5 min read
In 2021, as an evolution in our agile transformation efforts, I introduced Value Stream Management (VSM) to my organization and later advocated for the Product Operating Model (POM), but I never clearly explained why I believe these practices are so important. While I’ve shared their benefits in various writings and conversations with industry leaders, I failed to deliver a cohesive message to my department. This lack of clarity has sometimes created a misalignment between the technology and product teams, hindering our ability to adopt these practices fully.
Looking back, I realized that even before formally identifying the Product Operating Model as a framework, our team—and I—were already heading in that direction. By setting up cross-functional teams aligned to specific products, we naturally moved toward a product-focused approach without defining it explicitly. However, many teams still juggled tasks across multiple products, which exposed inefficiencies and reinforced the need for a clear, intentional strategy.
This experience taught me a vital lesson: adopting and communicating frameworks like the Product Operating Model and Value Stream Management is critical for team alignment, operational efficiency, and sustainable delivery.
Why Adopt Value Stream Management and a Product Operating Model?
In almost every organization, there is more work than capacity. This reality underscores the need for prioritization and a focus on outcomes over outputs. I advocate for adopting VSM and the POM because they address this challenge head-on, providing a framework to align teams, optimize workflows, and deliver maximum value.
The 2024 Project to Product State of the Industry Report1 confirms this approach, showing that organizations that adopt these frameworks outperform their peers:
- Elite organizations meet their quarterly objectives over 90% of the time, compared to less than 50% for low performers.
- These elite organizations are 2x more likely to operate with a product-oriented approach, reducing wasted effort by 30%.
- Yet, only 12% of organizations have fully operationalized the shift to a Product Operating Model, and most are still in the early stages of adoption.
These statistics highlight not only the opportunity but also the challenges organizations face when adopting these practices.
Aligning Teams to Deliver Maximum Value
A Product Operating Model allows teams to focus deeply on specific products, becoming subject matter experts while owning the product’s entire lifecycle. This ownership fosters alignment with business goals and eliminates inefficiencies caused by constant context switching.
The 2024 Project to Product State of the Industry Report reveals that in elite organizations:
- Over 50% of work is product-oriented, while low performers remain stuck in project-based approaches.
- Product-focused work leads to fewer canceled projects, less technical debt, and more business-aligned outcomes.
Value Stream Management complements the POM by making workflows visible, identifying bottlenecks, and optimizing delivery processes. Together, they enable teams to focus on what truly matters: delivering measurable value to the customer.
“Aligning teams to a product-focused approach ensures they not only deliver outputs but also realize outcomes, driving measurable impact for the business.”
Closing the Loop: Realization Matters
While flow ensures that work moves efficiently, realization connects delivery to outcomes. Realization is the critical second half of the equation: Did the work change customer behavior as intended? Was the desired outcome achieved?
The 2024 Project to Product State of the Industry Report highlights the gaps many organizations face:
- Only 15% of organizations can incorporate customer feedback within weeks, meaning most teams lack the insights needed to close the loop.
- 30% of work in low-performing organizations remains over 90 days old, contributing to waste and inefficiency.
“Flow transforms effort into movement, but realization transforms movement into impact. Without closing the loop, we risk delivering outputs instead of outcomes.”
By linking flow metrics to customer behavior and business results, teams can measure the true value of their work. This feedback empowers teams and fosters a culture of continuous learning and adaptability.
Why Context Matters
Adopting frameworks like Value Stream Management or the Product Operating Model as a checklist of best practices is tempting. However, organizations that treat these as cookie-cutter solutions often struggle to realize their full potential. Context matters—the success of these practices depends on how well they are adapted to the organization’s unique challenges, culture, and goals.
“There is no one-size-fits-all approach to transformation. The true power of frameworks like VSM and the Product Operating Model lies in their flexibility to serve as blueprints rather than rigid rules.”
The 2024 Project to Product State of the Industry Report reinforces this, showing that elite organizations don’t merely implement practices—they adapt them to align with their structure, strategy, and customer needs.
By focusing on the core principles—alignment, flow, and realization—organizations can customize these practices to suit their context while achieving their desired outcomes.
Empowering Cross-Functional Teams
Empowerment isn’t just for product managers—it’s for the entire cross-functional delivery team. While the 2024 Project to Product State of the Industry Report highlights the role of product managers in driving vision and outcomes, the real magic happens when teams collectively own their work, informed by flow metrics and realization feedback.
“When teams understand how their work impacts customer behavior, they can make informed decisions, prioritize effectively, and adapt quickly to feedback.”
This shared empowerment enables teams to:
- Collaborate more effectively.
- Deliver higher-quality outcomes faster.
- Build trust and alignment across roles and departments.
The Road Ahead
For 2025, this will be one of my primary focuses within my organization. This renewed focus stems from the feedback I received in late 2024 during a leadership program. In an anonymous 360-degree assessment from my peers at the executive level, one comment stood out: “You should focus more on business results as a technology leader.” That feedback hit hard but was also eye-opening. It made me realize that while our 10-year transformation from a monolithic waterfall process to a world-class Agile, continuous delivery, and microservices-based cloud solution was remarkable, we failed to communicate how this transformation drove measurable business results.
In response to this feedback, I am creating new tools and communication strategies for 2025 to enhance our approach to Value Stream Management and Product Operating Models:
- Value Stream Templates: Helping teams realign or re-identify value streams, ensuring our work directly connects to business objectives.
- Epic-Level Definitions: Providing a template for improved epic-level descriptions in Jira (or similar tools) that emphasize anticipated outcomes and dependencies.
- Team-Level OKRs: Establishing Objectives and Key Results tied to outcomes, ensuring alignment with business priorities.
- Division Wiki Updates: Updating our internal documentation to emphasize outcomes over outputs, recognize dependencies, and reinforce our mission.
These efforts aim to bridge the gap between technology initiatives and business value, ensuring we deliver features and demonstrate their impact on growth, profitability, and customer success.
Finally, I welcome your insights and ideas for those leading similar changes. Let’s learn from one another and work together to align our efforts with the outcomes that matter most.
“The time to act is now. Let’s lead purposefully, ensuring our teams deliver meaningful, measurable value in 2025 and beyond.”
Poking Holes
I invite your perspective on my posts. What are your thoughts?.
Let’s talk: [email protected]
References
- The 2024 Project to Product State of the Industry Report, Planview, https://info.planview.com/project-to-product-state-of-the-industry-_report_vsm_en_reg.html