Embracing Organizational Agility: The Ongoing Evolution from Projects to Products

In enterprise technology and digital transformation, there has been a shift from traditional project-based approaches to product-centric operating models. This transition has not just been a passing trend, but a strategic necessity for organizations seeking to improve agility, responsiveness, and value delivery to their customers. Let's start this series by exploring how this evolution occurs and why it remains crucial in today's competitive landscape.

Exit the Project-Centric Era

In the past, organizations managed their initiatives through individual projects, each with set timelines, budgets, and deliverables. While this approach effectively addressed specific needs, it often led to isolated efforts, limited flexibility in adapting to market changes, and slower introduction of innovations. Organizations in this era operated within rigid structures, prioritizing execution over continual value creation and adaptation.

Enter the Product-Centric Paradigm

The product-centric operating model represents a significant change where organizations align their efforts to deliver value through evolving products or services. Unlike projects with finite lifespans, products are managed as long-term entities, continuously refined based on user feedback, market insights, and technological advancements. This approach signifies a fundamental shift in thinking, moving from managing the implementation of a project to collectively crafting a product. It focuses on continuous improvement and customer-centricity, fostering sustainable growth and competitive advantage.

Key Elements of a Product-Centric Operating Model

1. Customer-Centricity and the Value Experience (VX):

Product-focused organizations understand that the ultimate goal is not the product, but the value and competitive advantages gained from it. This value comes from prioritizing customer experience, adapting to changing requirements, and strategically tailoring products to meet customer needs. It's also about ensuring that employees are satisfied and cultivating a positive work environment, which ultimately contributes to the overall organizational value, collectively known as the value experience (VX).

As a result, product-focused organizations base their effectiveness on product engagement, employee productivity, and customer experience. Products should primarily evolve based on direct and ongoing customer feedback and insights. This approach ensures alignment with evolving market demands and user preferences while creating, defending, and preserving value. Ultimately, it fosters greater collaboration between customers, business, and technical functions, leading to more agility and faster responses to the ever-changing customer needs.

A British energy challenger enhanced its value by improving the customer and value experience. They accomplished this by establishing multidisciplinary teams to provide an omnichannel experience for customers ordering smart meters, across various channels. As a result, they saw a substantial improvement in their customer satisfaction scores.

2. People, Process and Product - A One-Team Journey:

Product-centric organizations prioritize their customer products by promoting close collaboration between customer-facing and technology-enabling functions. This collaborative ownership model involves representatives from various perspectives such as business, engineering, design, and technology in co-developing a product.

These representatives work together to ensure product objectives align with strategic goals and consider business and technology indicators. This approach also ensures that necessary capabilities are present at every stage of the end-to-end customer journey, enabling robust decision-making and accelerated delivery processes.

It is imperative that supporting functions like procurement, HR, and supply chain are also integrated into the end-to-end value delivery process as part of the joint ownership model. This strong collaboration between different functions and capabilities helps create a shared vision and enables faster processes and shared accountability.

A global banking market leader redesigned their operating model around the stages of their customer experience and created cross-functional product and enabler teams, leading to a 50% improvement in their delivery cycle and other positive outcomes.

Similarly, a global payments leader reorganized its team structure and interaction model. They shifted from a traditional siloed approach, which caused slow delivery and poor communication, to stream-aligned, enabling, complex subsystem and platform teams. This change reduced dependencies, improved delivery speed, enhanced quality, and increased employee satisfaction. They also implemented regular cross-team workshops and cognitive load assessments to support this transformation. The result was a more agile and efficient development process aligned with business goals.

3. Enable and Adapt - Funding and Governance Models Redefined:

When developing products, iterative cycles like Agile and Lean are commonly used for quick prototyping, testing, and deployment of features. This reduces risks and allows quick adaptations to changing requirements or market conditions. To achieve the speed and autonomy these cycles require, organizations should consider adopting a continuous funding model and an adaptive governance approach to ensure minimal risk, early validation, and quick adaptation.

In product-centric organizations, cross-functional teams are organized around the continuous flow of value and are funded based on estimated requirements rather than for a specific period. The governance structures and policies are designed to provide an appropriate level of autonomy to product teams based on their maturity. They are also based on the requirements needed to achieve the right outcomes, mobilize people, and optimize results for the customer. Funding and capacity planning are strongly connected, focusing on outcome-based delivery rather than output-based delivery. By aligning demand with capacity more effectively, the right work can be easily and continuously allocated.

This approach provides cross-functional teams with stable and accessible funding that can be reallocated as business needs change, enabling quick adaptation to changing customer needs. It also allows cross-functional teams full accountability for the entire product lifecycle, encouraging domain knowledge, reusability, and reduced technical debt to improve the technical estate and yield benefits in future iterations.

Cross-functional teams create and validate product ideas, reduce technical debt, and improve processes to enhance long-term productivity and quality. The adaptive governance approach should be flexible to support essential responsibilities and enable rapid adjustments while allowing independent decision-making within defined boundaries. It should align with the different governance layers and areas of expertise within an organization to impact the development of the appropriate rules for each layer and discipline, rewarding empowered teams with full autonomy within set guardrails. This can increase team productivity and quality while reducing the time it takes to implement changes and the occurrence of errors.

These models promote greater autonomy and empowerment through cross-functional teams responsible for determining the best ways to fund and govern teams. Progress is measured on business outcomes, and funding can be discontinued or reallocated without a change control process. This breaks down traditional and financial silos to enable funding and governance for the most important business priorities, with a focus on value rather than cost.

