How to move to a product-centric organisation?

How to move to a product-centric organisation?

Prioritising the right elements of the business model

Organisations find themselves in the midst of ever-changing customer needs, and the cycle of product, feature and service introductions is shrinking to meet these demands. It is up to leaders to agree on the type of business they want to run: customer-centric, product-centric, geographically organised, function-centric, process-centric or unionised.

The majority of companies adopt the product-centric operating model to improve their responsiveness and help them achieve their business goals. But to reap the benefits of this model, companies must be prepared to adopt a more agile mindset.

As companies expand to serve their customers across multiple channels, they can become more complex, resulting in slower response, disconnects between different customer interactions and the loss of a holistic view of the customer. The result is the emergence of functional silos that can create operational boundaries with more hand-offs between teams, ultimately reducing flow and quality.

The result is not only an increase in the cost of serving customers, but more importantly a hindrance to customer value creation and a reduction in operational efficiency.

One way to overcome these problems is to adopt a product-centric operating model. So what are the key elements in designing a product-centric model? Although they vary according to organisational culture and current maturity, we have found that the following five practices can contribute to successful operational transformation:

Customer-Centricity: An organisation’s culture must recognise and continually seek to understand and respect its customers, both external and internal. A mature, product-focused organisation must build a strong foundation around customer on-boarding and off-boarding, customer development and customer experience management, and product management practices.

Product-centric mindset: The entire organisation, including the CEO, the product management team and the operational management team, must develop a ‘product-centric’ mindset with a clear and defined product strategy that is both easily understood and effectively communicated. The company must have a clear vision and an actively managed product portfolio to serve these customers.

To develop a product-centric organisation, it is essential to build a team whose skills include product strategy (product research, product life cycle, product cost/price), product planning (product mapping, feature prioritisation, product architecture, release planning), and product marketing and communication (catalogue, documentation, press release, product launch).

Focus on the flow: The product operating model should ideally map and manage the value stream from ideation to after sales services. Value streams and customer journey maps are mechanisms for achieving business objectives by organising around the value stream and providing feedback as part of the innovation and improvement process. However, value streams, if poorly managed, can lead to silos, hand-offs and back-breaking work. Value stream managers must diligently manage value streams and customer experience journeys by working closely with the customer, product teams and senior management to maximise results, throughput and quality.

Persistent, versatile and self-organising teams: A persistent team needs to stay involved and build over time, but it is essential that they remain focused on the product roadmap, not to achieve a goal or feature, but to continue the journey. Persistent teams are cross-functional. This means that team members from IT and the business are closely linked to communicate continuously. Working cross-functionally reduces the learning curve for new teams and can accelerate innovation.

Closed feedback loop: A consistent product strategy, supported by rigorous backlog management, can help deliver customer-focused features and capabilities that reduce the time to value. However, the real challenge is to ensure that there is a closed feedback loop to measure product impact and ensure that the results of delivered features are taken into account in the next product planning cycle. This requires enabling platforms with real-time data to understand customer behaviour, product performance and innovation opportunities.

The transformation to a product-centric operating model takes time, sometimes years. In addition to the factors mentioned here, other considerations, such as funding models, talent gaps and organisational change management, need to be taken into account. However, it is important to remember that not all elements of the business model are created equal. Organisations that prioritise the implementation of effective customer-centricity, product mindset, flow, permanent teams and feedback loop practices are more likely to achieve faster transformation.

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