With the introduction of LLMs and tools like ChatGPT, it is more apparent than ever that every organization is digital. Digital technology will support, design, maintain, and enable the organization's goods or services. How organizations are structured, managed, and governed will be increasingly like that of digital natives. However, unlike digital natives, legacy and tradition make it hard for traditional organizations to embrace digital approaches.
That challenge motivated the book “Project to Product - How to survive and thrive in the age of digital disruption with the flow framework by Mik Kersten.” The book describes how organizations must move from a project-oriented approach to funding and running delivery to a product-oriented one. Organizations must deliver products rather than finish projects. Mik compares the production line of BMW to the flow of work delivering software in a bank, highlighting, in the case of the bank, a lack of transparency, bottlenecks, waste, and confused goals and objectives as key differences between a product approach and a project approach. Projects encourage a focus on processes, milestones, and tasks, whereas products focus on outcomes, objectives, and value. Of course, there are exceptions, but treating the services you deliver to clients as a product seems simple and attractive.
But what does the change mean?
Moving to product is not just a case of changing mindset. Organizations need to consider three primary shifts, including mindset, to realize the opportunity of a product approach.
- The Mindset—A product mindset combines three often competing sets of needs: the user/customer, the business, and the technology. Organizations embrace the product mindset by approaching work in the context of those needs. This results in a vision rather than a feature-driven approach to work.
- Alignment—How teams and teams of teams are aligned can help or hinder a move to product. Products must be front and center in how organizations structure, incentivize and support their teams.
- Funding and measuring—How work is planned, funded, and measured needs to be aligned with the product. To ensure an agile approach, there must be a clear flow from objectives, investment, and measurement.
Organizations must embrace a product operating model to make these three things real. Because these products are digital, that operating model must be agile. Digital products are impacted by uncertainty in terms of client needs/expectations, technology, and the landscape those products fit within, so Agile is the perfect fit.
The Agile Product Operating Model has seven characteristics.
- Self-Managing Teams—Self-managing, empowered teams are the engine of product delivery. They include ALL the skills necessary to deliver value to users with limited dependencies on external services and people. Unsurprisingly, the most successful, innovative organizations have excellent teams with a clear line of sight to the problems they are solving.
- Learning-oriented—Teams are allowed to work in an empirical, experimentation-oriented manner, delivering frequently in small chunks of value. By enabling product teams to deliver frequently and learn, organizations create an environment where innovation grows as the knowledge of the user and problem comes into focus.
- Incentives align—Teams work on products to deliver value that aligns with the business strategy. Therefore, incentives and invisible incentives associated with status and authority must support this model. Individual measures must be replaced with team measures that connect directly to measurable business objectives.
- Product leadership is empowered. Decision-making processes are simple and connected to delivery teams. When teams discover information that requires action, decisions are quickly made without the need to wade through layers of management and bureaucracy. This will also increase the organization's willingness to accept mistakes within defined, bound risk parameters.
- Strategy is integrated—Business strategy connects clearly to product and technology strategy, making it easy to measure success and report progress. The strategy is also appropriately balanced between technology and business needs. By ensuring that technology and business needs are considered with a long-term or at least medium-term eye to the future, organizations reduce long-term risk or explicitly ignore it.
- Fund product, not work - Products have a clear value and connection to the business strategy. That value provides the ability to decide on the level of investment. Once that decision is made, teams are empowered to decide on the most critical work. By decoupling funding from work management, teams deliver the correct value and can change based on an increased understanding of the product's needs.
- Governance is flexible but transparent. The one-size-fits-all approach to management is replaced by a flexible model that relies on transparency and empowerment to ensure the right decisions are made and risk is reduced.
By adopting the Agile Product Operating Model, organizations can realize the potential of the Project to Product approach, providing an approach that unifies the organization in pursuit of value.