min read ·
March 3, 2024

Embracing the Product Operating Model

Partner, Head of Delivery

Neha Rahaman

An expert in lean product development with over a decade of industry experience working with startups as well as big enterprises. Neha has played multiple roles to enable organisations to adopt agile principles to deliver high impact products.

What makes a leading-edge product? In the evolving world of technology, innovative strategies and methodologies are more important than ever. As these advancements rapidly change the playing field, one innovative framework that has emerged is the Product Operating Model (POM). This business model is becoming increasingly popular in the tech industry, revolutionising how companies create, develop, and deliver products.

What sets this framework apart is its inherent ability to cultivate a more harmonized workflow, fostering strong ties of communication and collaboration. By adopting such a framework, companies have been able to pave the way for a culture where innovation flourishes, and customer contentment is prioritized, enabling them to maintain their competitive edge.

Product Operating Model

At its core, the Product Operating Model reimagines how businesses are structured, placing products at the nucleus of org-wide operations. This framework gathers teams from various fields into a cohesive, persistent team, guided by the product's life cycle rather than traditional department roles. This approach is distinct for its ability to enhance workflow synergy, boosting communication and teamwork. By embracing this model, companies create a fertile ground for creativity and put customer satisfaction at the forefront.

Demystify the Product Operating Model

Some key components of a Product Operating Model (POM) are essential to understanding how it revolutionises business structures and processes. 

  • Product Centricity: The heart of POM is the shift from traditional functional units or project-centric units to product-centric teams. This focus ensures all efforts are aligned with the vision of the product development, delivery, and enhancement, directly tying work to customer value.
  • Cross-functional Teams: These are integral to POM, comprising members from various disciplines like development, design, marketing, and operations. Such teams are responsible for the entire lifecycle of a product, encouraging collaboration and reducing silos.
  • Agile Mindset: POM heavily relies on agile practices, promoting flexibility, quick iterations, and responsiveness to change. This allows teams to adapt swiftly to market demands or customer feedback.
  • Customer Focus: A deep understanding of customer needs and behaviours is central to POM. This customer-first approach guides product development, aiming to deliver high-value solutions that address real problems.
  • Continuous Delivery and Improvement: Continuous integration, delivery, and deployment practices are fundamental, enabling regular product updates and improvements based on user feedback and performance data.
  • Data-driven Decision Making: POM emphasises the importance of data in guiding decisions. By leveraging analytics and metrics, teams can make informed choices about product features, priorities, and optimizations.
  • Empowered Teams: Leadership in a POM environment is less about hierarchy and more about empowering teams, fostering a culture of innovation, accountability, and openness to experimentation.
  • Engineering Practices: Effective use of technology and tools supports the POM by facilitating communication, project management, and product development processes, ensuring efficiency and scalability.

Building High-Performing Product Teams

One of the key aspects of the POM paradigm is forming highly efficient product teams comprising diverse experts working towards a shared vision. These teams need to be empowered with decision-making on various aspects of the Product, and this also fosters commitment and accountability. Clear communication of the product vision, will encourage collaboration, drive innovative solutions and minimise conflicts. But building high-performing product teams isn't an overnight process. It requires effort, patience, and an organisational commitment to nurture and sustain these teams for the long haul. However, the investment in building such teams can bear rich dividends in the form of industry-disrupting products that delight customers and drive tangible business growth.

Adopting an Iterative Development Process.

The Market is ever-evolving and so are the needs and wants of your customer. Hence your product needs to continually enhance and update based on real feedback and data insights. It is important to adopt agile engineering practices to adapt quickly and do continuous deployment, keeping your product competitive and meeting changing market demands. It fosters a culture of learning, allowing teams to identify errors and implement fixes swiftly. At its heart, the iterative development approach in the Product Operating Model is like being on a never-ending journey of evolution. Products aren't just made; they are continuously polished and enhanced. Driven by what customers say and what the data shows, this method is a key factor behind innovation and expansion in the technology sector.

Customer Obsession

Central to the Product Operating Model is a deep focus on putting customers first and making data-based decisions. To succeed, tech companies need fresh ideas and the core need is to not just satisfy customer demands but to surpass them. A strong system for collecting customer feedback is key.

