{"id":229549,"date":"2024-11-28T20:59:32","date_gmt":"2024-11-28T20:59:32","guid":{"rendered":"https:\/\/userpilot.com\/blog\/moving-to-the-product-operating-model-by-marty-cagan\/"},"modified":"2024-11-28T23:47:48","modified_gmt":"2024-11-28T23:47:48","slug":"moving-to-the-product-operating-model-by-marty-cagan","status":"publish","type":"post","link":"https:\/\/userpilot.com\/blog\/moving-to-the-product-operating-model-by-marty-cagan\/","title":{"rendered":"Moving To The Product Operating Model by Marty Cagan"},"content":{"rendered":"<p>Have you ever wondered why companies like Netflix, Amazon, and Apple consistently deliver breakthrough products while others struggle to keep up?<\/p>\n<p>Marty Cagan, partner at Silicon Valley Product Group (SVPG) and author of <em>Transformed<\/em>, believes the driving forces behind their success aren\u2019t big budgets or trendy frameworks but the principles they embrace. He encapsulates these principles in what he calls the <strong>product operating model<\/strong>.<\/p>\n<p>At this year\u2019s <a href=\"https:\/\/summit.productdrive.io\/speakers\/marty-cagan\/\" target=\"_blank\" rel=\"noopener noreferrer\">Product Drive summit<\/a>, hosted by Userpilot, Marty broke down the product operating model in detail, explained its core components, cleared up common misconceptions, and showed how companies could apply it in real life.<\/p>\n<p>You can watch it right away here:<\/p>\n<figure class=\"video strchf-type-video regular strchf-size-regular strchf-align-center\">\n<div class=\"embed-container\">\n<div style=\"max-width: 100%; position: relative; height: 400px;\"><iframe loading=\"lazy\" style=\"position: absolute; top: 0px; left: 0px; width: 100%; height: 100%; border: none;\" title=\"Moving to the Product Operating Model by Marty Cagan\" src=\"https:\/\/www.youtube-nocookie.com\/embed\/jEjIm76C8_Q?feature=oembed\" width=\"200\" height=\"113\" frameborder=\"0\" allowfullscreen=\"allowfullscreen\"><\/iframe><\/div>\n<\/div>\n<\/figure>\n<p>Or if you prefer reading, here comes the key takeaway!<\/p>\n<h2 id=\"e22kt\">What is the product operating model?<\/h2>\n<p>The product operating model is a set of timeless principles that top-performing companies follow when creating products.<\/p>\n<p>As Marty Cagan notes, these principles are consistent across industries, company sizes, and product types:<\/p>\n<blockquote><p><em>\u201cThere are 20 product model principles that we&#8217;ve identified. It&#8217;s interesting because they&#8217;re the same principles we see whether it&#8217;s a device company, an enterprise SaaS company, a consumer internet services company, or a startup,\u201d says Marty.<\/em><\/p><\/blockquote>\n<p>It\u2019s important to note though, that this model is conceptual, meaning it doesn\u2019t dictate specific methodologies (e.g., Scrum, Kanban) but provides the flexibility to choose the right approach for the problem at hand.<\/p>\n<p>The only non-negotiable principle is to focus on <a href=\"https:\/\/userpilot.com\/blog\/outcome-based-roadmap\/\" target=\"_blank\" rel=\"noopener noreferrer\">delivering meaningful outcomes <\/a>rather than producing outputs.<\/p>\n<h2 id=\"3untr\">What the product model <em>isn\u2019t<\/em>?<\/h2>\n<p>This concept has become a bit of an industry buzzword and as a result, people have been coming up with their own interpretations, sometimes shifting away from its original meaning.<\/p>\n<p>So let\u2019s get this straight and clarify what this model isn\u2019t:<\/p>\n<ul>\n<li><strong>It\u2019s not a product management model.<\/strong> While the model includes some frameworks for PMs, it\u2019s not exclusive to <a href=\"https:\/\/userpilot.com\/blog\/product-management-process\/\" target=\"_blank\" rel=\"noopener noreferrer\">product management<\/a>. The model encompasses the entire product ecosystem, including engineering, design, leadership, and stakeholders.<\/li>\n<li><strong>It\u2019s not the same as product operations.<\/strong> The abbreviation of the word \u2018<a href=\"https:\/\/userpilot.com\/blog\/product-ops\/\" target=\"_blank\" rel=\"noopener noreferrer\">product operations<\/a>\u2019 is \u2018product ops\u2019, which people often confuse with the product operating model. It\u2019s a support role focusing on research, data analytics, and enabling cross-functional teams, which can exist even in organizations that aren\u2019t aligned with the product model.