Every company aspires to build products that capture the hearts of its users!
Yet, even the most innovative ideas can stall without the right framework. It’s key to consider how to connect vision, execution and cross-functional collaboration.
Building a product isn't just about shipping features. It's also about delivering measurable outcomes for users and the business.
Enter the Product Operating Model (POM)! This comprehensive framework enables teams to transition from project-based execution to product-led growth.
POMs guide companies in creating products that not only meet market demands but also exceed customer expectations.
In this article, we'll unpack how a well-designed product operating model drives agility, customer-centricity and sustainable growth.
Let’s break down what a POM is, why it matters and how decision-makers can build one tailored to company needs.
What is a Product Operating Model?
To summarize, a Product Operating Model (PMO) is an organizational framework that aligns strategy, processes and culture.
The focus is on delivering user and business value through tailored products. This mindset serves as a blueprint for product teams to turn their strategies into meaningful outcomes.
A key element of POMs is that they empower cross-functional teams with clear responsibilities and outcomes. This scope goes beyond just tasks!
Product-based operating models are great for fostering lasting accountability and alignment across digital products' lifecycles.
Unlike models that operate on a short-term basis with predefined deadlines, POMs encourage continuous delivery and iterative learning.
For product leaders, POMs help focus on resonating with end-users and aligning with the company's product vision.
At their core, Product Operating Models:
- Empower teams to own problems and craft solutions.
- Encourage a culture of experimentation and learning.
- Drive alignment between business strategy and product execution.
- Enable faster, more frequent value delivery through agile principles.
- Allow to translate outputs (e.g., features) to outcomes (e.g., revenue growth).
Core Elements of a Product Operating Model
Product Culture
Culture is vital in defining how teams think, decide and interact.
A strong product culture should also be grounded on collaboration, curiosity and user-centricity.
With a solid culture, teams can prioritize solving meaningful problems rather than merely completing checklists.
Product Strategy
Product strategy defines the why and where of your efforts. It sets a clear vision and goals that can be measured to add business value.
In POMs, robust strategies strike a balance between long-term goals and swiftly adapting to market shifts.
As a result, decision-makers can concentrate on the most important business opportunities.
Product Teams
Successful product organizations leverage the strengths of durable, empowered teams!
This cross-functionality allows teams to foster ownership and combine their skills.
Product Managers, Designers and Tech Leads work cohesively to own problems end-to-end.
These teams focus on clear goals and direct access to user insights, enabling them to iterate solutions quickly.
Product Discovery
With Product Discovery, teams and companies can validate ideas way before scaling them.
“Are we solving the right problem? Does the solution resonate?”
These questions are answered with rapid iteration, product prototyping and user testing.
As a result, teams can lower risks while guaranteeing solutions meet actual needs.
Product Delivery
All previously mentioned elements enable Product Discovery to turn validated ideas into market-ready solutions.
Among its focuses, POMs delivery emphasizes iterative development, continuous integration and fast feedback loops.
Due to these highlights, it’s able to maintain quality while accelerating time-to-value.
Successful delivery consistently strives to strike a balance between flexibility and control. With this mindset, teams can consistently release updates without compromising reliability.
Product Measurement
Rather than by releases, the success of a POM is defined by its impact.
Product Operating Models require clear Objectives and Key Results (OKRs) to measure both user and business outcomes.
In this goal-setting framework, Objectives describe what teams want to achieve. On the other hand, Key Results enclose how to measure progress toward the desired achievement.
If an Objective is “improve user satisfaction,” a Key Result could be “increase NPS from 50 to 75.”
Product Operating Models and Customer-Centricity
As it focuses on attending to real users, Product Operating Models are, or should be, inherently user-centric.
Unlike product-centric approaches that emphasize features, POMs start by identifying real unmet challenges.
These steps lay the groundwork for addressing genuine problems. This focus allows POMs to transition from merely developing products to providing useful solutions.
At the heart of a successful Product Operating Model is a deep commitment to understanding real users.
How to Build a Product Operating Model?
- Definition. Start with a clear, inspiring product vision that answers why your product exists and where it's headed. You can also bring that vision down to earth with quantifiable goals.
- Structure. Small, autonomous teams with end-to-end ownership are key to working freely and breaking down silos. This organizational structure allows for faster yet accountable decisions.
- Agile. Iterative Agile frameworks help balance lightweight governance and team autonomy. They’re also great at testing and delivering ideas quickly yet focused on strategic, long-term goals.
- Tools. Strong tools know how to leverage collaborative and productivity apps and tools. Platforms like Jira are great for workflow management, just as Figma fosters collaborative design. Ensure your tech stack can scale with your needs!
- Metrics. Track both leading indicators (e.g., customer satisfaction) and lagging outcomes (revenue growth). Leverage continuous feedback loops with real users.
- Iteration. Start with a pilot team to refine your POM before scaling it across the organization. Regularly revisit your strategy, teams and processes to adapt to market and user changes.
Product Operating Model Examples
McDonald's Product Model
- Customer-Centricity. McDonald's Velocity Growth Plan aims to keep, win back and attract new customers. To achieve this, it leverages tech-driven tools such as self-order kiosks and delivery services.
- Cross-Functional Collaboration. A great example of a "triad" model, McDonald’s blends the expertise of several teams for thriving outcomes. Its dynamic menu personalization relies on close collaboration among data scientists, engineers and marketers.
Spotify Product Model
- Lean-Back Listener Strategy. A key change Spotify made was when it transitioned from playlists created by users to algorithm-based suggestions. Think of its well-known “Discover Weekly”!) That shift meant a stronger focus on Machine Learning, including the acquisition of The Echo Nest.
- Squad-Tribe-Guild Structure. Within its POM, Spotify’s team structured how people and teams should be organized. This change led to the creation of Squads, Tribes and Chapters.
- Squads are small, autonomous teams 6-12 members) focused on one feature area.
- The coordination of multiple Squads within a feature area forms a Tribe. These Tribes (40-150 members) coordinate efforts and build alignment within Squads.
- Chapters are typically led by senior tech leaders. The key here is to align on best practices and maintain engineering standards.
Amazon Product Model
- Backward Working. Amazon's PR/FAQ process includes drafting a Press Release and FAQ before building a product. This POM is crucial for the company to define the main vision of each of its products before launching. Working backwards can help teams solidify their scope, customer value and business outcome.
- Empowered Teams. A notable example of Amazon’s success is its “Two-Pizza Teams”. These small teams managed everything from start to finish, allowing for quick adjustments and experiments.
Conclusion
A Product Operating Model isn’t just about processes; it’s about people.
PMOs help teams connect bold ideas to real user needs and foster innovation to build products that actually stick.
At Capicua, we leverage proven frameworks to build tailored POMs for the future’s leading companies.
Unlock your vision’s potential— reach out and let’s start building!
