Product  Operating Model

I recently watched a video from a Scrum.org webinar where Dave West, Scrum.org CEO, discussed a key element of moving towards a customer-focused organisation. He outlined that shifting from a project to a product operating model can benefit an organisation,  concentrating on fostering product thinking, building cross-functional teams, and managing interdependencies between them. He stressed that frameworks serve as guides, but the practical implementation is what truly determines success.

This webinar inspired me to share the essence of my practical experience and observations. 

Transitioning to a product-oriented structure fundamentally changes how value is delivered. While projects focus on temporary efforts with defined start and end dates, products emphasise continuous improvement and long-term customer value. I'm referring to Edward Deming: "Create constancy of purpose: Focus on improving products and services, aiming for long-term competitiveness and job security". This move, while challenging, can be invaluable in specific circumstances.

You may reasonably ask me: How is it beneficial for a business? One key benefit of a product-operating approach lies in its ability to foster customer-centricity. Organisations can deeply understand user needs by focusing on a persistent product and iterating accordingly. This allows for rapid adaptation to market changes and keeps focus on valuable feature development. In contrast, project-based work often prioritises delivering a specific scope within a fixed timeframe, potentially neglecting evolving customer demands.

Furthermore, a product-operating model promotes long-term ownership and accountability. Product teams are responsible for the entire lifecycle of their products, from development to maintenance and improvement. This fosters a sense of ownership and encourages proactive problem-solving, leading to higher quality and more sustainable solutions. This is especially valuable in fast-paced industries like research, software development, and service delivery.

I am particularly accentuating, that the transition becomes invaluable when an organisation aims to:

• Establish recurring revenue streams: Products, unlike projects, can generate continuous value and revenue.

• Achieve sustained competitive advantage: Continuous improvement and innovation around a product provide an edge over competitors who solely focus on one-off projects.

• Enhance customer loyalty: A product-operating approach prioritises building long-lasting customer relationships through consistent value delivery.

• Increase agility and responsiveness: Product teams can quickly adapt to market changes without the constraints of project-based timelines.

However, shifting from a "project-" to a "product-operating" model is not a simple, single-day transformation. It requires a significant cultural and structural overhaul. To begin with mindset shifts - it is crucial. Teams must move from a task-oriented to a value-oriented perspective. Moreover, organisational structures must be realigned, establishing cross-functional product teams with clear ownership and autonomy. Furthermore, investment in product ownership is essential, as this function becomes the driving force behind product strategy and execution. Finally, new value-driven metrics and processes must be implemented to track product performance and customer satisfaction.

To be clear, the transition to a product-operating model does not render projects obsolete. They remain indispensable for discrete initiatives, e.g.: feature introductions, marketing campaigns, and technological research and development.

This change involves evolving roles, communication, and a commitment to continuous learning. It also takes time and a commitment to change management and leadership. Failure to address these aspects can lead to confusion, resistance, and ultimately, a failed transformation. Therefore, while the benefits of a product-operating organisation can be substantial, a carefully planned and executed transition is essential for success.