Transitioning to a product-centric organization?

A blog post by Manoj Mishra, managing director, Deloitte Consulting LLP  

Organizations are finding themselves in the midst of continuously evolving customer needs, and the release cycle of products, features, and services is shrinking to keep up with these demands. It is in the hands of leaders to agree on the type of company they want to lead: customer-focused, product-leading, geographically organized, function-centric, process-driven, or syndicated. The majority of companies are embracing the product-centric operating model to improve responsiveness and help accomplish business outcomes. But to realize the model’s benefits, companies must be willing to adopt a more agile mindset

As companies scale to serve customers across multiple channels, they can become more complex, resulting in slower response, disconnections between different customer interactions, and loss of a holistic view of the customer. As a result, functional silos emerge that can create operational boundaries with more handoffs between teams, which ultimately reduces flow and quality.

Not only does this result in an increased cost to serve customers, but more importantly, it impedes customer value delivery and reduces operational efficiency.

One way to overcome these issues is to adopt a product-centric operating model. So, what are the key elements in designing a product-centric model? While they vary based on organizational culture and current maturity, we’ve found the following five practices can help successfully drive operational transformation:

1. Customer-centricity: The culture across an organization should recognize and continuously seek to understand and respect its customers, both external and internal. A mature, product-based organization should build strong foundations around customer onboarding and offboarding, customer development, and customer experience management, as well as product management practices.
2. Product-centric mindset: The entire organization, including the CEO, product leadership team, and operational leadership team, must develop a “product-centric” mindset with a clear and defined product strategy that’s both easy to understand and effectively communicated. The company must have a clear vision and an actively managed product portfolio to serve these customers. Building a team with skill sets comprising product strategy (product research, product life cycle, product costing/pricing), product planning (product road mapping, feature prioritization, product architecture, release planning), and product marketing and communications (catalog, collateral, press release, product launch) is essential to developing a product-centric organization.
3. Focus on flow: The product operating model should ideally map and manage the flow of value, from ideation to post-sale services. Value streams and customer journey maps are mechanisms that take business objectives to execution by organizing around the flow of value and providing feedback as part of the innovation and improvement process. However, value streams, if mismanaged, could result in silos, handoffs, and toil. Dedicated value stream owners should diligently manage value streams and customer experience journeys by working closely with the customer, product teams, and senior leadership to maximize outcome, throughput, and quality.
4. Persistent, multiskilled, self-organizing teams: A persistent team must stay involved and build over time, but staying focused on the product road map—not to accomplish one goal or feature, but to stay on for the journey—is key. Persistent teams are cross-functional. That means team members from both IT and the business are closely connected to constantly communicate. Working cross-functionally minimizes the learning curve of new teams and can accelerate innovation.
   
5. Closed feedback loop: A cohesive product strategy supported by strong backlog management can help deliver customer-driven features and capabilities that reduce time to value. However, the real challenge is in ensuring that there is a closed feedback loop to measure the impact delivered and to ensure the results from delivered features are considered during the next product planning cycle. This requires enablement platforms with real-time data to understand customer behaviors, 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 organizational change management, must be addressed. However, it’s important to remember not all operating model elements are created equal. Organizations that prioritize building effective practices for customer-centricity, product mindset, flow, persistent teams, and feedback loop are more likely to realize faster transformation.