Lean Product Management

Lean Product Management

The Value Stream Manager

In our last post, we where talking about why a better Product Owner is a Product Manager. But, what do we mean exactly by great Product Management? Great Product Management is the modern evolution of the Value Stream Manager or Chief Engineer from Lean Organizations.

Modern product management was conceived in 1931 with a memo written by Neil H. McElroy at Procter & Gamble. The memo became a cornerstone in modern thinking about brand management and ultimately product management.

This is has been evolving and will evolve much more in the next few years. A new wave of modern Product Management is coming from Silicon Valley thanks to technology, software and the rise of Start Ups. But we cannot talk about Product Management without looking at some of the greatest Product Managers of all times.

Today, we bring you a very special and interesting case, very little known among the Product Management and Agile community: the Entrepreneur System Designer (AKA Chief Engineer or Value Stream Manager). A concept that exists since 1960s and is exactly the same as modern Product Management is supposed to be.

Are you a great Engineer thinking about moving to Product Management. Are you a great industry specialist and are you wondering whether you should start your own Start Up? Are you a Product Owner with strong technical background? Keep reading!

Definition of Chief Engineer by Lean Enterprise Institute

The chief engineer leads a small, dedicated team that creates the product concept, develops the business case, leads the technical design of the product, manages the development process, coordinates with production engineering and sales/marketing, and takes the product into production.

Chief engineers typically have strong technical skills that enable them to effectively lead and coordinate the technical work of engineers, designers, and other developers assigned to their projects. Their most important responsibility is to integrate the work of the development team around a coherent and compelling vision for the product.

The Problem

Your company probably has people responsible for learning about customers, for product design and engineering knowledge, and for learning about suppliers.

In your company, who is responsible for learning how to fit all the parts of the value stream together? Usually, no one— conventional companies optimize parts of the system at the expense of the whole. Even many of those claiming to be Agile.

Product Owner Middleman - Lean Product Management


Now, ask yourself another question. “Who in my company is responsible for making money from each product?” The usual answer is “everyone” — which means no one. How could there be, if there is no one responsible for designing the entire value stream?

In contrast, consider startup companies. The founder is the product leader, and absolutely is responsible for profit and satisfying customers.


Why are successful company founders Value Stream Managers?

Successful company founders are good system designers because they:

  • Create and communicate a new, compelling and feasible vision
  • Define clear and logical “architecture” for the product and value stream. What customer needs or desires are we trying to meet? Why will it satisfy customers? What will the pieces be and how will they fit together? What underlying technical philosophy will make the system coherent? What are the targets for the system and each of its parts?
  • Quickly learn just enough about many technologies and functions to solve cross-disciplinary problems.This requires deep technical and business insight— the ability to see that a new situation is governed by familiar physical and human principles
  • Make fast and correct decisions, balancing innovation, risk, time, cost, customer needs, and product and engineering physics.
  • Control the development process, keeping the process moving, and avoiding waste.
  • Provide technical guidance to the different departments, translate between them, and forge their conflicts into compromise, consensus, or creativity.

Does it sound familiar? Some people call them Product Managers nowadays.

Desirable - Viable - Feasible - Business Model - Lean Product Management


What do great Value Stream Managers do?

Great System Designers:

  • Represent the customer
  • Make money
  • Guide consensus and trade-offs
  • Run development
  • Provide the vision
  • Design the value-stream system
  • Provide technical leadership

The chief engineer is responsible for profitability, system architecture, project planning and timing, negotiating for resources and people with the departmental leaders, achieving consensus in the design team, and even approving the initial marketing campaign.

In contrast, large conventional companies often make an irrecoverable mistake: They aim project leaders at administering the project rather than designing the system. As a result, they tend to focus on satisfying management rather than customers. They typically are responsible for meeting cost and performance specifications set by someone else. They are bureaucrats that seek compliance.


A Story About Ford Motor Company

The Ford Motor Company was founded by a great ESD, Henry Ford. More recently, Lew Veraldi, ESD for the original 1984 Ford Taurus, changed the way automobiles look, created the world’s best-selling car. Yet he retired immediately after the project, and the Taurus began losing money.

Why didn’t Ford systematize his role? In the 1990s, Ford and GM tried to establish ESDs. Ford appointed “vehicle line directors” while GM created “vehicle line executives”. But, they separated these roles from the role of the system designer. They hoped that the two would work effectively together to perform the ESD function. But both companies struggled to make the new roles work effectively.

This is exactly what many organizations do as they grow. They separate the business and system design roles into different people.

The GM executive in charge of the Vehicle Line Executive program split the business and system design roles. He claimed that GM did not haveleaders who combined the required business and technical skills.But business objectives in manufacturing companies can be accomplished only through system-design skills.

It is precisely the ability to formulate a compelling but realistic vision and make good trade-offs that enables profitable products. (…) The product leader must be both an entrepreneur and a system designer.

How does a great Product Leader look like?

Taiichi Ohno - Value Stream Manager - Lean Product Management - Product Owner
Taiichi Ohno – father of Toyota Production System and, probably one of the best Product Managers of all times

Good Value Stream Managers (Product Managers) have the following characteristics:

  • They have a burning desire to create new products and value streams. They are eager to take responsibility and be held accountable.
  • They already have designed systems.
  • They learn fast, technically and otherwise. They have a profound grasp of engineering and economic fundamentals. They can communicate with and earn the respect of technologists of all kinds.
  • They like getting their hands dirty, but are able to back away from the details and focus on the big picture.
  • They have good judgment. They need to make a lot of decisions, most of them with incomplete data. They will need to override the beliefs of experts.
  • They can visualize the whole system that they want to create.
  • They communicate their vision of the product and value stream
  • They can work the informal systems of the company, the ones that actually get things done.
  • They have good technical and business intuitions.

While this is a combined technical, leadership, and commercial responsibility, it is the ability to integrate the entire value stream that inspires followers and accomplishes the commercial mission.

System design is a skill, not a phase. System Designers do not manage people, they design and manage the system.

Your first challenge as a system designer is to make sure the team is working on the right problems, which are usually tied very directly to customer needs.

The Vision

So, how do you get the support you need? You have to get people excited about your vision. It provides direction, it unifies the effort, and it has to be beautiful and coherent.

You build your vision out of many inputs. Talk to customers, suppliers, plants, research labs. Work with designers, marketers, and engineers. You have to socialize it, get feedback, incorporate knowledge and creativity. Until, you get the budget.

Your goal is to create a pitch exciting enough, complete enough, and realistic enough to pull the project members forward.

To make this work, however, the company president must always look first to the ESDs — the only people other than the president who are responsible for profit.Unless they have vigorous support from the top, the far larger number of bureaucrats will bury them.

Lean Product Management

As you can see, Lean Product Management as we currently understand in modern customer-centric product companies is nothing new, and we should learn from the experience of Lean organizations.

We can work with you to turn your organization into a real customer-centric product organization for the 21st century. For that, we have designed a development program for Product Owners and Product Managers in different stages of evolution.

Are you a great Software Engineer thinking about moving to Product Management. Are you a great industry specialist and are you wondering whether you should start your own Start Up? Are you a Product Owner with strong technical background?

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