This article outlines seven key development directions for Project Management Offices to effectively support modern product-oriented organizations. Transitioning from a project to a product-oriented operating model requires organisational change in culture, processes, and management. This will result in transforming current PMO services to become more Agile and product-oriented. This article has been written for you if you are interested in the evolution of the PMO toward a strategic product-oriented shift, especially if you are:
- The Head of the PMO office who is charged with transforming it into a new entity that will support and serve an organisation that is evolving towards becoming product-oriented.
- A member of a PMO seeking crucial competencies required in agile and product-oriented organisations.
- An Agile coach or leader, who is asked to help PMO colleagues become more Product-oriented and Agile.
If you are still interested, that's great! Enjoy reading.
In the next section, we will briefly define terms such as PMO, Product, Product-Oriented Organizations. Following that, we will explain why it is important to invest in these competencies and provide insights into how changes in the market will impact them. Finally, we will explore key competencies useful for PMOs in product-oriented organisations and make some final conclusions.
Project Management Office (PMO)
A PMO is a management structure that standardises project-related governance processes and facilitates sharing resources, tools, methodologies, and techniques (Project Management Institute, 2021). Traditionally, PMOs have focused on governance, ensuring projects remain on track, within budget, and compliant with defined processes. Typically, this traditional approach works well for a group of organisations operating in a more predictable environment for which this kind of service will be viable.
Product
Products are mechanisms by which organisations invest, manage, and deliver value. They are vehicles that deliver value with a clear boundary. The product ideally has known stakeholders, well-defined users, customers who pay for it, and people who use it. (Scrum.org, 2024)
Product-oriented organisation
A product-oriented organisation focuses on delivering value through one or more products. These organisations are structured around products rather than traditional functional hierarchies and often use Agile and Lean management principles. They continuously design and improve digital or physical products to deliver value and satisfy customers. Typically, in organisations reorganising themselves toward product-oriented organisations, the operating model of the organisation is changing as well. Typically, we can observe the operation model's gradual evolution toward an agile product operating mode (Scrum.org, 2024). A schematic view of the agile operating model is presented in Figure 1. The literature presents a variety of perspectives on what constitutes a product-oriented organisation, leading to some ambiguity in its definition. For the purposes of this article, we will use the generic definition previously mentioned.
Agile Product Operating model source (Scrum.org, 2024)
Why change towards product orientation?
Product-oriented businesses assume that the product they deliver is the most important aspect to which they are willing to restructure their business. Consequently, the value associated with the product, along with the quality and cost associated with it, is a main determinant of the company's success in the market. In that case, the core foundation and main source of competitive advantage is an organisation's ability to deliver what customers need. Once organisational leadership anticipates this thinking, they like to try to shift all aspects of the organisation (i.e., people, processes, governance, culture, behaviour, financial model, etc.) toward one that is optimised to deliver and maintain a business-oriented approach based on physical or digital products.
Is this the right thing to do?
In the next few years, we will be shaping more and more product-oriented organisations. Evidence of this includes the increased presence of product leaders in the C Suite. Insights Report, 30% of Fortune 1000 companies have a Chife Product Officer (CPO) in 2023, up from 15% in 2022 (Moatti, 2023). A notable proportion of smaller companies tend to have their product managers report directly to the CEO, particularly in cases where the organisation has fewer than 20 product managers. This trend is quite understandable, as in the early stages of a company's development, it is common for the CEO to take on the role of the primary product advocate. As the product evolves and expands, organisations often find it beneficial to allocate more focused resources to the Product function. (productplan.com, 2024)
On the other hand, shifting from project to product is comparable to creating a product-centric technology organization, like becoming a software or digital business. While 66% of leaders think that they are digitally transforming their business, only 11% of CEOs are doing so (Goasduff, 2019). I foresee increased business focus and interest in highly adaptive, digital product-oriented organisations by managers and shareholders.
Below is a subjective list of seven development directions that can prepare your PMO for future transitions and evolution. In general, many PMOs and organisations operating in complex environments can benefit from implementing these approaches.
7 Directions for the PMO of the Future. Source: pawelrola.com
Customer-Centricity
Customer-centricity is the ability of people in an organisation to understand customers’ situations, perceptions and expectations. The customer should be at the centre of all decisions related to delivering products (Ramich, 2022). All the associations and experiences related to product use should positively create customer satisfaction, loyalty and advocacy. A set of competencies that will build a customer-centric workforce among PMO members will be crucial. Among others, the basics of UX, UI, customer journey, personas creation, customer satisfaction measurement, and evidence-driven product development might be good first steps.
Business Agility
At its core, Agile is a mindset that comes with a set of values and principles. It’s about how we think and act. Agile encourages us to deliver in small steps, learn quickly from our experiences, gather feedback, and provide value to our customers early on. Plus, it highlights the importance of people, collaboration, and open communication.
