The Benefits of P&L Product Management

Ok, so if I want to talk about P&L management (which I actually don’t), I have to first outline one majorly important thing. This is leaning more into the purview of the financial people, or the bean counters if you will, than it is about this specific field.

I don’t like talking about largely financial logistics like this, they’re neither my field of interest nor my field of expertise. The problem with this is that product management people, among other specialist fields, must actually understand a little bit about P&L management, because it is the source of many of our biggest obstacles.

What it’s About:

P&L stands for profit and loss. It’s basically using a pretty binary filter to view the trends within a business dynamic. What is costing money, but not contributing to sum profit? What is actually returning more than what is going into it?

Those things consuming but not really contributing in higher quantity in return, are losses. Things that happen that aren’t part of the system to bring about revenue, such as failed products, failed marketing campaigns and other such unpleasant things are also losses.

An Analogy:

This heralds to a customer experience concept which is itself an analog of conservation of energy with maximum output. In customer experience, this is used in apologia for focus on customer loyalty (and it’s a truism at that).

That very thing – loyalty- is also a big factor and stimulus for close attention being paid to P&L. Retention of customers is a profit if it doesn’t require exorbitant measures being taken.

Customer acquisition is scarcely profitable, and if it’s perpetually necessary to create need even in customers who have used you before, then you have losses there.

Why Here:

Well, when it all boils down to it, everything’s all about balances of losses and profits, and strategies in response to these to garner more desired results down the line. When something costs money and has no profitability, it is discarded or “patched”, where something profitable is analyzed to see if it can be made to produce far more profit.

The skill of managing these accurately, as well as understanding their implications on any given subject at hand, greatly lends to more sound and more effective practices in product management and many other fields as well.

It also helps us to understand the constraints that these things bring to us and why things are the obstacles they tend to be. In doing this, we’ll grow to see the financial people less as enemies and more just as moderators who have to enforce unpleasant but unavoidable rules.

It’s unfortunate.

There’s really not that much more I can say about this topic, to be honest with you. I’m reaching for any additional caveats or points, and I’m already completely out of pretty much everything to say about this at this point. And woe upon me, for I have to do two more pieces on this, and there was barely enough for one.

bnr19

 

Mark Silver
Mark is the Lead Author & Editor of Spectechular Blog. Mark established the Spectechular blog to create a source for news and discussion about some of the issues, challenges, news, and ideas relating to Product Management.
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