A global energy leader shifted to a continuous funding model integrated with Lean Portfolio Management to address the constraints of traditional annual budgets. This approach allowed for continual evaluation and flexible reallocation of funds based on KPIs like customer satisfaction and time-to-market. A notable success was the rapid turnaround of their flagship product, where quick funding adjustments based on real-time data led to a 30% increase in user adoption and a 20% boost in customer satisfaction within six months. This value-based funding model improved agility, innovation, and overall performance.

Similarly, a leading utility provider revolutionized its governance approach! They adopted an adaptive governance model, defining organizational layers and discipline areas to tailor policies for each layer and discipline. This resulted in a tiered governance framework that set boundaries for independent decision-making, boosted decision speed, encouraged autonomy within cross-functional teams, and reduced deployment lead time by an impressive 23% – all without compromising on quality or increasing defects.

4. Continuous Measurement, Continuous Improvement:

In product-centric organizations, continuous governance , continuous delivery, and feedback loops are critical for optimizing features, customer experience, and operational efficiencies. This allows for flexible and adaptable value delivery through frequent updates, quick response to customer feedback and market demands, and reduced risks associated with large-scale deployments.

The metrics that matter and their associated targets are important tools for tracking, improving, and impacting outcome delivery. These metrics contribute to moving the dials on key business drivers and outcomes and are aligned with the overall business strategy. Metrics such as customer satisfaction, time-to-market, product quality and usage analytics guide decision-making and help prioritize improvements. These metrics provide valuable insights into how well the product meets user needs and expectations, highlighting areas for improvement and efficiency in the development process. For example, customer satisfaction scores can indicate areas where the product excels or needs improvement, while time-to-market metrics can show the efficiency of the development process. Product usage analytics reveal user behaviour and feature utilization, driving continuous improvement.

Data and APIs are crucial to product-centric metrics measurement because they enable real-time tracking and analysis of key performance indicators, ensuring accurate and actionable insights for continuous improvement. By leveraging APIs, organizations can seamlessly integrate various data sources, facilitating a holistic view of product performance and user engagement.

Incorporating continuous delivery and feedback loops fosters a culture of collaboration within development teams. Regular feedback sessions and retrospectives help teams reflect on processes, identify bottlenecks, and make changes swiftly. This environment encourages open communication and problem-solving for more innovative solutions. Maintaining a close feedback loop with users helps build products aligned with user needs, leading to higher user satisfaction and loyalty.

A global pharmaceutical leader implemented organizational agility principles to operationalize continuous value delivery practices and improve the efficiency and quality of deliverables. Metrics such as increased first-touch resolution rates and enhanced customer effort were strategic priorities for improvement. Through continuous monitoring of product usage analytics and consistent user feedback, high-impact improvements were identified and implemented, resulting in an 18% increase in first-touch resolution rates and a 6-point improvement in customer effort scores.

Benefits of Product-Centricity

- Faster Time-to-Market: With a focus on continuous delivery and iteration, organizations can respond swiftly to market opportunities and customer feedback, accelerating innovation cycles.

- Enhanced Customer Satisfaction: Products that evolve based on user needs and preferences result in higher customer satisfaction and loyalty, driving sustained revenue growth.

- Operational Efficiency: Cross-functional teams collaborating within streamlined processes reduce dependencies and bottlenecks, improving efficiency and resource allocation.

- Adaptability and Resilience: Inherent flexibility allows organizations to pivot quickly in response to market shifts or competitive pressures, maintaining relevance and market leadership.

Other Real-World Applications

Organizations across various industries are reaping the rewards of adopting product-centric operating models:

- Tech Giants: Google and Amazon organize their operations around products (e.g., Google Search, AWS) to innovate rapidly and scale efficiently.

- Financial Services: Banks and fintech startups leverage product-centric approaches to deliver personalized digital banking solutions and accelerate time-to-market for new financial products.

- Manufacturing: Automotive manufacturers adopt agile product development to integrate smart technologies into vehicles, responding swiftly to consumer demand for connectivity and sustainability.

Challenges and Considerations

While the benefits are compelling, transitioning to a product-centric model requires organizational commitment and cultural transformation. Challenges include:

- Cultural Shift: Moving from a project-centric to a product-centric mindset requires cultural alignment, leadership support, and continuous learning and adaptation.

- Skill Set Alignment: Teams should acquire or enhance skills in agile methodologies, product management, and cross-functional collaboration.

- Legacy Systems and Processes: Adapting existing systems and processes to support continuous delivery and integration can pose technical and operational challenges.

Conclusion

The journey from projects to products represents a strategic evolution towards organizational agility and customer-centricity. Embracing product-centric operating models positions organizations to thrive in today's dynamic market, lead innovation, and drive sustainable growth. This shift empowers organizations to continuously evolve, innovate, and exceed customer expectations in a competitive global landscape.

This article is part of the series "Exploring Organizational Agility & Generative AI " authored by Chuks Anochie.

Chuks Anochie is an expert in digital transformation and technology management. He specializes in helping organizations attain organizational agility and gain a competitive edge. He has built experience over two decades in assisting enterprises aiming to enhance operational efficiencies and expedite the delivery of value.

During his downtime, Chuks engages in doctoral research within this domain and aspires to contribute to the growing academic discipline of digital transformation.