One of the most fundamental shifts when scaling agile delivery beyond single teams is transforming the way work gets done. This shift involves transitioning from temporary, project-based teams to a delivery model designed around product-oriented value streams that provide a pipeline of continuous value delivery to customers. A product-oriented operating model is a way of organizing, funding, and delivering value that differs significantly from traditional project-based delivery. On the whole, product-based delivery teams produce more business value for less cost.
Product-Oriented Delivery
The mission of a Product Team is to perform the work needed to achieve the Product Vision. The strategy to achieve the Product Vision can be laid out as a Roadmap, that is, a sequenced set of objectives to be achieved over time, each one targeting a specific business objective and advancing progress towards the overall Product Vision. The delivery team completes each objective by translating them into implementable solutions, namely product features and associated technology enablers. A feedback loop ensures the roadmap evolves based on learning from each completed objective. This keeps product-based teams focused on continuous product innovation vs. narrowly focused project metrics like scope and schedule.
The process to refine product strategy into implementable product features should run as a cadenced event where product managers, architects and other stakeholders will break epics into features that are sufficiently refined to support delivery planning (or PI Planning). Prior to that step, epics will have been validated for business value, and technical feasibility. The refinement process should produce sufficient work to support at least the next PI.
Organization
Product-based delivery teams are focused on delivering business outcomes based on solving problems and providing value to their customers. Getting the right organizational structure in place is critical to the success of everything else. Agile teams must be organized around delivering something of value. Traditional functional silos create flow-impeding dependencies between teams, and can be the single biggest impediment to agile delivery. A focus on organization re-design should be maintained until major dependencies between teams has been broken. A value stream mapping exercise is a useful way to design an organization around business and customer problem-solving.
Since product teams are dedicated to a value stream within a specific business domain and most likely to a technology platform, there will be less ramp-up time to acquire the necessary domain and technical knowledge needed for the development of new product capabilities.
Funding
Project-based funding is usually performed on an annual basis and then funding is locked in for the fiscal year. This can mean that change is burdensome in the face of shifting business priorities or changing market dynamics. Product teams (or, Agile Release Trains in SAFe) persist for the life of the products that they develop and support. Hence they are funded on a continuous basis vs. short-term projects of fixed scope/duration. Product-based funding may also be done annually but is based on team capacity needed to support the Product Roadmap (with appropriate guardrails established). Having a stable source of funding provides product teams with the flexibility to reallocate spending as the needs of the business change.
Measurements
Project teams are measured on feature delivery, and schedule/budget performance. Product teams are focused on business outcomes, which are measured via business KPIs. Linking software development (outputs/features) to measured business value creation (outcomes/KPIs) is described in detail here.
Summary
Product orientation can also be applied within companies who not sell “Products” but rather provide services such as banking, insurance, real-estate, and so on. In this case a “product’ is simply a vehicle for delivering value to a customer. The concept can also be used effectively by IT organizations that support internal business processes like hiring, on-boarding, payroll, vendor management and so on.
In either type of organization product teams are cross-functional, business outcome-oriented, and long-lived. They solve problems and improve business outcomes, rather than deliver scope on schedule.
In the SAFe framework, the product operating model is implemented via Value Stream-Aligned Agile Release Trains (ARTs).
Mik Kersten’s book: Project to Product, is another great reference.