<\/li>\n<li><strong>It\u2019s not <a href=\"https:\/\/userpilot.com\/blog\/tag\/expension-revenue\/\">product-led growth<\/a>. <\/strong><a href=\"https:\/\/userpilot.com\/blog\/product-led-growth\/\" target=\"_blank\" rel=\"noopener noreferrer\">PLG<\/a> is a go-to-market strategy where the product itself drives acquisition, retention, and expansion. To put it simply, the product model focuses on how products are developed and delivered, whereas PLG dictates how they grow in the market.<\/li>\n<li><strong>It\u2019s not about having a product team. <\/strong>Many companies have product managers,<a href=\"https:\/\/userpilot.com\/blog\/what-is-a-product-owner\/\" target=\"_blank\" rel=\"noopener noreferrer\"> product owners<\/a>, and product leaders. These roles don\u2019t automatically imply that you\u2019re following the product model. In the product model, these roles are more related to skills rather than titles.<\/li>\n<\/ul>\n<h2 id=\"jekc\">What does it really mean to transform?<\/h2>\n<p>Now, we\u2019ve talked about some high-level concepts, but how does transformation happen in practice?<\/p>\n<p>To help you get started, let\u2019s look at what is <em>actually changing:<\/em><\/p>\n<ul>\n<li>How you decide which problem to solve.<\/li>\n<li>How you solve problems.<\/li>\n<li>How you build and deploy the product.<\/li>\n<\/ul>\n<h3 id=\"9l6l8\"><strong>1. Changing how you decide which problems to solve<\/strong><\/h3>\n<p>According to Marty Cagan, most traditional companies today rely on annual or quarterly planning processes, where executive leadership allocates engineering resources across business units based on high-level priorities (which are often driven by immediate competitive pressures or operational needs).<\/p>\n<p>While this system isn&#8217;t inherently flawed, it\u2019s not innovative.<\/p>\n<p>In a product-led model, the focus moves toward solving problems with the highest <a href=\"https:\/\/userpilot.com\/blog\/example-of-strategic-initiatives\/\" target=\"_blank\" rel=\"noopener noreferrer\">strategic impact<\/a>. Product leaders take responsibility for identifying these problems by collaborating with stakeholders across the organization.<\/p>\n<p>Instead of merely delivering features, the conversation shifts to outcomes: what problem are we solving, and how will we <a href=\"https:\/\/userpilot.com\/blog\/how-to-define-success-metrics-for-a-product\/\" target=\"_blank\" rel=\"noopener noreferrer\">measure success<\/a>?<\/p>\n<p>However, we will admit that this approach isn\u2019t always easy to implement as it disrupts the power dynamic within the company, and not all stakeholders can accept that.<\/p>\n<h3 id=\"9r89s\"><strong>2. Changing how you solve problems<\/strong><\/h3>\n<p>Most teams are stuck building features that are handed to them.<\/p>\n<p>Shifting to an empowered team model means you stop taking orders and start finding solutions.<\/p>\n<p>Let us illustrate this differentiation with an example. Imagine you need to set your product apart from competitors to maintain your pricing.<\/p>\n<p>In this example, the product leader asks the team to build an <a href=\"https:\/\/userpilot.com\/blog\/analytics-dashboard\/\" target=\"_blank\" rel=\"noopener noreferrer\">analytics dashboard<\/a> for the tool. The product manager then adds this task to the roadmap, oversees the collaboration between designers and developers, and aligns expectations with stakeholders to reach the desired output.<\/p>\n<figure class=\"image strchf-type-image regular strchf-size-regular strchf-align-center\"><picture><source srcset=\"https:\/\/images.storychief.com\/account_6827\/image_7d416a1bcf0d26329887fcf831f12e7d_800.png 1x\" media=\"(max-width: 768px)\" \/><source srcset=\"https:\/\/images.storychief.com\/account_6827\/image_7d416a1bcf0d26329887fcf831f12e7d_800.png 1x\" media=\"(min-width: 769px)\" \/><img decoding=\"async\" src=\"https:\/\/images.storychief.com\/account_6827\/image_7d416a1bcf0d26329887fcf831f12e7d_800.png\" alt=\"Venn diagram on how product managers operate in feature teams\" \/><\/picture><figcaption>Venn diagram on how product managers operate in feature teams. Source: SVPG.