Until the 2010s, the role of Chief Product Officer was practically unheard of. Since then, however, the role has been steadily growing into a mainstream discipline.
Recent data suggests that around 30% of the Fortune 1000 companies now have a CPO. That’s up from 15% in 2022. And it’s not just large, established companies that are embracing and investing in Chief Product Officers, either. Practically all venture companies, particularly in Europe, are prioritising this as a key executive role.
The maturity of product leadership and management is centered around big tech hubs – mainly in the US and Western Europe – and we’d say it’s still developing in many regions as a stand-alone function. However, with the rise of big digital organisations in the last decade, the role of Chief Product Officer has really taken off.
So, what exactly is a Chief Product Officer (CPO) and do you need one for your company? In this article, we’ll walk you through:
- Profile & responsibilities of a CPO
- The three types of product leader
- When to bring in a CPO
- Should you consider a VP or Head instead?
- What a CPO gets paid
What is a Chief Product Officer?
A Chief Product Officer is a high-level executive, responsible for overseeing and guiding the development and management of a company’s product portfolio. This is a key strategic position that plays a pivotal role in shaping a company’s product vision and ensuring that their products align with market needs.
CPO Demographic breakdown
According to our own research, there are around 10,000 people working in product leadership in Europe – roughly 700 of those have the active job title of Chief Product Officer. When it comes to gender diversity, there is a heavy male to female weighting with 77% of CPOs being male and 23% female.
When looking into the academic backgrounds of CPOs in Europe, we found the most popular degrees for product leaders are Business Management, Computer Science, and Economics. The vast majority of CPOs have a master’s degree and held a tech-oriented role before moving into product leadership.
Although the CPO role is gaining traction across all sectors of the tech industry, there are a few that particularly stand out. For example, the highest numbers of CPOs are working in SaaS, IT, Fintech, and Security and the average tenure of a CPO in any one role is roughly two years.
Responsibilities of a CPO
As with all roles, the exact responsibilities of a CPO vary depending on the industry, company, and market they’re working in. Here are the 7 most important ones:
- Product strategy: The CPO defines the company’s overall product strategy. This involves identifying market opportunities, understanding customer needs, and aligning the product roadmap with the company’s goals.
- Product development: The CPO leads the product development process, including conceptualization and design.
- Product roadmap: The Chief Product Officer is responsible for creating and managing the product roadmap that outlines the timeline and prioritization of new features, enhancements, and products.
- Market research: To understand customer needs and trends. Research informs the product strategy and helps companies stay on top of market changes.
- Product launch: The CPO oversees the launch of new products or features and supports the sales and marketing functions to bring them to market.
- Performance and risk management: As well as monitoring product performance (tracking adoption, customer satisfaction and revenue), the CPO handles identifying and mitigating risk. This includes competitive challenges and adapting to market changes.
- Talent management: CPOs build and manage high-performing product teams – including hiring, mentoring, and retaining skilled product managers, designers, and engineers.
The difference between a good CPO and a great one
As well as the responsibilities outlined above, a skilled CPO can also successfully foster a culture of innovation within the company. They encourage creative thinking, support exploration of new technologies, and identify opportunities for disruptive product ideas. In addition, the great ones are expert collaborators – working cross-functionally with various departments – and excel when it comes to stakeholder communication and engagement.
The three types of product leader
In the world of product, there are three main types of leaders. They are:
- Business-focused: A business-focused CPO grew their career in product roles. They generally have an early background in sales, customer development or management consulting and focus on business-specific metrics such as revenue, user acquisition, and product awareness.
- Design-focused: This is perhaps the least common career progression route into senior product leadership, but it does happen. These leaders are focused on user experience, user interfaces, and the broader user experience, usually coming from UX/UI and design backgrounds.
- Technical background: – Typically, these are leaders who started out in tech and moved over into product. Think of extroverted engineers who want to and can answer the ‘what’ and ‘why’ of product development in addition to ‘how’ we’re going to do it. Leaders with this type of background also open themselves up to combined CPTO (Chief Product and Tech Officers) roles.
When making a hire, you’ll want to think hard about the kind of product leader you need. Consider what you want this person to drive and be able to achieve in their role and what makes sense for your business in the long run.
When to hire a product leader and do they need to be a CPO?
The short answer to this is, it depends. The size of your company, business strategy, how you want to build your team, and the stage you’re at all play a role. Developing a solid product team early on can make a big difference to your ability to execute on value. However, the hire you make must suit your growth plans. As a founder or CEO, you can assign whatever job titles you like. But here’s how we see it.
For most startups and young scale-ups, the founder is the company’s first product leader. They’re the ones with the vision and knowledge, and product is usually one of the areas they’re most passionate about. As the company grows, however, the founder/CEO is going to get pulled in many different directions and will have increasingly less time to focus on product. Although they’ll still want to remain involved to some extent, they’ll have less capacity to execute.
If this is the stage your company is at, you’re best off hiring a Head of Product or VP Product. You need someone who can take things off your plate and run the day-to-day product leadership work. As a CEO, if you’re still planning to be hands-on in developing the product strategy and vision yourself, and your product team will remain relatively small for the time being, you probably don’t need a CPO just yet.
Instead, look for a VP or Head of who can handle a small team and run product operation well. Usually, we see this hire coming on board after the first significant fundraise.
You can’t take a title back…
Remember, you can also never take away a C-level title once you’ve given it out. So, when a company is young and growing, it’s a good idea to leave space at the top for you to hire a CPO later, when you really need one.
Now, at a more established level, when you’re on a high growth trajectory and have more budget to play with, this is the time to bring in a CPO. This is the person who can do everything someone at VP or Head level can do but also bring in the big picture and set the product agenda for the entire company.
They’re the person who can build you a product roadmap for the next 3 or 5 years and get you on track to being a leader in your field, rather than simply keeping your product development ticking over. As a founder or CEO, you want to bring on a CPO when you’re looking for a product leader who can lead bigger teams, including managers, and take the reins when it comes not just execution, but also vision, strategy, team, and culture for the entire product function, as well.
Compensation: average salary of CPO in Europe
What a CPO gets paid depends on several factors. This includes company size, location, and sector, level of investment in the company, experience, and responsibilities of the role.
To date, we’ve hired more than 20 product leaders across a wide variety of tech sectors in Europe. We’ve also conducted extensive compensation analysis and benchmarking using the Talent Intelligence platform Navis.
What we’ve found is that compensation packages for CPOs are usually a mix of base salary, equity, and bonus. Typically, the package falls within the range of €160,000 to €240,000. But these ranges are not absolute. They can be higher or lower depending on the candidate and the company that’s hiring.
Here are five examples of real (anonymized) compensation packages for CPOs from the last year:
- CPO, France, B2C SaaS, €145k base + 30% bonus + equity
- CPO, Germany, B2B SaaS, €170k base + 20% bonus + equity
- CPO, Ireland, B2B Fintech, €200k base + €40k bonus + equity
- CPO, UK, Fintech, €250k base + €75k bonus + equity
- CPTO, The Netherlands, VC, €220k base + 50% bonus