There are many ways to answer this question - I will try to keep it simple: Most of the top 1% of Product Managers are folks who get their team to focus on work that produces the maximum impact. In order to do this, top product managers gather data and interview enough users to have a clear understanding of the following questions:Who - Who is your user? What do they care about in their day to day life? What kind of business are they involved in? How they think about themselves?
Why - Why do they need your product? Why can't they find a solution? Why do they find existing solutions frustrating? Why will they go through the trouble of learning/installing/deploying something new?
What - What will happen if the product is brought to market? How will the world of your customers change? How will the world of their customers change? How will the world in general change?
Relentless data mining, interviewing, focus groups and other methods will ultimately help provide a clear understanding of these questions. Once you can articulate these three questions, you will be ahead of 99% of Product Managers in the field.
-mb
PS: The question was originally answered on Quora here.
PPS: If you liked this post you might also like Zombie Products article as well.