<\/figcaption><\/figure>\n<p>Empowered teams, on the other hand, follow a different approach. In this case, the product leader presents the team with the problem, not the solution. They say: \u201cWe need to differentiate our product from others to maintain pricing.\u201d<\/p>\n<p><a href=\"https:\/\/userpilot.com\/blog\/types-of-product-managers\/\" target=\"_blank\" rel=\"noopener noreferrer\">Product managers<\/a> take the lead and become the face of the business in empowered teams. Instead of being merely project managers, they become creators in charge of building a product from the ground up\u2014one that\u2019s viable, feasible, usable, and valuable.<\/p>\n<figure class=\"image strchf-type-image regular strchf-size-regular strchf-align-center\"><picture><source srcset=\"https:\/\/images.storychief.com\/account_6827\/image_22743baec80a2c8f9e85235740404d5a_800.png 1x\" media=\"(max-width: 768px)\" \/><source srcset=\"https:\/\/images.storychief.com\/account_6827\/image_22743baec80a2c8f9e85235740404d5a_800.png 1x\" media=\"(min-width: 769px)\" \/><img decoding=\"async\" src=\"https:\/\/images.storychief.com\/account_6827\/image_22743baec80a2c8f9e85235740404d5a_800.png\" alt=\"Venn diagram on how product managers act in empowered teams\" \/><\/picture><figcaption>Venn diagram on how product managers act in empowered teams. Source: SVPG.<\/figcaption><\/figure>\n<h3 id=\"2jg04\"><strong>3. Changing how you build and deploy the product<\/strong><\/h3>\n<p>Even after years of <a href=\"https:\/\/userpilot.com\/blog\/agile-release-planning-best-practices\/\" target=\"_blank\" rel=\"noopener noreferrer\">Agile<\/a>, many companies are still tied to quarterly\u2014or worse\u2014big-bang releases. The spread of &#8220;fake Agile&#8221; allows them to assume they\u2019re improving, while in reality, their development practices remain stagnant.<\/p>\n<p>If you\u2019re going to adopt a product operating model, you need to have CI\/CD pipelines in place to make <a href=\"https:\/\/userpilot.com\/blog\/feature-release\/\" target=\"_blank\" rel=\"noopener noreferrer\">fast releases<\/a>\u2014ideally a couple of times every 2 weeks. This allows you to:<\/p>\n<ul>\n<li>Address customer needs promptly.<\/li>\n<li>Catch technical problems before users do.<\/li>\n<li>Ensure that the new releases add value for the customer and business alike.<\/li>\n<\/ul>\n<p>Companies with legacy or tightly coupled systems will likely need to refactor their code before adopting this model.<\/p>\n<div class=\"container-banner-userpilot\" style=\"border: 1px solid #dadada; border-radius: 5px;\">\n<div class=\"wrapper-banner-userpilot\">\n<div>\n<p><img decoding=\"async\" class=\"fav-icon-banner-userpilot\" src=\"https:\/\/userpilot-website-assets.s3.us-west-2.amazonaws.com\/wp-content\/uploads\/2023\/11\/06101950\/usp-fav-dark.png\" \/><\/p>\n<h3>Try Userpilot and Implement <strong>Concepts of the Product Operating Model to Your SaaS<\/strong><\/h3>\n<div class=\"banner-userpilot-button-icon\">\n<p><a class=\"banner-userpilot-button\" href=\"https:\/\/userpilot.com\/userpilot-demo\" target=\"_blank\" rel=\"noopener\">Get a Demo<\/a><\/p>\n<ul>\n<li>14 Day Trial<\/li>\n<li>No Credit Card Required<\/li>\n<\/ul>\n<\/div>\n<\/div>\n<div class=\"image-banner-userpilot\"><img decoding=\"async\" src=\"https:\/\/blog-static.userpilot.com\/blog\/wp-content\/uploads\/2024\/01\/userpilot-features-preview.png\" alt=\"\" \/><\/div>\n<\/div>\n<\/div>\n<h2 id=\"6brd4\">The <strong>5 Product concepts of the product operating model<\/strong><\/h2>\n<p>We\u2019ve already briefly touched upon some of the building blocks of the product model, but in this section, we\u2019ll do it in a more structured way to ensure we don\u2019t overlook anything and give you all the nitty-gritty details.