A product-centric enterprise is an essential corporate strategy in the digital and cognitive era. When looking at your toughest competitors, those that are putting themselves in a position to disrupt the industry are the companies that can move quickly and figure out new ways to organize their efforts. For many, they are viewing their work as focusing on product development rather than separating work into projects.
As EY noted, “Many of today’s threats stem from digital disrupters (companies that have technology and software product development at their core). It is through this product-centric mindset that these digital disrupters have been able to drive value through ways previously unknown or under-utilized.”
It will behoove chief information officers to study how disruptors switch to a product-focused approach as they interact with customers and other departments in the enterprise. A product management capability is a foundational requirement.
Major concepts from information technology come to play in a product-centric business, from fleshing out a product using agile development to how you manage the IT life cycle. The product development approach works in concert with the typical business processes you’d expect, including marketing research, product management, and the underlying research and development work to see if an idea is going to be feasible.
A Product-Centric Enterprise Encourages Innovation
Transformation to a product-centric mindset is called for as your enterprise moves to innovate, keeping current customers happy and attracting new customers.
Gartner noted that “Product-centric enterprise makes it easier to rapidly innovate and iterate because they focus on customer experience, evolving requirements, and the strategic differentiation for a product or service. A product-centric model is ideal for integrating digital technologies and scales, offering a high chance of growth and profitability.”
Software companies serve as examples of how enterprises organize their digital initiatives since agile development often involves quickly learning what the customers need through successive iterations.
Change in Budgeting
Moving to a product-centric mindset will involve changing how your enterprise pays for things. Gartner explained that “The development and deployment of digital products and services are usually considered an investment, and it is accepted that the team will operate at a deficit until an offering with market traction is established.” It may take three to five years before your new digital products start to generate revenue after the first round of funding.
A change in your point of view may be needed, in terms of investment. For example, Pradip Sitaram, CEO of Enterprise Community Investment ran into budgetary issues when they moved to a product-centric model. He realized that calendar-year project budgets often don’t make sense for product-centered approaches.
CIO reported that Sitaram said, “It assumes that the workload begins on Jan. 1 and magically ends on Dec. 31, and none of them works that way.” Sitaram asked the business leaders to describe, in high-concept terms exactly what they wanted to develop, determine the number of available funds, and what the deadline needs to be. Instead of viewing it as a project, “the joint teams would then sit together to figure out collectively the best product they could develop with that amount of time and money.”
Product-centric Enterprise Merges Product Development and Information Technology Units
More collaboration between teams will be needed inside your organization when the focus switches to a product-centric approach. EY reported on how “a telecommunications client achieved material success applying the product management mindset to their IT by merging their traditionally separated IT and product development business units.”
In a short period, the newly integrated teams shortened the time it took to get to market, boosted the rate at which people adopted technology innovations, all while increasing satisfaction ratings from users.
There is a case to be made for hiring more business-savvy individuals for your team. CIO pointed out that Steve Haindl, CIO of Holman Enterprises finds that finding the right people is crucial when shifting your company to a product-centric mindset. “Each of Holman’s three business lines has a product management team made up of IT, business, and marketing people. Each team also has a ‘mini CIO’ who knows the business.” The process took the COO and CFO about six years to refine.
Steps to Start Focusing on “Products” in Your Enterprise
You will reorganize your teams to become a product-centric organization. The first step in this process will be to identify the “products” in your company, which are services or goods that you sell.
Jile cites an example of a bank that changed its approach. It recognized that the various digital banking services it offers are actually a product called an “online banking solution.” A retailer’s website determined that its product was “catalog and product search.”
The next step is to organize teams around products, and allocate funding. Jile says, “these teams can be Business Development, IT Development, Support, and Operations, who think and decide what to build, how to develop and how to manage the product.”
The third step is to define the vision for the product (why does it exist?) and what the company’s long-term goal is for the product, which will then provide support for all subsequent decisions you make around developing and delivering it.
When these steps are finished, your enterprise’s “stakeholders will measure the outcome with the stated objectives and changes in the market needs. The findings will help the business to decide on whether to continue investing in the product or not.”
Transitioning From Projects to a Product-Centric Enterprise Approach
In your IT department, adopting a product-centered mindset instead of focusing on work in terms of projects will enable you to get the most value out of the time and effort your team puts into creating solutions for customers. It’s a new way to organize your staff that emphasizes the outcome from product-development teams rather than measuring the amount of output they are generating to meet a series of project milestones.
Remember that working on products rather than projects will require changes to how you budget, moving from calendar year projections to an approach that involves identifying what you can do to solve customer problems using a set amount of funds, working toward a specific deadline.