In today’s digital age, when disruptive innovation is the norm and when “big no longer beats the small” but “fast beats the slow,” it’s critical that organizations are always experimenting, innovating, and adapting to the ever-changing competitive ecosystem. Agile and DevOps, when bolstered by a strong product function, are table stakes for the organizational capability to experiment and adapt. In this blog series, we demystify the product function and offer actionable advice to businesses undertaking a product-led transformation.
Before we dig into the merits of a product mindset, let’s examine its project-centric counterpart. The project-centric model is built on the premise that needs and requirements are predictable. Hence it uses long planning cycles and central governance and decision making to deliver projects and programs. The project management field has experienced increasing layers of processes, governance, compliance, and oversight, yet these activities fail to add value to project outcomes. In fact, some may argue that it has had opposite effect. Why? Because today’s business environment is not at all predictable but rather filled with uncertainty and changes frequently. Thus, the project-centric model no longer works.
Facing these realities, business leaders must find more effective ways to deliver digital and technology products. According to the Harvard Business Review, only 17 percent of business leaders are very confident that their organizations are getting the greatest possible return on their product development investments. Business leaders seeking insight can look to the global organizations leading the charge on innovation, such as Netflix, Amazon, Apple, Google, Facebook, and Microsoft. The combined market capitalization of these six organizations is currently about $4.75 trillion. Compare that against the GDP of Japan, the world’s third largest economy at $4.82 trillion. These are startling numbers and four of these six companies amassed all their wealth in just the past twenty years, which is unprecedented. What sets these companies apart? They organize around value streams and use a product-centric model to deliver their products and services.
To highlight what sets a product-centric model apart, below are some key differences between the project and product-centric models.
Embracing a product-centric orientation isn’t merely a trend—it’s imperative for survival. Take, for example, the classic cautionary tale of Blockbuster. Just fifteen years ago, a movie fan could walk into one of Blockbuster’s 9,000 stores and walk out with his or her favorite movie. Today, Blockbuster is a relic of the past, disrupted by Netflix, which entered the market with an innovative business model built on top of a sophisticated technology platform. This is just one example where a fast-moving, nimble newcomer replaced a slow-moving incumbent. Other industries are being disrupted too, with new entrants who are nimble, agile, lean, and product centric. To avoid being Blockbustered, incumbents must successfully adapt to the change and a shift to the product-centric model. In the next blog of this series, we’ll explore our Product Development Manifesto, a practical, working philosophy to help organizations move away from project-based structures to product-centric ones.
Click here to read part two of our series.