<\/p>\n<figure class=\"image strchf-type-image regular strchf-size-regular strchf-align-center\"><picture><source srcset=\"https:\/\/images.storychief.com\/account_6827\/image_0d11f1c2f4a0eaac1abb8c9a42d0e251_800.png 1x\" media=\"(max-width: 768px)\" \/><source srcset=\"https:\/\/images.storychief.com\/account_6827\/image_0d11f1c2f4a0eaac1abb8c9a42d0e251_800.png 1x\" media=\"(min-width: 769px)\" \/><img decoding=\"async\" src=\"https:\/\/images.storychief.com\/account_6827\/image_0d11f1c2f4a0eaac1abb8c9a42d0e251_800.png\" alt=\"Product model diagram with dimensions, concepts, and competencies\" \/><\/picture><figcaption>Product model diagram explaining its dimensions, concepts, and competencies.<\/figcaption><\/figure>\n<h3 id=\"26t6h\"><strong>Product culture<\/strong><\/h3>\n<p>The product culture is the way your employees approach product development. As mentioned throughout this article, the biggest shift when moving to the product operating model is about changing output for outcome.<\/p>\n<p>But this change isn\u2019t as easy as it sounds. Stakeholders need to be okay with delegating the lead regarding product features. Also, your product teams need to have the right competencies to adapt to this new approach and responsibilities.<\/p>\n<h3 id=\"bam8f\">Product strategy<\/h3>\n<p>According to the product operating model, the <a href=\"https:\/\/userpilot.com\/blog\/product-strategy\/\" target=\"_blank\" rel=\"noopener noreferrer\">product strategy<\/a> needs to be holistic and contextual. Marty Cagan refers to it as a <em>strategic context<\/em>.<\/p>\n<p>This means that the strategy needs to take into account the team\u2019s competencies, <a href=\"https:\/\/userpilot.com\/blog\/product-vision-examples\/\" target=\"_blank\" rel=\"noopener noreferrer\">product vision<\/a>, and business objectives to be realistic.<\/p>\n<p>It also should allow each team to use the strategy to define individual objectives that feed into those bigger company goals.<\/p>\n<figure class=\"image strchf-type-image regular strchf-size-regular strchf-align-center\"><picture><source srcset=\"https:\/\/images.storychief.com\/account_6827\/image_683cce2f52fe11bbdd5b03eea1516fe3_800.png 1x\" media=\"(max-width: 768px)\" \/><source srcset=\"https:\/\/images.storychief.com\/account_6827\/image_683cce2f52fe11bbdd5b03eea1516fe3_800.png 1x\" media=\"(min-width: 769px)\" \/><img decoding=\"async\" src=\"https:\/\/images.storychief.com\/account_6827\/image_683cce2f52fe11bbdd5b03eea1516fe3_800.png\" alt=\"Product operating model strategic concept diagram\" \/><\/picture><figcaption>Product operating model strategic concept diagram. Source: SVPG.<\/figcaption><\/figure>\n<h3 id=\"ckq20\"><strong>Product teams<\/strong><\/h3>\n<p>In the product operating model, <a href=\"https:\/\/userpilot.com\/blog\/product-team-structure\/\" target=\"_blank\" rel=\"noopener noreferrer\">product teams<\/a> need to be fully cross-functional and accountable for results. This empowers them to take higher ownership and make decisions that benefit the business and the customers without waiting for stakeholders to okay them.<\/p>\n<p>This can only happen if cross-functional teams have clear objectives and resources to conduct solution discovery and gather customer insights.<\/p>\n<h3 id=\"b4apr\"><strong>Product discovery<\/strong><\/h3>\n<p>In the product model, <a href=\"https:\/\/userpilot.com\/blog\/product-discovery-process\/\" target=\"_blank\" rel=\"noopener noreferrer\">product discovery <\/a>is more about solution discovery. The idea behind this is that product teams are always in close contact with customers. Therefore, they already know what the problems are, but they need to research to determine how to solve them.<\/p>\n<p><a href=\"https:\/\/userpilot.com\/blog\/product-discovery\/\">Through product discovery<\/a>, developers can tell if a solution is feasible, designers say if it\u2019s usable, and product managers (not stakeholders) determine if it\u2019s viable and valuable.<\/p>\n<h3 id=\"cj2kb\">Product delivery<\/h3>\n<p>The product model companies follow processes to quickly build robust, high-performing, uncoupled, and scalable solutions that solve users&#8217; problems AND add value to the business.<\/p>\n<p>These are usually truly agile businesses.