because your internal employees are captive and because internal employees can’t easily switch, people are going to usually resort to using their power of influence or direct decision-making. This relates directly to my previous point. It’s not that the people are “more political” for internal products, it’s just that this is their only outlet.
While recognizing this, you can combat it by clearly documenting and prioritizing requests. See Prioritizing Work Template The purpose is two folds:
1. You want to separate out requested work from your own product initiatives. You want to showcase, that there are two lines of work: work requested by others and your own initiatives to improve the product.
2. You want to be transparent about how requested projects are prioritized. Whatever the prioritization approach, you need to explain why and recognize certain key people / department are more important than others. Think of them as marque enterprise clients. While some people won’t like this because they aren’t part of this key group, being transparent ensures everyone plays the same influence game which makes your power map more accurate and easier to use.

Are you an internal PM? What’s a technique you’ve used?

The Elements of Product Management

Templates for internal product managers.

Not all product managers manage customer-facing, revenue-generating products. If you're an internal PM, what are two things you should do that will help you succeed?