Simultaneously, the role of data cannot be overstated. In the POM paradigm, data is not just numbers and statistics but invaluable insights into consumer behaviours, preferences, and needs. By consistently analysing data and monitoring trends, companies can anticipate customer needs, making proactive decisions instead of reactive ones.

But how do customer-centricity and data-driven decisions coexist?

Quite seamlessly, in fact. Data is the flashlight that illuminates the path to heightened customer happiness. It guides product teams in their development process, helping them align their innovations with what the customer truly desires and thereby charting the path to go from Minimum Viable Product (MVP) to Minimum Desirable Product (MDP).

 The successful amalgamation of customer-centricity and data-driven decision-making ensures the creation of products that are not just technologically advanced but also deeply resonant with customers. This forms the bedrock of the POM approach, setting the stage for longer-term success.

Fostering a Culture of Innovation

Innovation is the lifeblood of the tech industry. The Product Operating Model inherently encourages a fertile ground for creativity and out-of-the-box thinking. It empowers teams, advocates for an iterative development cycle, and prioritises the customer's needs and wants, creating a conducive atmosphere for invention.

This culture goes beyond the walls of the research and development department. It infiltrates every nook and cranny of the organisation, from the C-suite offices to the engineering labs, fostering a shared mindset that welcomes novel ideas, values experimentation and isn't afraid of making mistakes.

The POM promotes a mindset where everyone in the organisation is encouraged to challenge norms, question assumptions, and propose innovative solutions. A dynamic feedback loop between the product teams and the end-users further invigorates this innovative ecosystem, providing invaluable inputs that can spark novel ideas and product enhancements.

Remember, innovation isn't a sporadic burst of genius. It's a consistent pursuit of betterment, fueled by a curiosity to explore, learn, and improve. And that's exactly what the Product Operating Model seeks to nurture—a relentless quest for innovation that can redefine boundaries and pave the way for technological breakthroughs.

The Impact of Adopting the Product Operating Model

When tech companies pivot towards the POM, they unlock a plethora of advantages. Enhanced collaboration and productivity are immediate outcomes as product-centred teams work cohesively towards a unified vision, breaking down silos typically seen in traditional business functions. This synergy not only hastens the product development process but also sparks creative problem-solving, leading to a marked improvement in product quality.

Additionally, the POM's strong emphasis on customer-centricity and data-guided decision-making can yield products that resonate deeply with consumers' evolving demands. The end product is the perfect blend of innovation and relevance, striking a chord with the target audience. This close alignment with consumer needs can foster customer satisfaction and cultivate loyalty, fostering a strong, enduring relationship between the brand and its customers.

By integrating the Product Operating Model, tech companies can reap the rewards of a streamlined workflow, enriched product offerings, and elevated customer experiences, ultimately setting the stage for sustained growth and market leadership. Embracing the POM isn't just about changing a business model; it's about fostering an ethos of innovation, collaboration, and customer-centricity that can propel a tech company to new heights of success.

Companies that Have Successfully Adopted the Product Operating Model

In the tech industry, some standout organisations have successfully implemented the Product Operating Model. Companies like Spotify and Google, known for their ingenuity and customer-centric approach, have successfully adopted the POM. 

Spotify, for instance, famously uses 'squads' - small, cross-functional teams with end-to-end responsibility for a specific part of their product. This structure has led to agile product development and enabled Spotify to stay ahead of customer needs. On the other hand, Google, another POM aficionado, has achieved innovative leaps by harnessing the power of diverse product teams. These teams have driven some of Google's most renowned products, like Google Maps and Google Search, by continuously iterating and refining the product based on user feedback and data analysis. Other companies like Atlassian and Netflix also exemplify POM’s success, their product-focused strategies resulting in breakthroughs that have revolutionised their respective industries. These examples elucidate how the POM can unlock the potential of tech companies, fostering innovation, customer satisfaction, and industry leadership.

Transformation is a journey and not a destination, Product Operating Model principles help organisations to continuously evolve and adapt based on the evolving market and take advantage of the opportunities swiftly.


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