Product Management vs. Portfolio Management: how they differ

Regardless of how similar they appear at first glance, any expert in either field will tell you that managing a product and a portfolio is not the same thing. While a product manager supervises the development of a specific product or service, a portfolio manager often manages multiple assets for a business. The real difference, however, is not only in the number of projects they manage, but also in how they behave, plan, and work.

In this article, we will look at the key differences and similarities between these two roles. Whether you are a exoerienced product or portfolio manager, a management consultant, a freelancer looking to simplify your online business, or someone else, you will find insightful advice to help you develop your skills and expand your business.

Let us define a few terms to get things started.

What is product management?

Product management talks about keeping an eye on all stages of a product's development, from ideation and research to development, testing, and marketing. It entails developing designs, testing prototypes, troubleshooting problems, and carrying them out daily. In the United States, roughly 42% of product managers send out software updates at least once a week. Their primary goal is to produce goods that meet the needs of both the customer and the business. Product managers typically oversee the product roadmap, define the "what" and "why" of new product features, and link those features to organizational objectives.

What is portfolio management?

Portfolio managers are concerned with all aspects of the business’s offerings. These projects may or may not be related, but they are all managed in a single space known as a portfolio. Managing a portfolio entails monitoring a group of assets and investments to achieve a company's or client's long-term economic goals.

The portfolio management market is currently worth $5,372.90 million, and it is expected to grow to $6,568.44 million by the end of 2028, at a 4.10% annual growth rate.

What are some key differences between Product Management and Portfolio Management?

Scope:

Product managers supervise a product or service from ideation throughout its lifecycle. Portfolio managers, on the other hand, oversee a collection of products, services, and projects, ensuring that each project within the portfolio aligns with the overall goals of the company.

Thus, during decision-making, resource allocation, and risk management, the former is responsible for a specific product, and the latter for the entire range.  

Focus:

Product managers' primary duty is to design products that appeal to the target market, so they frequently enhance features, pricing, and positioning to capture a fair market share. The goal of a portfolio manager is to increase the return on investment for every project, service, and product in the portfolio. As a result, they rank assets based on how they affect the company's revenue goals, putting high-reward projects ahead of lower-reward ones.

Metrics:

Product managers are interested in data about how their particular product performs, such as revenue, customer satisfaction, and reach. On the other hand, managers of a portfolio use metrics that apply to the entire range of goods to guarantee that each performs at its best.

Customer placement:

Product managers put the needs of the customer first. They monitor consumer behavior regarding the product they are in charge of and use the feedback to make necessary adjustments. On the other hand, portfolio managers' top priority is ensuring that the assets are managed profitably. They plan with the customer's needs in mind but also ensure that the portfolio is well-balanced to meet the company's financial objectives.

Position within the organization:

Product managers usually work under portfolio managers. They regularly report updates on the product roadmap, performance, and difficulties. 

What are the similarities between Product Management and Portfolio Management?

1. Increasing ROI

The goal of both is to boost the company's revenue. The first ensures that the product is value-based and profitable for the company, while the second selects and ranks the portfolio's components based on expected returns.

2. Skillset:

Except for a few differences, both require a similar set of skills, such as:

• knowledge and effective communication skills to collaborate and interact with internal and external stakeholders to gather insightful information.

• ability to negotiate and solve problems, and find the least expensive and most effective way to handle a task or challenge.

• strategic planning during product development and iteration in line with the overarching objectives of the business.

3. Value-driven approach:

Both are concerned with providing value to customers. After a product is released, product managers monitor its performance, collect customer feedback, and make necessary adjustments. To do so, they work closely with teams that deal directly with customers. Portfolio managers plan with customers in mind, ensuring that the portfolio includes products that meet their needs.

4. Market analysis:

For both positions, thorough market research is necessary to pinpoint opportunities and assess product-market fit. Product managers pay attention to the competition and market for their products, while portfolio managers do the same for the entire portfolio. By identifying market trends, needs, and opportunities, they can make data-driven decisions about which products to invest in and how to position them.

5. Strategic planning:

Both roles must engage in strategic planning to meet the organization's goals. Product managers must arrange product features according to the objectives and strategy of the company, and portfolio managers must rank projects according to their value to the business. 

Because of the overlap between the two roles, a hybrid term known as product portfolio management has emerged.  

What is Product Portfolio Management?

Simply put, it is a portfolio approach to managing products, applications, or services, whether one or many. Therefore, a single product can be a "one-product portfolio" because it may have multiple aspects, themes, use cases, and markets. Think of it like this: Every interaction a customer has with your brand, product, or service is a product of its own. Your website, customer support, integrations, delivery arrangements, and other elements fall under this category. Working with a portfolio mindset allows you to manage all your products and their various aspects in line with your overall strategy for better results.

The first step in managing a product portfolio for independent contractors who frequently handle various aspects of their business directly is to have a standard, functional website. Our website builder provides a free, modern platform where you can manage all your services, with video conferencing features to communicate with your team and clients, schedule meetings, and get paid.

In conclusion,

The roles of product and portfolio management are similar but different. The first is focused on developing and managing a specific product for a business, while the latter deals with managing a group of projects. Both functions are different in focus, scope, and objectives. However, they are similar in terms of the skills needed, and in their customer-focused and profit-driven approaches.

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