By Benjamin Wheaton – Tech & Product Specialist
When I started my career in Executive search, the product function was in its relative infancy. Product management was often seen as a tactical role, responsible for execution rather than strategy. However, as software products became more complex and the market more competitive, the importance of product management has grown exponentially and today product management organisations are pivotal drivers of growth for software companies around the world. However, European enterprise software firms still often face unique challenges when it comes to hiring and retaining top-tier product leadership talent.
In this article, I wanted to explore how the product function has evolved and also review some of the particular challenges that European companies encounter in securing product leadership and how these might be managed effectively, now and into the future. If European software companies are to expand into global leaders (rather than be sold early to US competitors) then the ongoing development of this key leadership function is of paramount importance.
I believe the key areas where product management has evolved are the following:
Customer-Centric Focus
Modern product management is deeply rooted in understanding and serving of customer’s needs. It involves gathering feedback, conducting user research, and leveraging your data and AI to make informed and rapid product decisions.
Cross-Functional Collaboration
Product managers now work closely with engineering, design, marketing, and sales teams to align product development with business goals. Effective communication and collaboration are essential skills and working effectively across the organisation is critical.
Data-Driven Decision-Making
Data analytics and metrics guide product managers in assessing product performance, identifying areas for improvement, and making data-driven decisions. As AI and automation technologies continue to evolve rapidly these are arguably one of the most exciting and dynamic areas in modern product management.
Agile Methodologies
Agile and iterative development methodologies have become the norm, allowing for faster product iteration and adaptation to market changes.
Product-Led Growth
Many successful enterprise software companies now prioritise product-led growth, where the product itself is the primary driver of customer acquisition and expansion; a massive departure from when I came into this sector when a good product was important, but sales was the key driver in most software businesses.
European Challenges in Hiring Product Leadership
Despite the increasing importance of product management, European enterprise software companies often face challenges in hiring and retaining top product leadership talent:
Talent Shortage
There is a shortage of experienced product leaders in Europe compared to the tech hubs in the US. This is especially acute in high-growth companies that pass $50M ARR when the product organisation needs to grow significantly to continue to support growth on a much larger scale. Product leaders who have operated and led successfully in this more ‘industrialised’ manner are very rare indeed and the competition for this limited pool of talent in Europe is therefore very fierce.
Lack of Established Ecosystems
Whilst the ecosystem in Europe is growing rapidly, it has not yet developed into the rich primordial soup of the US. In Europe, we are getting there, but this is a generational thing. We’re starting to realise the economic benefits of having European success stories such as Skype, Spotify, Adyen, Supercell and Zalando – businesses that have created enormous wealth, were fantastic academies for budding entrepreneurs, and have added enormously to the valuable network of angel investors. However, today, Europe still lacks the cohesive tech ecosystem found in places like Silicon Valley. This can hinder networking and mentorship opportunities for product managers.
Cultural Differences
Europe’s diverse cultural landscape can present challenges in building cohesive product teams, as different regions may have varying work styles and expectations. Europe is a bunch of quite different markets – that being said, the product organisation transcends geographic boundaries and companies pursuing product driven growth often are not overly hampered by this, though it clearly adds a layer of additional complexity.
Investment and Risk Aversion
European investors have historically favoured traditional industries over tech startups, leading to a risk-averse culture that can be less supportive of rapid product innovation. Obviously, this has changed significantly in the past 10 years or so. However, European investors remain much more conservative than their US counterparts.
Addressing some of these challenges
To build a thriving software industry in Europe and overcome these challenges, several strategies can be pursued:
Investment in Education and Training
Programs to encourage universities and colleges to offer specialised courses in product management. This will help create a pipeline of skilled talent.
Foster Cross-Border Collaboration
The promotion of collaboration and knowledge-sharing among the leading European tech hubs can help bridge talent gaps and create a more unified tech ecosystem.
Attracting and Retaining Global Talent
European companies can attract experienced product leaders from other regions by offering competitive compensation packages, flexible work arrangements, and a vibrant work-life balance. Historically, European companies have offered less lucrative opportunities for product leadership than their US competitors. This is changing and needs to continue to improve if the region is to attract and retain the very best people in this critical area.
Promotion of a Risk-Tolerant Culture
The encouragement of a culture of innovation and risk-taking within the European tech industry is critical. Investors and policymakers can support this by providing incentives for startups and scale-ups. Culturally, we also need to change our view of failure. In the US having failed is viewed as a positive learning experience. In Europe it can often be viewed more negatively and this needs to change.
Mentorship and Networking
The creation of mentorship programs and forums where aspiring product managers can learn from experienced leaders is important. This is an area where we are a way behind the US, though there are some positive developments here as the ecosystem continues to grow and become more sophisticated. Events such as La Product, The Product Management Festival and Wey Wey Web are among a growing list of specialist events in the region.
The evolution of the product management function has reshaped the enterprise software landscape, making it a critical driver of growth for companies worldwide. European enterprise software companies must recognise the importance of strong product leadership and address the unique challenges they face in hiring and retaining talent. By investing in education, fostering cross-border collaboration, aggressively hiring and relocating global talent, promoting innovation, and facilitating mentorship, Europe can build a thriving software industry that competes effectively on a global scale and contributes significantly to the region’s economic growth.
It has been interesting to observe, and play a small part, in the development of the ecosystem in Europe over the last decade or so and I’m excited with what the future holds. Who knows – maybe Europe’s first $trillion company is on our client list?