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Measuring cost vs. measuring value?

Discussing the differences between Product Management in the Private and Public sector.

There has always been a perceived difference in how Product Managers in the public and private sector work, what their priorities are and their key focuses.

Historically at its most simplistic the view has been that within the Public sector the Product Manager focuses on what user’s need. Whereas Product Managers in the private sector focus on what users want.

Interestingly as more organisations in the Private Sector adopt the user centric design principles championed by Government Digital services and public sector organisations the difference in the role between the Private and public sectors decreases. Within the public sector we do indeed focus on user’s needs, however we do have to consider their wants as well if we want to create services our users will enjoy using.

Equally while Product Managers in the Private Sector will focus more on want’s, as that is where their revenue is likely to be, and what will give them the edge in the market. But they will also consider need’s, because when developing a service for users, it’s important to understand whether users wants and needs are polar opposites to ensure your not setting your scope too small or your costs too high. As such, while this difference between need and want is possibly still the best way to separate the roles, they are not as different as they once were.

A simple task backlog

No matter what sector they work in, be that private sector or Public, Product Managers are still there to ‘represent’ the end user and their needs/wants, within the Public sector the Product Manager is more likely to work with a user researcher who will help them understand those needs, and there will be more of a focus on user research to ensure the users are properly understood and represented, but at their core the Product Manager is still there to ensure those needs are met in the best possible way.

They are also responsible for understanding the opportunities and gaps within the market place, looking for opportunities to fill a need that is missing; for developing their Product strategy and roadmap and setting the scope for their Product to meet the needs or target the gaps they have identified.

So, perhaps the other key difference between the Private and Public sector Product Managers, is cost revenue. Within the Private Sector, the Product Manager is responsible for ensuring the Product or Service they are developing will fit within the Business Model, they manage the profit and loss for their Products, and the development of the business development strategy. They will quantify the return on investment predominantly through revenue return. They will be examining the market place to understand what similar products are out there, and their costs to users to use; Once they have a rough idea on how much they can make they can determine their ROI is based on how much it will cost to develop vs. how much profit are they likely to make from users once the Product or service is live.

Within the Public sector there is not the same onus on cost revenue. Departments are funded by the treasury, very few agencies or bodies generate their own revenue, and while there are some, they are not looking to create a profit in the same way the private sector is.

Instead the return on investment we are considering in the Public sector is about value to the public purse. Is there value in spending public money on developing this product or service? We do this by examining how much is currently spent on running any existing services; how much is ‘lost’ through waste or inefficiencies; how much can be saved by introducing service improvements or a new service for users and how much will it likely cost to develop? If the savings out way the spend, then there is likely value in us using public money to develop this.

A dashboard showing user numbers

This approach to determining value is the difference between the public and private sector product managers, but also shows how similar the roles actually are. Product Managers, no matter what sector they are in, care about their users and developing products and services for them. They look to the market to understand opportunities; they work to develop their Product strategy and to quantify the available Return on Investment.

I think we need to put to bed this idea that the Private sector solely puts revenue over users, and that the Public sector doesn’t care about costs.  Both Private sector and Public sector Product Managers have a lot they can learn from each other, and we should be looking for more opportunities to join up and share our experiences and knowledge.

I believe both Private sector and Public sector Product Managers have a lot they can learn from each other, and we should be looking for more opportunities to join up and share our experiences and knowledge. I think we need to put to bed this idea that the Private sector solely puts revenue over users, and that the Public sector doesn’t care about costs.