Profit and Loss Responsibility

Marty Cagan addresses a recurring question from company leaders: should product managers carry P&L responsibility? He traces the idea to consumer packaged goods, where a product manager owned costs, marketing, forecasts and profitability for a discrete product. In modern technology companies, products are shared services built from many interrelated components, so only the CEO typically owns the full P&L. Cagan argues that if leaders want P&L as the team KPI, teams can be measured that way, but in practice they are usually assigned business problems such as growth, churn, engagement or revenue. Because teams affect shared metrics, attributing results to a specific team requires tools like A/B testing.

01Key takeaways

• If leaders want P&L as the team's KPI, it can be used, but it is rarely the primary objective for product teams.
• Give product teams prioritized business problems to solve, which may include growth, retention, engagement or revenue.
• In software, the marginal cost of serving another customer is near zero, so production-focused KPIs matter less.
• Use A/B tests to isolate which team's work actually moved a shared metric.
• Expect that a shared product means few teams own a full P&L, so accountability should be defined by the metrics each team influences.

02Key sections

The origin of the P&L question

The idea that product managers should own P&L comes from consumer packaged goods companies with portfolios of standalone products. That model shaped many people's picture of what a product manager does.

Why the model has changed

Modern software products are shared services built from many components owned by different teams. Only the CEO usually holds full P&L, and each team's work rolls up into the whole.

Metrics teams are actually given

Teams are typically assigned prioritized business problems such as growth, churn, engagement or revenue rather than P&L. Software's near-zero marginal cost also reduces the relevance of production KPIs.

Attributing results with experiments

Because teams work on interrelated components and similar KPIs, isolating each team's impact is hard. A/B testing is the key tool for product attribution.

03From the post

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Summary and takeaways written by PM Atlas; quotes are short excerpts. © the original author.