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Being Customer Centric In The Subscription Economy Means A CPO Is Indispensable

Tien Tzuo
CEO, Zuora

The Subscription Economy has given a rise to several new roles in the C Suite as businesses transition away from direct ownership to direct digital relationships. One of those budding roles has been the Chief Product Officer (CPOs). They’re incredibly vital for companies making the shift away from being product centric to putting direct and digital relationships first – or at least built within products and services. They’re integral to business transformations because they usually head product operations, strategy, and coordinate between different teams. They’re the seeds of growth that scaling companies need in order to become and stay relevant – in other words, indispensable.

Every major corporation worth their salt has a CPO now. I wanted to talk about more of their importance and place in today’s economy with this week’s Subscribed Weekly, so I spoke with Renée Niemi, a former CPO and perhaps one of the first to be. Today, she runs a social and learning community called Products That Count with her partners at Mighty Capital and coaches other CPO’s on things like digital business transformation. 

Read on for our discussion on the rise of CPOs, what keeps them up at night, and what turns hardware-as-a-service strategies that focus on value, into indispensable products. 


Well, Renée, first off, it’s nice to meet you and thank you for joining us. Can you tell us a little bit about yourself and what prompted you to get into products and product leadership? 

Tien, thanks for having me! This is my favorite topic! I grew up in Silicon Valley so, I’ve been around technology my entire life. Right out of school, my curiosity, love and passion, frankly, for product, really drove me down that product management path. I have a degree in electrical engineering. In the early days, it was very much hardware product management. Believe it or not, they didn’t always call it product management. The role of product management is still reasonably new in the business world. 

Over time, it ended up being product leadership. Then I took on more and more roles because I found that without marketing being successful, my products weren’t successful. I found with support being successful, the products can be successful. And so, I ended up taking an escalating series of roles over my career, and then ultimately ended up the Chief Product Officer.

You really see companies start to shift with the onset of more digital services, probably 15 years ago. Again, there weren’t a lot of Chief Product Officers out there in those days. In fact, I may have been one of the first. But the real shift was the mindset which was from, ‘what’s the next great product’ to ‘what’s the next great business and business model and how do we really solve our customers’ (or your subscribers) problems in a unique and interesting way that creates a unique business?’ I ended up moving into more general management roles, higher level leadership roles, but always product centric and product driven. I led the Smart Home business at Logitech. At Google, I led the business for Android and Chrome for work and education.

So that’s my story. Through and through, at the end of the day, I can best be described as an extremely passionate, well-schooled product leader and business leader. I believe that when you have a great product, that magic happens. It’s very easy to say you have a great product, but very hard to wrap all of the pieces around it successfully.

Products-as-a-service have some responsibility for this shift in hiring CPOs, with hardware, software, and cloud leading the way. Why is “the rise of the CPO” happening?

My personal experience was more hardware-driven where there was a lot of complexity and we were trying to change the business models to more subscription-based. But all the cloud based companies and software companies have had the role of CPO for a long time. The tech companies tend to be very product led and understand the role of digital services within that. We’re starting to see the CPO role emerge in traditional businesses, especially those going through digital transformations. Not always, but product plays a big role in those transformations. Traditional businesses can be retail, but are also very much banking, media like CNN, and we’re also starting to see it in healthcare. Think large hospitals and national care centers (i.e. cancer, dialysis, etc.).

The reason why you didn’t see these roles before was because traditional business mindsets were very, very different. It was less about the product and more about the service, whether it be the financial service or the medical care or whatever those pieces are. But with digital, their entire worlds are being disrupted. And there was just nobody in the C-suite in these companies that could lead it.

I would say a CIO would try to lead from a tech perspective, but would hit a wall when it came to the business and customer elements because the CIO is used to solving internal problems, not external problems. The other option might be a CTO which is great when you have underlying technology needs. But again, a CTO is not customer centric.

So, this role of CPO is really starting to emerge in these traditional businesses because of this shift to digital. They’re not just responsible for the product, but they also have the task of developing the digital version of that business and reinventing the culture to a product culture. That’s hard. I remember having a conversation with a CPO at a very large media company that said, “My boss is a journalist. He grew up through the ranks in journalism. He just doesn’t understand the product. He wants to understand the product.”

