A well organized and executed product organization provides an opportunity to advance your digital transformation efforts. In a 2019 survey, Gartner found that 85% of organizations have adopted, or plan to adopt, a product-centric delivery model, compared to 40% in 2018.[i] This number has grown due to increased digital touchpoints along with the need for quicker delivery and continuous improvement. Utilizing product management disciplines is key for a digital transformation, but you need to make sure you are choosing the right product-centric operating model for your organization’s digital ambition. We’ve outlined 5 considerations to keep in mind when setting up a new (or altering your current) product organization during a digital transformation.
- Assess your delivery methodology honestly. It is ok to be hybrid, not all are agile.
Are you agile or using waterfall delivery or somewhere in between? Figure out your starting point. Assuming you’re delivering digital products, your intended delivery method will need to coalesce with your product organization’s structure. For example, if you’re delivering in waterfall, you may not need product owners, but you will need strong product managers to work with the delivery BAs to create requirements. In a SAFe or DevOps environment, your product owners will be critical for guiding the delivery team’s efforts.
This is important because your product organization will be the bridge between customer desires and delivering products that meet those desires. To do this both effectively and efficiently, you need to understand how your delivery organization manages business requirements and executes delivery so that your product organization is set up to properly feed it.
Most Product organization best practices are written with the underlying assumption that you’re fully ingrained in Agile or SAFe delivery. Don’t make the mistake of setting up your product organization according to “Product Best Practices” if your delivery org is still hybrid. There will be requirement and delivery gaps that will put an undue burden on the overall digital transformation
There is not a one size fits all approach when it comes to standing up your product organization. Take where you are and make best practices work for your organization. As you mature, your delivery model can continue to transform with your organization.
- Rationalize and clearly define your product catalog.
Any large transformation should be seen as an opportunity to rationalize your product catalog. Rationalization should go beyond just an inventory of your products and should also include understanding each product’s contribution to your company’s performance. This will help you identify which products should be adequately supported and properly monitored throughout the transformation. It will also help when designing what your product organization will look like after the transformation (I.e. resource allocations).
This may seem straight forward, but you would be surprised how many firms don’t have clear visibility into their entire catalog of products. Rationalizing your product catalog will allow you to focus on continuing to build and improve the value-add products that drive your transformation, while retiring any that are legacy or redundant. By streamlining your current offering you can see where there are gaps or additional areas of improvement.
- Decide how matrixed your product organization will be and understand how that will impact delivery.
Every product org has some mixture of vertical product expertise and horizontal capability expertise. It’s expected that your company’s digital transformation will either introduce new or enhance existing functional capabilities. With this, your product organization will need to determine which capabilities will be solely owned by product verticals and copied across each vertical vs which will be shared across all product verticals
For each iteration of this matrixed design, you must consider the impacts to both operational efficiency and delivery. A highly matrixed organization with many shared capabilities will have low redundancies, higher knowledge sharing, and increased consistency across products. However, there is a greater burden on strong demand management skills, market insights/analysis, and responses to market changes will take longer. A less matrixed organization will have almost the exact opposite including more redundancies, less knowledge sharing and less consistency. However, individual product teams will be nimble enough to respond to changing market demands faster with less need for deep market insights.
There is no right or wrong approach. The point here is simply to ensure that you are giving considerable thought to how being matrixed helps or hinders your companies competitive advantage and marketplace position.
- Complete a product skillset gap assessment.
Once you’ve defined your product organization’s ideal structure, product catalog, and matrix level aligned to your transformation, you’ll need to determine whether you have the appropriate skillsets to make it all work. Some new skills that a digital transformation may demand of your product organization include Agile/SAFe delivery, digital experience, omnichannel, customer and user experience, advanced data analysis, and more.
Don’t let your current skills [or lack thereof] restrict your product organization’s ability to best support your firm’s success. There are likely some tough resourcing and personnel decisions ahead. Having a clear vision for what your product organization will look like after the transformation helps to make this process smoother
- Clearly define roles, responsibilities, and the go-forward operating model.
Before hitting the “GO” button, product leaders should share their vision for the future with other functional groups to ensure alignment. Most important are the business, operations, and engineering organizations. These leaders are also assessing and redesigning their groups in accordance with the company’s digital transformation. As a product leader who has the unique position of sitting at the intersection of customer, business, operations, and technology, you must ensure your operational designs fit those of your partnering organizations.
This is the time to clearly define lines of ownership, roles, responsibilities, hand-offs, and decision rights. Having a clear understanding of how these components will work together across organizations will save your company from lost productivity, re-work, attrition, and countless other negative results of an unsuccessful transformation.
Make no mistake, this is where the “Gotchas” are. Don’t be afraid to go back to the drawing board and re-tweak previous product organization decisions to better fit within your firm’s new digital ecosystem at large.
As with all things transformation, this is not a one and done activity. The product organization will continue to evolve as it matures. It is important to understand how to manage delivery health on an ongoing basis to ensure that your product organization continues to improve as your company undergoes further transformation.
[i] https://www.gartner.com/en/newsroom/press-releases/2019-02-19-gartner-survey-finds-85-percent-of-organizations-favor-a-product#:~:text=Eighty%2Dfive%20percent%20of%20organizations,of%20their%20work%20in%202018.