Agile is an umbrella term that covers a variety of methods and frameworks that follow the values and principles laid out in the Agile Manifesto. Business Agility allows teams and organisations to be more adaptable to changing market and customer needs. From a PMO perspective, any investment in a changing mindset is probably the investment that will bring the biggest value.
The Portfolio Kanban
Portfolio Kanban is a holistic approach, using the Kanban method, that aims to improve an organisation’s ability to deliver value by applying Kanban practices and principles. It is well-defined and can be used as a management method (Kanban Univeristy , 2022) , adapted as a stand-alone method on all levels of organisation, or used by Scrum teams as a strategy to improve the flow used by Scrum teams (Scrum.org, 2021).
The Portfolio Kanban applies across the hierarchy levels, starting from the team level, going through product and product portfolio management, and reaching the level of executive managers and CPO.
Agile Procurement
The procurement and contract governance assist PMOs by providing processes for procuring services from agents and suppliers. In product-oriented organisations, these processes will still exist. The principles related to it will evolve compared to traditional ones. Utilising best practices to identify patterns and address common challenges in strategic sourcing is beneficial for a product-oriented- organisation. An agile procurement organisation can leverage the diverse skills within its ranks, is customer-centric at its core and is both resilient to changing demands and able to evolve quickly (Deloitte, 2021). Investing in these capabilities will enable the building, support, and future delivery of an effective and adaptable process for acquiring goods, services, or works to support product-oriented organisations.
Product-oriented governance
Product-oriented governance involves structured processes, procedures, and policies that organisations implement to effectively manage their products. This approach ensures that products are developed, maintained, and evaluated systematically, promoting consistency and alignment with the organisation's goals. Organisations are re-evaluating their product governance by updating outdated processes and investing in technology supporting a comprehensive product governance framework. A well-defined and widely understood product governance framework encourages a holistic approach to managing product risk and performance throughout the product life cycle. (Deloitte, 2022).
Objective Key Results
Peter Drucker has embraced a variety of management techniques to improve the company’s performance. One example is Management by Objectives (MBOs), a process during which management and employees define their key objectives and what they should do to achieve them. (J. L. Cordery, 1991). John Doerr made a unique Objective Key Result system for setting, tracking and evaluating individual objectives of employees and, as a final result – the company’s main objectives. The system implemented by Google from the start has likely contributed to its success. Google has enhanced efficiency and effectiveness with the OKR system through its “70-20-10” rule. This principle guides Google members to spend 70% of their time on their core job, 20% as part of another team, and 10% on something blue sky.
Data Analytics
Data analytics will become a future cornerstone of any management function in product-oriented organisations. Enabling leaders to make data-driven decisions is a crucial aspect. With the increasing complexity, organizations leverage analytics to predict trends, optimize resource allocation, and monitor performance in real-time. The ability to prepare, understand, analyze and conclude on data states is pivotal in aligning product strategies with organizational goals, ensuring effective operations, and delivering consistent value. Understanding modern IT tools like AI-powered platforms will amplify the capabilities of traditional data analytics by automating, enhancing, and deriving deeper insights from data. By integrating data analytics with AI, organizations can gain valuable insights into past events and their causes, while also effectively predicting future outcomes. This powerful combination not only recommends the most effective courses of action for achieving optimal results but also enhances overall efficiency and fosters informed decision-making. As a result, businesses can drive innovation and unlock new possibilities across various industries.
Product Management Office: is this the future state of PMO?
This shift toward a product-oriented organisation is a complex transformation that can last for a longer period of time as it affects almost every aspect of the organisation. This is especially true of bigger organisations, where resistance to change is high, and change inertia and diffusion are typically slow (compared to small and highly agile startups with lean structures and operations).
I believe that in any of the management functions, including PMO, this transition needs to happen sooner rather than later. In organisations with a well-established project culture and strong, active PMO, this entity itself should become one of the change agents and advocates of evolution. While projects can serve a valuable purpose, it's essential to recognise that a restrictive mindset may limit some of the team's flexibility and ability to prioritise value. By shifting towards a product mindset, we can cultivate greater clarity and a stronger focus on delivering meaningful outcomes (Scrum.org, 2024).
This shift can help us change the operation paradigm and involve the current PMO in new goals and challenges related to supporting multiple different products developed in a product-oriented organisation. Perhaps the term Product Management Office will be used widely, similar to how the Project Management Office or Project Portfolio Office is used today. This shift requires time, investment, thoughtful leadership, and an open-minded team.
We have outlined several key areas where the PMO and practices in your organisation can develop and thrive. If this article resonates with you and encourages you to delve into capability building and business transformation, please feel invited to explore further insights and resources at pawelrola.com. Your growth journey starts with the first step!
This article was originally published at: pawelrola.com Directlink
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