Product Oriented Organisation: A response to the new technological paradigms?30 October 2023

Navigating the tumultuous waters of an ever-changing and rivalrous technological environment, companies are seeking to stay on course. To maintain their agility and satisfy their customers’ demands, a growing number of them are turning to a product-oriented organization strategy. The concept of a product-oriented organization is based on the idea that multi-disciplinary teams focus on managing and improving a specific product or service, rather than on a specific function (such as marketing, sales, production, etc.). By focusing their efforts on products, companies would improve coordination, stimulate innovation and enrich the customer experience.

This is not a new dilemma; managers have been confronted with the “function” versus “product” question for decades[1]. However, the current technological environment and the importance of “user centricity” seem to be driving the emergence of the product-oriented organization as a lever for growth and competitiveness. What concrete advantages can this product-based organization offer in the long term? What unexplored innovation potential can it unlock for companies?

I- New technological paradigms require agile organizations

1. New technological paradigms

One promise, the ubiquity of user feedback

Customer engagement tools such as NPS, social networks and online reviews offer a comprehensive understanding of customer requirements and improvements to be incorporated into the product. Contact with the user is spread throughout the organization, and it is now possible to easily collect feedback without going through the traditional time-consuming and costly processes typical of marketing. To satisfy customer expectations, the adoption of flexible and responsive operational processes is crucial.

A threat, an increasingly shifting competitive landscape & accelerating innovation

In a world of accelerating technological innovation and increasing competition from “digital natives”, companies are under pressure to anticipate and adapt to technological upheavals. The stories of Kodak, Blockbuster and Research in Motion (RIM) illustrate the innovator’s dilemma, when the management practices that enabled them to succeed make it difficult to develop disruptive technologies, ultimately costing them their markets[1] . Positive examples also exist. Microsoft, for example, has succeeded in reinventing itself by pivoting from a historic positioning on software to the cloud with Azure and Office 365. Similarly, Netflix has managed to evolve from an initial mail-order DVD rental model to a video streaming model.

In this context, a key to competitiveness lies in the agile adoption of new technologies, the ability to anticipate and take advantage of innovations. This ability to rapidly navigate the technological landscape has become an indispensable success criterion for companies seeking to stay ahead of their competitors.

One solution: short-cycle deployment of technological innovations

Today, companies regularly introduce new technologies and functionalities on an iterative and continuous basis. This enables companies to remain responsive to changing market needs and rapidly deliver added value to their customers. By adopting this deployment model, companies can reduce time-to-market, get faster feedback from users and adapt more effectively to changing technological and business requirements.

2. Paradigms incompatible with traditional organizations

The limits of organization in functional silos

Figure 1: Traditional organization in functional silos.

A functional silo organization refers to a corporate structure where each team focuses on its own tasks, limiting collaboration between them. While this may be appropriate for organizations with stable operations, it could stifle innovation and agility for three main reasons:

• A lack of communication and collaboration that prevents the sharing of ideas and can lead to conflict or duplication of effort

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• Slower decision-making due to hierarchies within each team

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• A team focus on specific processes rather than on achieving overall corporate objectives, which can hamper innovation

As a consequence, these limitations will induce a lack of agility to capture real customer needs and implement associated solution evolutions on time.

These obstacles are particularly acute in digital product and project management, however, they remain relevant across a wide range of goods and services production and across diverse sectors. They range from retail to e-commerce to financial institutions.

“User centricity” seems to require a holistic approach

The product paradigm is proving particularly effective in meeting user-centric needs. Unlike technology, which tends to focus on feasibility, monitoring innovations and exploiting their potential, the product paradigm focuses on the end-user. It takes into account not only the user’s immediate needs, but also the way these needs evolve throughout the product’s life cycle. Moreover, marketing, often focused on sales targeting issues, tends to consider the user in terms of market segments rather than individual experience. This approach may overlook the importance of the entire product lifecycle.

Product orientation takes a holistic view, focusing on understanding how each user interacts with the product at different stages of its lifecycle.

II- The product-oriented organization : Definition & Beliefs

1. What is the product-oriented organization

“An organizational scheme that enables companies to meet their objectives: to continuously design and improve digital products”

This is an agile organizational scheme (Figure 2) suited to the continuous improvement of complex, moving solutions, capable of responding to market disruption and customer demands. In this model, teams are specifically trained and aligned around products, fostering a more agile, flexible and results-driven approach. One of the major differences with a traditional organization is that product is no longer a subset of an existing department, but a department in its own right. Functional departments such as marketing, sales, technical, HR or finance continue to exist, but their role has changed. The Product Manager is responsible for identifying user needs, imagining the product and then testing and validating its hypotheses with users. Marketing is responsible for publicizing the product and managing its launch.

Figure2 – Product-oriented organization diagram

2. The product-oriented organization at the service of continuous product improvement

Two budgets: one for continuous improvement and one for new product development

Two types of budget co-exist within a product organization: One stable for the continuous improvement of existing digital products (corrective maintenance, evolutionary etc.) and the other fluctuating to develop new functionalities. The product organization makes it possible to keep debt under control (Figure 3), and to achieve perpetual value growth on a constant budget.

Figure 3 – Product life cycle and product-oriented organization.

User feedback used to drive product iterations

The process of listening to customers is essential, and involves gathering feedback from a variety of channels. Whether via product-integrated tools such as chatbots, surveys or external sources such as social networks, review platforms, this process offers a comprehensive overview of user needs. However, it’s crucial to understand that customer feedback analysis should not be limited to a superficial evaluation of reviews. It’s vital to dig deep and explore the essence of user behavior, beyond the simple expression of their feedback. This is where the mining of authentic feedback comes into play, offering a richer and more precise perspective on user expectations.

In addition, analyzing feedback on product prototypes offers valuable insight into how users may interact with the product once it has been launched[1]. This makes it possible to anticipate customer behavior, optimize functionality, prioritize efforts and maximize the impact on customer satisfaction.

These two types of feedback (on the product, and on the prototype) coupled with technological and market intelligence will enable continuous improvement. It’s crucial to stress the importance of a careful prioritization phase for the product backlog. This requires a deep understanding of user needs. It’s not just about meeting their expectations, but going beyond them to really understand what they value. Listening to customers feeds the product backlog, facilitating the definition of the product roadmap with better decision-making and a more effective response to customer and company objectives.

Conclusion

In conclusion, faced with a constantly evolving technological reality and the growing importance attached to the user experience, the product-oriented organization would position itself as a key strategic response for companies. By enabling better synchronization of efforts, fostering innovation and enriching the customer experience, this approach can offer significant advantages.

However, it is not a one-size-fits-all solution. Several criteria come into play to guide the choice of organization: the size of the company or team, the duration, the nature of the projects and their degrees of standardization, etc.

A checklist produced by eleven to help our customers assess the benefits and risks of product-oriented organization will be published shortly.

By adopting a customer-centric approach and actively gathering customer feedback, companies can develop products that effectively meet customer expectations, and do so in a short cycle. This can include features related to sustainability, energy efficiency or other aspects of social responsibility.

Sources:

[1] For a historical study of the organizational structure of U.S. corporations, see Alfred D. Chandler, Jr, Strategy and Structure (Cambridge, The M.I.T. Press, 1962).
[2] Clayton M., Christensen, The Innovator’s Dilemma, Valor Editions, 2021
[3] Marty Cagan, Inspired, Wiley, 2017
(4) Eric Ries, The Lean Startup, Currency, 2011