Embracing the Product Operating Model: A Shift Towards Customer-Centricity
In February 2023, Marty Cagan, a renowned product management expert, announced his new book, “Transformed,” which explores the Product Operating Model. This concept marks a significant departure from the traditional approach, focusing on the responsibilities of product managers and leaders. Instead, it delves into how companies can successfully adopt this model to drive growth and innovation.
The Origins of the Product Operating Model
The concept of an operating model dates back to the intersection of strategy and process. It aims to increase efficiency by aligning an organization’s objectives and vision with its day-to-day activities and expertise. The Product Operating Model, first introduced by Kristen Linnea Johnson and Carol Stone at the 2019 AWS re:Invent conference, takes a customer-centric approach. It revolves around the user, not the product, and prioritizes understanding customer needs over building features.
Key Components of the Product Operating Model
This model has several distinct characteristics that set it apart. Also known as “product-led,” its building blocks include:
- Outcome-based teams: Teams organized around challenges, not skills, to ensure they’re in sync with user needs.
- Mitigating risk before building: Balancing risk mitigation with building to deliver solutions that meet user needs.
- Company-wide alignment: Ensuring the entire organization is aligned to the same outcomes, using tools like OKRs.
- Empowered teams: Giving teams the autonomy to pursue their goals, without direct management, to foster creativity and innovation.
The Four Product Risks
To successfully implement the Product Operating Model, companies must address four critical product risks:
- Is it viable for the business?: Ensuring the initiative aligns with business goals and is cost-effective.
- Is it relevant for the user?: Validating user interest and ensuring the solution meets their needs.
- Can we build it?: Assessing resources and know-how to deliver the solution.
- Is it ethical to deliver?: Evaluating the solution’s safety, inclusivity, and potential impact on users and the business.
Is the Product Operating Model Still Relevant?
With the startup winter of 2022 and the pandemic’s aftermath, some may question the model’s relevance. However, it’s essential to recognize that the Product Operating Model thrived in an environment where money was abundant, and growth was prioritized over profitability. While it’s true that you can’t sell outcomes, there’s a compromise to be found between the two opposing views. The Product Operating Model is more relevant than ever, especially as non-tech departments like marketing, sales, and customer success regain importance.
The Future of the Product Operating Model
As the model undergoes its first substantial transformation since its inception, it’s crucial for companies to adapt and evolve. Those who haven’t already explored the Product Operating Model will struggle to keep up with its transformation. By embracing this customer-centric approach, businesses can stay ahead of the curve and drive meaningful growth.