Transitioning from a financial background to a Product Manager role may seem like an arduous leap. After all, what finance skills translate to a Product Management role?
Surprisingly, there is a lot of overlap between these two positions. Where a Product Manager’s job is to oversee the production of a product, it also includes the optimization of the sales and profit margins generated by that product for the business. In doing so, a Product Manager needs to communicate to stakeholders the financial aspects surrounding the product and convey them using financial terminology.
Moving into product management from the finance sector actually gives you a leg up on the competition. While having skills derived from a different background, such as engineering, can be beneficial, a good business sense is one of the most difficult to develop without prior experience, and finance skills are exactly what you’ll need to measure value, which comes first.
One of the core responsibilities of a Product Manager is to oversee the performance of their products. You will do this by monitoring the KPIs (key performance indicators) to assess how effectively a product achieves its business objectives. Awareness of consumer and industry trends, as well as the ability to set and monitor critical KPIs such as customer acquisition costs (CAC), customer conversion rate (CCR), daily active users, feature use, user churn, Net Promoter Score, customer loyalty, and customer lifetime value, are all essential product management skills.
Companies monitor these metrics regularly to ensure that their systems are running smoothly or to make strategic changes if the measurements seem to be off.
If you’re coming from a financial background, you’ll be all too familiar with the measurements of KPIs. Income, Expenses, Assets, and Liabilities are all useful KPIs in finance. However, merely getting these metrics without monitoring and comparing them quarter-to-quarter and year-to-year limits their ability to steer the finances in the right direction. The same is true in Product Management.
Finance Jargon for Product Managers
Here are some standard terms you’ll see used in both worlds:
- Net Present Value (NVP): The difference between the current value of cash inflows and outflows over a period of time is known as net present value (NPV). The NPV is a calculation used to determine the feasibility of a proposed investment or project.
- Return on Investment (ROI): How much do you expect to get back if you spend a certain amount in developing a product? Most businesses have a goal number they want you to hit, or they won’t fund the project.
- Profit and Loss (PnL): The profit and loss (PnL) statement is a financial statement that summarizes sales, expenditures, and expenses over a specific period, usually a fiscal quarter or year.
- Break-Even Analysis: A break-even analysis determines how many units must be sold in order to break even. It’s a simple calculation that tells you whether a product opportunity is viable or not.
Understanding the User Experience
Understanding the customer is the first and most crucial step in both Product Management and Finance. The better you understand your users and clients, the more likely you will produce a product or service that they can afford and, better yet, are willing to purchase.
Having insight into the differences between a user’s “needs” and “wants” from both a product viewpoint as well as a financial one is a vital component for success. Being able to address these aspects of a user experience is necessary to formulate the product’s roadmap.
While a product roadmap is designed to provide a detailed summary of all facets of a new product, including priorities, timeline, functionality, and resources, the ultimate goal is to convince stakeholders as to its viability. With a financial background, you will be able to convey the business objectives using metrics with which the majority of stakeholders can identify and subsequently make sound decisions.
As a Product Manager, you must contribute to the definition of the company’s vision and then work with that vision with practical and achievable objectives.
Whether you remain in the financial industry as a product manager or take your finance skills to different verticals, having the ability to forecast, use critical, analytical, and logical thinking, incorporate inductive and deductive reasoning skills are all required for strategic planning.
When it comes to identifying and prioritizing the objectives of a product roadmap, strategic thinking is mandatory. You should be able to predict how long each step of the product life cycle will take and when demand cycles will enable you to better position your product. You’ll also need to devise plans for dealing with unexpected costs and risks, a skill you will have fostered in the financial sector.
In today’s competitive market, strong leadership is vital to ensuring that companies remain financially adaptable and develop resilience and sustainability. As a financial professional, a lack of leadership skills can see your competitive advantage quickly overtaken.
In a similar vein to being a good leader in the financial sector, you will need to transition the same skills to your new Product Manager role. As a Product Manager, you are the leader of the product. You are the face of your product and the voice of the consumer for your teams, and you work with a variety of teams and external stakeholders daily. As the product’s spokesperson, you must be able to clearly articulate the product’s vision and plan to the rest of the team.
You are the archive keeper of all product information as the Product Manager. That means it’s your responsibility to keep internal and external team members informed of what’s going on. This is why being a good leader and having communication skills are critical. It’s also your responsibility to provide your design, engineering, and development teams with consistent and detailed direction and guidance.
Misaligned expectations and missed deadlines can result from poorly presented information. If you find yourself in this scenario, you must use the finance skills you developed to plan for the unexpected and adapt to ever-changing environments.
Transitioning from Finance into Product Management
As you can see, there are several overlapping skillsets shared between Product Managers and Finance Professionals. However, understanding how to leverage these finance skills during a Product Manager job hunt can seem daunting.
Are you looking to make a career transition from finance to product management? Schedule a call today for a free consultation with one of our career coaches to learn how we can help kick-start your career.