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Decentralization of product management in the technology industry

Stern Stewart & CO. GmbH
Salvatorplatz 4
80333 Munich

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Starting situation – strong centralized product management resulted in greater customer distance

Product management and product development at a leading global manufacturer of lights were both heavily centralized. One consequence of this was that centrally developed products frequently did not meet the regulations and requirements in the markets for which they were ultimately intended. There was virtually no exchange or transfer of expertise between the markets. In addition, unclear distribution of roles resulted in duplication of roles in customer acquisition, and thus to an inconsistent approach to customers.

Project approach – lending an ear to customers – decentralization of product management

Firstly, the tasks of the product manager and the future innovation requirements were clearly defined. Based on this, a top-down and bottom-up capacity analysis was performed and compared with competitors by means of benchmarking. This comparison showed that there were clearly too many product managers in central positions. To achieve the target of greater decentralization, the markets were re-evaluated based on clearly defined criteria (e.g. volt number, wages, and degree of innovation). This yielded a new grouping of countries with similar requirements, allowing central overcapacity to be relocated to individual markets. This proximity to the local market promoted greater market knowledge, faster response times, and shorter product cycles.

Finding – international product management: as central as possible and as local as required

Globalization presents companies with the challenge of making allowance for regional differences and the special requirements of individual markets. This is made much more difficult if product management is too strongly centralized. Decentralization and thus greater regional responsibility, along with a knowledge of local products, can be the answer to the problem. At the same time, the balancing act between costs and complexity and the required market proximity need to be defined for each company and implemented on a case-by-case basis. 


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