Many companies are transitioning to ‘product mode’ and some are going further to become ‘product led’. This strategic pivot can deliver a competitive edge.
This article explains why companies should adopt a product operating model, identifying the critical junctures in an organisation’s journey where this approach becomes imperative.
It also covers specific anti-patterns. That is, typical responses to recurring problems which cause inefficiency and lead to counterproductive behaviour.
It also sets out the kinds of challenges that can be resolved by adopting this approach.
A product operating model isn’t just about changing how an organisation is structured. It’s a fundamental shift towards:
The most important thing in this approach is delivering value to customers through products and services that evolve based on real-world feedback and changing market dynamics.
The model can be broken down into three key drivers.
The primary driver for adopting a product operating model is a desire to focus on customer-centric innovation.
In contrast to project-based models that emphasise output over outcome, the product model champions the development of solutions that genuinely resonate with customer needs and preferences.
This builds customer loyalty and drives growth.
In a digital-first world, market conditions and customer expectations change at breakneck speed.
A product operating model lets companies adapt quickly and jump on new opportunities with minimal lag, ensuring they remain relevant and competitive.
Lastly, moving to a product mode lays the groundwork for sustainable growth.
By focusing on long-term product evolution and customer satisfaction, organisations can build a loyal user base. They can reduce churn. And they can unlock new revenue streams.
All of this lays a solid foundation for lasting success.
Recognising the right moment to transition to a product operating model is important for organisations aiming to stay competitive and responsive to market dynamics.
Here are some signs it’s time to make the change.
By changing the organisation's structure, processes, and culture to be more agile, customer-centric and always innovating, businesses can better navigate the complexities of today’s market and achieve sustainable growth.
Moving to a product operating model can also fix existing problems. We often see the following.
Traditional siloed structures make it hard for people to communicate and collaborate, impeding the free flow of ideas and information. A product operating model promotes cross-functional teams, creating a culture where everyone contributes and shares their unique skills.
Many organisations fall into the trap of prioritising output, such as the number of new features released, over outcomes like customer satisfaction or engagement. A product operating model helps them focus on delivering value and measuring success based on tangible outcomes.
Change is difficult, especially for companies that have always done things in a certain way. Transitioning to a product model means embracing experimentation, learning from failures, and celebrating iterative progress.
A common challenge is the lack of autonomy and decision-making power among teams. A product operating model gives teams ownership over their products, encouraging a sense of responsibility. This setup creates more engaged and motivated workforce who are eager to their best.
In a culture that penalises failure and discourages risk-taking, people are afraid to experiment. A product operating model encourages taking smart risks and sees failures as learning opportunities that are essential for innovation and improvement.
Traditional models may not do a good job of allocating resources. They often lead to investment in low-impact initiatives because of legacy priorities or politics. A product operating model helps organisations target resources into what’s most important based on performance, market feedback, and strategic priorities. This ensures resources are focused on high-impact areas.
Organisations often get caught up in short-term objectives, neglecting long-term product health and sustainability. This short-termism can compromise the product's future viability and market fit. A product operating model helps organisations plan for the future, and balance quick wins with sustainable growth and adaptation over time.
Some organisations churn out features without solving real user problems or delivering value. This ‘feature factory’ mentality leads to bloated products with features that may not meet real customer needs. A product operating model shifts the focus towards outcome-based development, where success is measured by the value delivered to the customer, not just the quantity of features produced.
A product operating model helps organisations handle the complexities of modern markets and uncertainty better. It drives innovation and delivers meaningful value to customers.
This leads to sustainable growth, competitive advantage, and being able to adapt quickly.
Here are the key benefits of a product operating model.
A product operating model has a strategic road-mapping and outcome-focused planning built in.
This helps organisations balance short-term achievements with long-term product health and market relevance.
The model creates a workplace where experimentation is encouraged, learning from failure is supported, and innovation is actively pursued.
This helps organisations overcome their aversion to risk and challenges.
By focusing on delivering value to customers and addressing their real needs, a product operating model ensures that development efforts are aligned with what users truly need.
This helps avoid the trap of becoming a feature factory.
By prioritising data and user insights over hierarchical opinions, a product operating model ensures that decisions are informed, objective, and aligned with user needs.
Being flexible with resources lets organisations quickly reallocate them to high-impact initiatives.
This helps organisations make the most of what they have and build products efficiently.
By making UX research and design thinking a key part of the development process, a product operating model ensures that products are intuitive, user-friendly, and truly meet user needs.
A product operating model focuses on rapid iteration cycles and close engagement with users.
This allows for constant learning and swift adaptation, making the product fit the market better over time.
A product operating model pushes organisations to keep up with the latest technology and to use modern tools and practices that can enhance product development and performance.
When a company decides to adopt a product operating model, it’s like starting a whole new chapter in their story.
It makes them better able to deal with the volatile, uncertain, complex, and ambiguous (VUCA) world we operate in. It puts agility at the core of their strategies.
It fosters an environment where rapid experimentation, iterative learning, and customer-centricity are the norms.
It becomes the driving force behind every decision, process, and customer interaction. It shakes up the organisation culture.
And it unlocks the potential for sustainable growth, competitiveness, and the ability to deliver exceptional value to customers.