This particular CPO was just spending so much time just trying to educate and shift the mindset of this particular media company.

We see this shift happening a lot in the Subscription Economy – traditional businesses and industries now want to operate like a technology business. What should be keeping CPOs up at night, especially with this shift in the industry?  

What keeps CPOs up at night is talent and decisions around talent.  Because there’s a huge competitive fight for talent. There is always a challenge getting really good product managers and product leaders, but with digital transformation, the need is so much bigger. Plus, the education system, you can’t go to school to be a product manager. By the way, that’s also changing. 

So, where do you go to get the good talent? And how do you stay competitive and create an environment that retains the best talent that you have? I would say that, by far, is the number one challenge. And in fact, I talked to a CPO a while back. His particular company is based in Brazil, even though they do business across South America. He said, “Not only do you have all the traditional challenges, but then you have the challenge of being headquartered in Brazil.” He ended up creating his own product school, got his own funnel, and he teaches to create new product leaders.

What are your thoughts on products transitioning to “as-a-service” models, like hardware, for example?

Listen, I am a big believer (and the research proves) that you have to add value to your customer. Any business that is going to a subscription model with a business-led initiative versus a customer-led initiative will fail. I think there’s lots of failed examples, especially on the hardware side. That being said, you can see there are scenarios that a hardware-led business model or hardware-as-a-service model may make sense, especially when some hardware has consumables associated with it. For instance, my printer used to drive me bananas, because I’d be in the middle of printing something out and then I’d run out of ink. I ended up subscribing to HP Inc. subscription and now, I have these cartridges that last two years. 

I’m all in, because I don’t have to constantly be annoyed by buying these ink cartridges. So it solved a big problem for me, right? That’s an example where it actually makes a ton of sense.

Other examples might include a car as a service, where you get the latest and greatest car for a monthly subscription fee. There’s a lot of value and there’s a big segment of the population who just wants the latest and greatest. Doesn’t want anything to break down, wants the best bells and whistles. The secret here is being customer centric, not business centric when you’re making the decision to go from a one-off purchase to a subscription model.

It’s sort of a hot topic: Chief Information Officers are also becoming more and more prevalent at software or service companies because they have all this customer data. Tell me the difference between CIOs and CPOs. 

Traditionally, CIOs are responsible for internal tools. Depending on the CIO, I have seen them  exert control over needed tools such as data systems that the product managers need to get product usage insights.Through that relationship, they try to take on more and more of the product delivery but that model rarely succeeds.

The most successful model that I see is when the CIO sees themselves as a service organization to internal business functions such as the CFO to run the finance systems, operations to run the supply chain, etc.   In that context, the CIO is a partner  to the CPO or the product organization to get them the systems that they need to deliver great products. 

How do you think data plays a role in building better customer or user experiences? In today’s world, there’s no excuse for this effort not to be data driven. 

You almost have to look at data in buckets. So there’s business data, there’s product usage data, and then there’s learning data. And what I mean, by learning data, this is a kind of core intelligence in the product, which is different from usage data. Not all companies use both of the last two. But clearly, data insights to how people are using the product is core and fundamental to a product manager. They’ll use it to do everything from testing out a new feature, to A/B testing where they’ll launch two versions against a test group of users and look at results, to deciding where there may be a usability problem, to deciding prioritization issues. That usage data is so critical and the best product leaders really live in that data.

The second data also comes from usage, but is often augmented by third party data. That data funnels into everything you’ve heard about machine learning and AI, and that makes your product constantly get better and smarter.

Business data is a whole different animal. That will usually come from the CIO. And that’s just analyzing, who’s buying? How are they finding the product? The whole funnel, think of that as the funnel to the customer journey. There’s all sorts of tricks that people use. Data is fundamental. Those product managers who aren’t using data in these three ways are not being successful. That’s all I have to say.

This has been a delightful discussion, Renee. Thanks so much for your insight and for your time this week.

Thank you, Tien. This has been delightful and thanks for having me. Like I said, I’m passionate about product management and am glad we spoke!

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