When you need a way to manage your business transformation, your choice of an approach will lead you to the product management vs project management dilemma, and rightly so. Both methods have been used successfully to manage radical organisational changes in the past. However, one is superior to the other, and a lot of it has to do with the fast-paced business environment organisations operate in today.
Product management can be more helpful for your business transformation than project management. Unlike project management, product management is agile and centred around value creation. It also allows value ideation and delivery to run concurrently, facilitating continuous product improvement.
But that’s just the tip of the iceberg with regard to what makes a product a centric approach more suitable for business transformation. Read on to learn more about it, what makes it better than project-centric approaches, and what you need to do to make it work for your business.
Much of what we will discuss in today’s post will be based on the differences between product and project management. To provide you with some context, let’s briefly review these two approaches to business transformation management and highlight what sets them apart.
Let’s start with the definitions.
Project management refers to the use of specific skills, methods/processes, knowledge, and tools to deliver predetermined outcomes within defined parameters. In simpler terms, it’s how work within an organisation is coordinated to provide deliverables within scope, budgets, and schedule.
Typically, projects have a beginning and an end. They’re concerted efforts to provide value for a business or organisation by creating a unique service, product, or result/change. Generally, the success of a project hinges on its ability to deliver this value per a predetermined schedule, budget, and expectations一it’s the work of a project manager to ensure this is achieved.
Product management is a bit more challenging to define because its scope varies from one organisation to another. In most companies, it’s an organisational function that governs all aspects of a product’s lifecycle (from planning and development to market positioning and ongoing improvement) with a special focus on how the product meets customer demands.
A product manager usually spearheads product management. This individual collaborates with groups inside and outside an organisation to formulate and execute a plan that ensures that the product in question is optimised to meet its strategic and financial goals. They also act as a customer advocate within an organisation, ensuring that market needs are considered throughout every step of the product life cycle.
Looking at these definitions gives you a rough idea of the differences between product and project management. However, the distinctions between these two run deeper than that.
To shed more light on the differences, let’s compare product and project management based on the following merits:
In project oriented-management, funding is assigned based on milestones that are usually defined upfront. That’s unlike product-centred management, where funding is allocated according to business outputs and may be supplemented if the delivery of incremental results necessitates it.
In project management, success is measured based on the team’s ability to complete a project per requirements, within a budget, and on time.
On the other hand, product management measures success based on a team’s ability to deliver incremental value while meeting organisational objectives (e.g., a team’s ability to build a marketable app that generates the expected revenue).
Project management leaves less room for ongoing adjustments than product management. For instance, if the development of new software is managed through the former, strategic decisions and specifications will be outlined before teams get to work.
A plan will then be formulated to guide teams towards project completion with minimal room for ongoing changes. With a product-centred approach, there will be multiple iterations, allowing development teams to make ongoing adjustments if strategic opportunities crop up or our initial assumptions turn out to be wrong.
In project management, individuals often participate in several projects simultaneously, increasing project churn and frequency of reassignments. That’s different from product management, where members of cross functional teams work on one product at a time, increasing team stability.
If a team develops software under project management, their work virtually ends on the due date, when they deliver what they were tasked to create. They’re less concerned with how the software performs once the project is complete.
If the same team functions under a product manager, they’d be involved in the software’s ongoing performance, performing maintenance regularly to keep in top shape.
To sum it all up: project management prioritises building things the right way, whereas product management emphasizes building the right things.
To determine which approach best suits organisational transformations, we need to know the kind of transformations most businesses are undergoing today and what’s driving them.
Let’s quickly review these two prerequisites and determine the most suitable approach to business transformation afterwards.
Today’s business transformations fall into three broad categories:
- Digital transformation: refers to adopting new technology to improve the customer experience by rethinking products and the processes, innovations, and operational efficiencies that support them.
- Data transformation: refers to a deliberate effort by an organisation to adopt new data management capabilities and develop a data culture that puts information (instead of opinion and human intuition) at the centre of product development and innovation.
This kind of transformation gives organisations more factual insights into the various aspects of the customer experience, allowing them to identify existing competencies and areas that need improvement.
- Solutions transformation: means rethinking approaches to the design, development, bundling, and selling of products to realign all organisational functions around customer expectations and preferences. Doing this sees an organisation’s ditch disjointed point solutions for a holistic approach to providing the complete product experience.
If you take a closer look at what drives these kinds of business transformations, you’ll notice that they’re all centred around one thing: improving the customer experience. In other words, most business transformations are triggered by the need to serve the customer better.
This sentiment was echoed in IDG’s latest research, where the need to improve customer experiences was identified as one of the main drivers of digital business transformations alongside the need for business agility and better employee productivity.
So, the need to meet customer expectations is driving most transformations in the modern age. It makes sense, too.
Salesforce’s “State of the Connected Customer” report highlights the importance of meeting consumer expectations, noting that:
- 80% of consumers consider customer experience equally as important as the quality of services/products provided by a company.
