If your IT organization isn’t delivering value for its customers — or is failing to swiftly release digital and data products — it could be that your company hasn’t fully transitioned into a digital business.
Sure, IT may have adopted an Agile approach to product development, or even invested in innovative digital technologies. But your organization may be among the 75% of companies across sectors as diverse as financial services and healthcare in which leadership hasn’t been accountable to its digital vision — as compelling as it may be.
Path to True Digital Leadership
For businesses struggling to meet their customer’s constantly changing demands, it’s paramount to become a truly digital-led business — not just adopting a few digital bells and whistles.
Digital organizations move quicker, solve product challenges faster and allow development teams to draw on the diverse abilities of their members to meet customer needs — a crucial skillset for success in today’s IT landscape, which is experiencing a unique confluence of headwinds, including high inflation, industry-wide layoffs and fears of a recession.
Going all-in on digital by embracing a product mindset is a powerful tool to help businesses weather the storm. By prioritizing efficiency, speed and iteration, organizations can improve their digital customer experiences and products, stepping up their CX track record.
To truly be digital is more than having a great customer mobile app or online experience. Being digital is a way of doing business and takes a fundamentally different operating model. It requires a mindset shift across every facet of the organization to move faster, rely on data and put the customer at the center of every decision.
The first step? Shifting away from the notion of outputs (features developed) to outcomes (value realized).
Organizations are seeking ways to deliver more value for customers, ship faster, scale quicker and disrupt categories — especially as nimble startups and digital natives relentlessly encroach on their market share.
The organizations winning in the market have discovered that shifting to a product mindset and operating model has been critical to innovate at market speed and deliver sustainable results at scale. They focus on continuously building and shipping loveable products and experiences at high velocity (rather than on task completion), project status and on-budget, on-scope and on-time delivery. Operating in a product mindset means assigning teams of experts on a problem, pointing them at value and then letting them solve it in the ways that are most relevant to the end-user and customer.
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The Business Imperative for Adopting a Product Mindset
The sudden onset of remote work and surge in online demand caused by the pandemic accelerated shifts in consumer behavior that once were thought to be years away. Organizations that were caught flat-footed have struggled to keep up with digital demand, and they’re now facing another volatile consumer landscape in which consumer expectations and preferences are in a state of flux.
Such organizations must adopt a product mindset to meet those changing expectations with speed and dynamism. By doing so, IT product management teams can swiftly change course using real-time data and insights gathered from their customer base, instead of channeling their efforts toward rigid project milestones and deadlines that fail to respond to market shifts.
Many organizations already see the advantage of moving away from a project-driven perspective. In fact, 85% of companies already plan to adopt or have adopted a product-centric model. But while many organizations know the benefits of adopting this model — swift software delivery and releases, a smarter ideation process, improved CX, and company-wide agility — their plans don’t always come to fruition.
Working in this more holistic mindset requires a fundamental shift in communication across different sections of an organization — and many companies fail to recognize the core dimensions of a product mindset approach, even as they initiate Agile transformations.
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The Unique Dimensions of a Product Mindset
To successfully transform the way they operate, IT leaders need to know the distinguishing features of product-driven organizations. Here are several differentiators that companies should consider before making the shift from a project to product mindset — so they’re clear on what the process entails.
1. Flexible Goal Setting
IT leaders who rely on a project portfolio typically define the scope before teams even begin work on a project. Budgets are predetermined, milestones are decided and project timelines are given clear end dates — all the hallmarks of a classic “command and control” leadership approach take hold.
By contrast, in a product mindset, a team often starts by developing a problem statement — a thesis that outlines the gap between a product’s current state and desired state — and crafting high-level strategy without setting tight parameters that could limit flexibility. Because learning is ongoing and incentivized, the approach is less linear and more akin to an ongoing loop, which allows for constant iteration and improvement.
Products promote a governance model that favors discovering what customers really want and need and a longer-term investment strategy that improves the quality of products. Rather than funding the resources needed with the demand in the short term (project world), teams select and fund work based on its value.
2. Clear Definitions from the Start
What is a product — as opposed to a platform? When team members and leadership are referring to a product, are they talking about the same thing? These are questions that smart product-driven organizations address from the outset.
If your IT organization assumes that all digital initiatives must take a product-based approach, that’s a false start. When shifting to a product-based operating model, there will still be some cases where project-based approach and waterfall delivery are more appropriate.
