Heads of Product Report Heavy Toll From Payments Uncertainty

Corporate heads of product drive profitability by setting strategic goals and supporting innovation across an organization’s entire product line. Unlike CFOs and corporate heads of payments, product executives tend to put their focus on aligning a company’s offerings with market demands and ensuring timely product releases.

But according to “What Keeps Chief Product Officers Awake at Night” — a PYMNTS Intelligence report based in part on surveys with 60 corporate heads of product — 40% of heads of product working on behalf of companies that generate between $400 million to $750 million in annual revenue must negotiate highly uncertain environments. Meanwhile, 31% of those managing product lines at smaller firms (generating between $100 million and $250 million in revenues) say the same.

Uncertainty can lead to a heavy financial toll and have significant consequences across companies of all sizes. Many heads of product surveyed report diminished profit margins (48%) and missed opportunities (32%) as key adverse effects are triggered by uncertainty. In fact, overall, heads of product estimate the total cost of uncertainty at 7.2% of revenue.

The primary concerns of middle-market firms’ heads of products revolve around customer demand behavior. That’s because customer demand behavior directly shapes an organization’s ability to update existing products or introduce new offerings. For example, the uncertainty introduced by a delayed product release can reduce profits.

In light of the impact that shifts in customer demand can have, it probably comes as no surprise to learn that nearly one-third of heads of product we surveyed say customer demand behavior is their biggest source of uncertainty. As we explain in our report, a slight change in customer demand can alter a firm’s entire product strategy as well as its ability to innovate and agilely release additional product.

But as the figure above illustrates, changing customer demand is only one source of uncertainty heads of product must deal with. Twenty-three percent of respondents say competitive positioning can add to uncertainty, while 20% say reacting to compliance and regulatory requirements can add to their uncertainty.

Interestingly, only about 17% identified supply chain integrity issues as a major source of uncertainty in their world. When we surveyed CFOs and heads of payments about the sources of their sources of uncertainty for our “Heads of Payments Zero In on Customer Behavior in Uncertainty Debate” report, supply chain integrity nearly topped the list for 32% of CFOs and 30% of heads of payments. (Meanwhile customer demand behavior was a source of uncertainty for 33% of CFOs and 28% of heads of payments.)

As “What Keeps Chief Product Officers Awake at Night” concludes, while analytics and automation have proven to be effective tools for CFOs and heads of payments seeking to mitigate uncertainty, we found that heads of product are less inclined to use those tools. This suggests there may be barriers to implementing data and tech-driven solutions for heads of product. By emphasizing strategic foresight and operational agility, heads of product may be better positioned to navigate uncertainties — and seize emerging opportunities.

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