<\/p>\n<h2 id=\"fqbat\"><strong>Essential product operating model competencies<\/strong><\/h2>\n<p>Companies that follow a product model see roles as a mix of competencies. Feature teams work to solve business problems. However, empowered teams \u201c<em>exist to solve hard problems for your customers and for your business, in ways your customers love, yet work for your business,<\/em>\u201d writes Marty Cagan.<\/p>\n<p>Here are the skills your team should adopt to take on these roles:<\/p>\n<ol type=\"1\">\n<li><strong>Product managers<\/strong>: This person understands business and user needs and is responsible for guiding cross-functional teams to develop outcomes that add value and are viable.<\/li>\n<li><strong><a href=\"https:\/\/userpilot.com\/blog\/what-is-a-product-designer\/\" target=\"_blank\" rel=\"noopener noreferrer\">Product designers<\/a><\/strong>: This professional needs to have the skills to work in cross-functional product teams, design user-friendly solutions, and experiment to iterate on the solution. They\u2019re responsible for making the product usable and the overall product experience.<\/li>\n<li><strong>Tech leads<\/strong>: This person should be the most experienced engineer or developer in the team. They need to know how to work in teams, test and iterate solutions, and be accountable for the feasibility of the delivery.<\/li>\n<li><strong>Product leaders<\/strong>: These are all team leaders and group managers of designers, engineers, and product managers. They need to have the right skills to hire a team, create a product vision, and design a product strategy that helps reach <a href=\"https:\/\/userpilot.com\/blog\/product-goals\/\" target=\"_blank\" rel=\"noopener noreferrer\">business goals<\/a>. They should also become servant leaders and coach teams to reach goals.<\/li>\n<\/ol>\n<h2 id=\"9bphq\">Conclusion<\/h2>\n<p>Transformation starts with rethinking how your business identifies and solves problems. Instead of building the features that were handed to them, teams following the product model engage in continuous discovery to identify the best outcome both for the business and users.<\/p>\n<p>If you\u2019d like to learn how Userpilot can help your product teams gather customer data and conduct experiments, <a href=\"https:\/\/userpilot.com\/userpilot-demo\/\">book the demo!<\/a><\/p>\n<div class=\"container-banner-userpilot\" style=\"border: 1px solid #dadada; border-radius: 5px;\">\n<div class=\"wrapper-banner-userpilot\">\n<div>\n<p><img decoding=\"async\" class=\"fav-icon-banner-userpilot\" src=\"https:\/\/userpilot-website-assets.s3.us-west-2.amazonaws.com\/wp-content\/uploads\/2023\/11\/06101950\/usp-fav-dark.png\" \/><\/p>\n<h3>Try Userpilot and Implement <strong>Concepts of the Product Operating Model to Your SaaS<\/strong><\/h3>\n<div class=\"banner-userpilot-button-icon\">\n<p><a class=\"banner-userpilot-button\" href=\"https:\/\/userpilot.com\/userpilot-demo\" target=\"_blank\" rel=\"noopener\">Get a Demo<\/a><\/p>\n<ul>\n<li>14 Day Trial<\/li>\n<li>No Credit Card Required<\/li>\n<\/ul>\n<\/div>\n<\/div>\n<div class=\"image-banner-userpilot\"><img decoding=\"async\" src=\"https:\/\/blog-static.userpilot.com\/blog\/wp-content\/uploads\/2024\/01\/userpilot-features-preview.png\" alt=\"\" \/><\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Are you constantly juggling competing priorities, leaving little time for the big-picture thinking that drives product success? If so, learn how to address those common problems through the product operating model.<\/p>\n","protected":false},"author":55,"featured_media":229551,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"content-type":"","inline_featured_image":false,"footnotes":""},"categories":[214],"tags":[5474,292,6686,5739,817],"class_list":["post-229549","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-product-management","tag-product-drive","tag-product-growth","tag-product-operating-model","tag-product-strategy","tag-product-teams"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.2 (Yoast SEO v27.2) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Moving To The Product Operating Model by Marty Cagan<\/title>\n<meta name=\"description\" content=\"Marty Cagan says the product operating model can be transformative for your company&#039;s growth. 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