For example, large-scale cloud infrastructure and ERP migrations initiatives may be better served by a project-based waterfall delivery approach as organizations may not be comfortable with bi-weekly iterative releases. Many organizations are under the illusion that they’re already product-based because they’re executing in two-week sprints. In reality, they could be sprinting every two weeks and producing outputs that don’t drive business outcomes. Otherwise, IT organizations may end up with a portfolio filled with products in name only — and, more importantly, a handful of misaligned strategies.
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3. Autonomous Governance
Implementing a decentralized leadership style is one of the most significant challenges traditional companies face while reorienting toward a product mindset. This governance model is geared toward autonomy and outcomes, as opposed to how those outcomes are accomplished.
Organizations that are instead used to a more traditional “command and control” model typically prioritize a way of working in which every team lines up with a culture driven by more outputs than outcomes. They also tend to play it safe when it comes innovation and collaboration, ensuring that people follow a “tried and true process.”
That mentality is at odds with a shift to a product mindset. In fact, the best digital product organizations empower individuals and teams to make product decisions as needed. The subsequent feeling of ownership and accountability can encourage team members to “buy in,” spurring passion-driven contributions in the process.
4. Initiatives that Tie Back to Business Value
Many IT organizations flounder because they haven’t connected their projects to long-term business outcomes. Inwardly focused, they often orient their efforts toward budget allotments and time frames instead of profits. The result is that many team members get stuck performing digital busywork and seem as if they’re adding value to the company. But when executives ask team leaders how their efforts improve business value, they have nothing to offer.
A product-oriented mindset, on the other hand, directly measures software delivery in terms of business outcomes, which provide a North Star for every team member. Because driving value is at the heart of every product management decision, teams are able to meet incremental value delivery targets at a rapid pace.
Related Article: How to Use Business Value to Prioritize Company, Customer Initiatives
5. Smarter Performance Metrics
In the case of a project-driven approach, organizations are closely tracking a multitude of metrics — whether a project is on time, on budget and meeting various milestones. They deliver the impression of offering deep insight — but in truth, their measurement rarely improves overall product outcomes.
IT leaders with a product mindset instead try to find the “Goldilocks zone” at the intersection of three considerations: feasibility, value generation and desirability from a consumer perspective. That doesn’t mean that a product-driven team ignores key performance indicators — instead, their approach focuses on metrics tied to actionable considerations like Net Promoter Score, app ratings and reviews, product usage trends, number of logins per month and duration of logins, cycle time, release frequency and defect resolution rate.
6. Customer-Centric Processes that are Driven by Outcomes
Project-oriented organizations typically have teams that are so focused on solutions and systems that they forget about a product’s ultimate destination: the customer. A team with a product mindset, on the other hand, can often respond to the ever-changing needs of the market because customer-centric outcomes are an organizing principle.
This approach is not always a given. For example, in our recent Be Digital Survey, three out of four respondents said they were a product-focused organization but needed to reprioritize speed over perfection to meet customer demands. That kind of agility is easier to rally when outcomes linked to products and customer experience — not static project milestones — lie at the center of an IT department’s goals.
7. Dynamic Collaboration Between Individuals
One of the key differences between a project and product mindset is team composition. In a product-driven business, teams are crafted to be multi-disciplinary, cross-functional and persistent — yet flexible enough to realign their goals when key members change. Gone are the days of exchangeable, individual contributors floating from one project to another while struggling to meet unchanging expectations.
Managers, teams and individuals don’t work under a typical, top-down management style in which leadership shoulders all accountability. Instead, they’re linked by a matrix organizational structure that is self-organizing, adaptable and collaborative. Such an approach is fundamental to getting a product out to market as quickly as possible, gathering insights from its reception and then iterating based on those insights.
Moving Forward: Realizing the Vision
Adopting a product mindset can be challenging. But it’s important to understand that your organization doesn’t need to change on the spot — or tackle everything all at once. If you’re spearheading the implementation of several new digital initiatives, you should step back and consider orienting one of those initiatives as a pilot first.
Start by designating a single product team and developing a strong vision (ideally, a slightly discomfiting one) that will unite its members under one banner. Then, craft initial experiments aimed at realizing its vision, with the understanding that quick wins are the foundation for an evidence-based change management strategy.
Once the product team has achieved a certain level of momentum, you can begin implementing other digital initiatives in the same manner. Over time, your organization will rapidly evolve to tackle changing consumer demands — whether they’re influenced by inflation or a recession — with speed, creativity and flexibility.
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