Who Owns the Product? Resolving an Inherent Organizational Dilemma
The concept of product ownership and its perplexing effects are inherent to numerous industries. Nevertheless, two industries in which the intricacies of this subject are especially visible are banking and gambling. Both of them, even though they are becoming heavily IT based and moving their business models to digital platforms, are still reliant on the physical retail channels for developing market presence and generating a significant portion of their revenues. On the other hand, in both of these industries, the product development process is separated from the retail channels in which the products are being sold. Why is this so? There are two reasons, both organizational in nature.
The first one concerns the spatial distribution of the retail channel, usually having from several dozens to several hundred branches or retail shops spanning the vast geographical area, thus making it very difficult to centrally supervise both product development (usually located in one place) and multi-locations product operations, while retaining efficient and not very tall hierarchical structure. The second reason concerns the differing nature of work – the product development is more focused on the future, creativity, effectiveness, and long-term perspective, while the product operations is oriented on the present, repetition, efficiency, and short-term perspective. With this separation arrangement between the product development and the retail channel in place, the question of accountability for the end-to-end product performance is something that arises more often than not.
So let us start with defining what owning the product truly means. The true product ownership extends over the entire product life-cycle – starting from the idea conceptualization, moving to its execution (i.e., building a business case, analyzing operational and organizational impact, communicating the new product internally and externally, on-boarding the personnel, as well as preparing and launching the product), through monitoring operational and financial product results on daily basis, and finally deciding on product improvements or termination. Taking this holistic perspective means that the product owner is responsible for more or less everything related to the product performance.
However, what usually happens in practice is that, since there is a clear distinction between product development (organizational units in charge for the idea-to-market process) and product operations (organizational units responsible for day-to-day product sales and post-sales services), a significant portion of accountability falls through the cracks at the handover point, thus creating the no man’s land issues. In these cases, when problems with the product performance occur, usually both sides blame the other one for the situation they are facing. The people in charge for development usually go on about how great the product is, but the lack of know-how and capacity in the retail is causing the poor performance. On the other hand, the people in retail do believe that the lack of personal contact between the product development folks and customers is causing the low level of understanding of the market needs and wants on the product development side, thus leading to insufficiently tailored products with the low cost-to-quality ratio that underperform when compared to the competitors’ products.
So, who should be the product owner? The side that develops the product or the side in charge for its daily sales activities? Which side should be held accountable for the overall results?
The natural and logical response would be to give accountability to those in charge for making it happen. Therefore, the accountability goes to the product development. However, if that is so, what is the accountability of the product operations? They surely need to have their own stake in accountability since they are involved in executing the process, but the answer to this question depends on the way the product operations is perceived. If it is perceived as a selling channel, then their accountability lies in obliging to the standards and plans ruling sales activities. No matter what product they are selling, the standards regulating the sales process and content should be the basis of assessing their performance, as well as the achieved versus planed sales targets. In this way, the overall customer experience performance metrics is clearly divided between the product performance (for which the accountability is taken by the product development team) and the service performance (exclusively owned by the product operations/retail channel personnel). Of course, this line of division can still be blurred from time to time, so additional effort needs to be given to defining the details more precisely wherever possible, while having procedures for conflict resolution in place should these occur.
In some cases, these strict divisions of work and accountability will not suffice. In these situations, the solution is to superimpose some sort of liaison devices over the formal organizational structure.
One of the liaison devices recommended in this type of organizational setting is called “integrative role”. What it means in this case is that people in the product development unit are given an integrative role in relation to their domain over their peers in the product operations unit (retail and corporate products in the banking industry, or betting, casino, and virtual games in the gambling industry). This role stems from their responsibility for the end-to-end product performance, and results in providing (or recommending) the sales plans, as well as the product know-how and sales guidelines to their respective peers in the product operations, but without having formal control over them. Employees in the product operations are supervised by their formal head/manager and responsible to him/her for their work, while being inclined to do things according to the plans and guidelines obtained from their product development peers.
This type of organizational arrangement adds to the overall organizational complexity, but may be necessary in order to effectively coordinate the development and operational side of the products their organization is offering. The rule of the thumb is to increase the organizational complexity until the level necessary to achieve the predefined goals and objectives in the most efficient manner. Suddenly, resolving inherent organizational dilemmas such as defining the product owner does not seem like a daunting task anymore.
The text has been published on the SEE Gaming Business Forum website.
The author is our colleague Ivan Stefanović, a Manager in the Consulting Department.