- 66% of consumers expect brands to understand what they need and expect.
These are just the highlights. If you look at the report, you’ll find tons of other relevant findings on the importance of understanding what your customers need and expect.
Product management is better suited to business transformations than project management because:
- It’s agile.
- It focuses on value creation instead of milestones.
- It allows discovery/ideation and delivery phases to run parallel, providing a continuous stream of ideas.
Let’s discuss each of the statements in greater detail.
Focusing on value creation instead of achieving project milestones allows businesses to formulate consumer-centric value streams, helping improve the customer experience.
And since success is measured through actual business outcomes rather than completion of milestones, there’s more focus on merits like cost reduction, customer satisfaction, and revenue generation, which are more crucial in business transformation.
Adopting an iterative strategy allows teams to regularly solicit customer feedback and act on it every step of the way. This adds flexibility to product development and allows businesses to adapt more efficiently to changing customer needs.
That’s different from project management, where products are created purely based on the initial analysis of customer preferences (during the planning phase).
There’s minimal adjustment during the development process, which can be detrimental to customer satisfaction given how fast consumer needs evolve in the modern world.
Such is the focus on agile in product management that product teams have a designated role for driving agile events: the scrum master. This person plays an essential role in ensuring that teams operate to their full potential by ensuring:
- An agile operating model is formulated and followed to the latter.
- Agile blockers are removed.
Agile blockers are any hurdles that slow down product delivery or stop it altogether. Team blockers slow down a team’s progress on a task.
An agile operating model combines strategy designs, best practices, and execution tactics to help businesses segment tasks into short phases of work punctuated by frequent testing and adjustments. Typically, these phases of work are handled by self-adjusting teams.
The model does more than just speed up product development. It also boosts productivity and collaboration, not to mention making organisations more nimble in adjusting to changing customer needs and business goals.
What’s more, creating self-adjusting teams improves employee satisfaction and loyalty. When teams are empowered to make product decisions and adjustments on their own, the individuals involved feel valued and trusted by the organisation, making for a happier, more loyal workforce.
Typically, adopting an iterative strategy means value discovery and delivery phases can run concurrently. This kind of parallelism helps ensure a constant flow of new ideas within teams.
That’s because, unlike project management, where teams often disband after project completion, product teams remain intact even after a product is developed and launched in the market. Sure, the individuals might get involved with other products within the organisation, but they remain committed to past products’ ongoing improvement and management.
As time goes by and trends change internally and externally, team members may get new ideas for improving some of the products they’ve been involved within the past. When this happens, it’s easier for these new ideas to be put into practice because the original product team can quickly be reassembled.
There’s no disputing that a product centric approach is better suited to business transformations than project management. But while product management certainly has a lot of merits, whether it helps your business transformation will depend on how you implement it. Put bluntly; product management can only help your business transformation if it’s implemented end to end.
Because planning and delivering organisational change through a product-centric approach is a cross-functional effort, where business processes are managed across functional boundaries.
As an FYI, cross functional management is different from functional management. While functional management aims to maximise the performance of a specific organisational function, cross-functional management adopts both a vertical and horizontal organisational outlook to create synergies in both directions.
Generally, cross functional management is a better way to build the systems and processes required to foster enterprise changes in areas such as:
- Product quality
- Customer satisfaction
That’s because it combines expertise from different knowledge areas and channels it to a common (transformational) goal.
Product management needs to be implemented across operations, tech, HR and other organisational functions to work. You need to have a product manager and a team of diverse talents aligned to a common goal to realise organisational change, leave alone transformations.
So year, product management can be an effective way to approach change and transformation, but only if you truly implement it end to end.
Indeed, product management is a more suitable approach to business transformation. The rationale is that it’s agile, focused on value creation, and a great way to run value ideation and delivery phases concurrently. It caters to improving the customer experience, one of the primary drivers of business transformation today.
So whether you’re gearing up for data, solutions, or digital transformation, product management is the way to go. However, whether this approach works for your business will depend on how well you implement it. Implementation needs to be cross functional and not just centred around the IT department.
- The Wall Street Journal: CIO Journal content by Deloitte: Shift IT from Project to Product
- Forbes: Five Reasons To Ditch Project Management For Product-Based IT
- Attlassian: What is product management?
- Wikipedia: Product management
- Aha!: What are the types of business transformation?
- Aha!: What is the role of product management in enterprise transformation?
- Salesforce: What Are Customer Expectations, and How Have They Changed?
- Salesforce: State of the Connected Customer
- Aha!: Blog: What Is a Solutions Transformation?
- TATA Consultancy Services: he Path to an Agile Operating Model
- Aha!: How are product teams organized?
- Aha!: What is the Complete Product Experience?
- Bootcamp: Cross-functional management
- IDG: 2021 Digital Business Research