A Shift from Project Centric to Product Centric Operating Model

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“Good companies manage Engineering. Great companies manage Product.”

– Thomas Schranz, CEO and Product at Blossom

Over the past few decades, traditional approaches to software development have transformed from traditional waterfall methodologies to agile, which enabled development teams to focus on most viable products (MVP) for early stage demos with customers. Early feedback made teams product market fit and improved client satisfaction.

With a faster time to market, digital enterprises have a competitive advantage. However, Delivery@Speed is very successful with agile where there is a product backlog defined and the same is groomed continuously, and it is a successful model for a project centric approach with continuous project delivery.

In the current VUCA world, industry is very uncertain and changing overnight with geopolitical changes such as the recent Russian war against Ukraine, which has disturbed the entire world economy with crises, inflation, and a huge impact on the entire commodities and product markets.

There is a change needed in the approach to meet the market@speed and growing requirements of customers, where changes are needed overnight, feeding from product roadmap to product backlog, which is continuous and is in high demand.

Projects are not enabled to change or accommodate with current changing trends or needs of markets with value alignment. My effort in this text is focussed on a need of A shift from Project Centric Agile way of working to Product Centric Operating model.

The Product Centric Agile way of working is a new operating model that enables bringing agility into strategic planning, budgeting, capacity and demand management, and governance.

The Product Centric way of working embraces a top-down approach to product development and focuses on value alignment with customers to drive innovation and product development.

Let’s see what market reports research studies on the need for a product-centric approach clearly state. “The-2022-State-of-Product-Management-Report-by-ProductPlan” clearly states that product-led growth has the biggest impact on customer acquisition, with 40% of respondents saying product experience has the highest impact on customer acquisition with current changing markets and experience.

And the same report also brought to light the key challenges faced by product managers, with the topmost challenge being “planning and prioritizing initiatives.” This report also brought to light the key actions taken to address these challenges, some of them including:

  • Product team becoming more involved in other parts of the business-like customer acquisition,
  • Changing the way of working with in the business

A Gartner survey has found that 85% of organizations now favour a product-centric application delivery model. “The increase in how quickly and broadly organisations are adopting the product-centric application model doesn’t arise randomly. It goes hand-in-hand with the adoption of agile development methodologies and DevOps”, said Bill Swanton, distinguished research vice president at Gartner. “In addition, an increasing number of applications that IT teams develop are used by external parties, such as clients or partners, and require the increased customer focus that characterises the product-centric model.”

The above insights have clearly called out that a product-centric approach is the need of the hour, and the faster digital enterprises adopt this approach, the more they will reap the benefits of accelerating ROI and value alignment.

Embracing a Product Centric Operating Model

A product-centric way of working is primarily connecting the top down (i.e. strategy) and integration into all other supporting functions and operations with a focus on delivering value for customers and value alignment across the teams in the organization, wherein product managers’ role becomes vital in the product-centric organization and it is more about value delivery than the product itself.

2022 Product Management Survey says, 55% of enterprises use a mixture of Agile and waterfall development approaches for developing products and 32% said that they have Product Owners (PO) working with an agile development.

 

If the question is how different is the project centric operating model? here are some characteristics.

Project Centric Operating Model Product Centric Operating Model
Scope is agreed in advance Value Delivery determined based on the feedback
Have a set start and end dates Focus on value system and value stream
Focus on feature delivery Focus on delivering business outcomes
Agile Mindset Agile + Product Mindset
Project based funding Product specific funding
Focus on delivering the plan Focus on delighting the customer

A product-centric operating model must take an integrated approach to key tenets such as customer-centricity, product-based project delivery, and development, as well as enable a culture of continuous improvement and innovation. The following are the key tenets that we recommend looking into for embracing a product-centric operating model.

 

Cigniti has an in-house maturity framework for measuring maturity for the key tenets that assist enterprises in assessing their current state and enabling them to build a target product-centric operating model.

 

The maturity model is aligned to the key tenets with keys levels as:

A sample snapshot of Target structure

 

Conclusion:

The effort here is to understand the need of Shift of the operating model, and certainly that arises out our next question in today’s way of working is who does what between Product Owner (PO) and Product Manager (ProdM)? Marty Cagan describes the job of the product manager as “to discover a product that is valuable, usable and feasible”, intersection between business, technology, and user experience.

We need to deep dive and understand more on these roles and establish RACI effectively and enable an effective target operating model with a focus on effective governance, Continuous improvement, and innovation culture.

Need help? Contact our Digital Engineering team of experts to learn more about a shift from project centric to product centric operating model.

Author

  • Diwakar Konda

    Diwakar Konda, PMP, L6σBB, SAFe Agilist is a Senior Manager – Process in Cigniti Technologies, Hyderabad, India. With 16+ years of work experience in techno-managerial roles across manufacturing to IT services, he brings a significant experience in delivery excellence, process consulting, process auditing and establishing Center of Excellence (COE) across various domains, technologies, and platforms across clients in multiple industries.

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