Product operating excellence is an approach to running a product operating model such that an organization can effectively strategize, manage, and deliver its product and portfolios to achieve near-term and long-term impact.
It can be achieved by enabling the orchestration of data, ways of working, and change management across all aspects of product operations.
Successful product ops leaders adopt a continuous improvement approach that measures, adjusts, and optimizes how a product organization operates as its internal factors and external environment evolve.
Why is Product Operating Excellence Critical to Companies?
With rapid technological advances, the cost of building products decreasing, and the global distribution of products and services, all companies face escalating challenges to win customers and manage complexity. See Exhibit 1 from the “Product Excellence: Driving success through true product excellence” compendium by McKinsey & Company.
Furthermore, in “The bottom-line benefit of the product operating model” report by McKinsey & Company, they show that a strong product operating model is critical to the success of the product organization.
Organizations with high product operating model maturity, across geographies and industries, have 60 percent higher returns to shareholders and 16 percent higher operating margins than bottom-half performers.
What Are the Differences (and Similarities) Between DIfferent Approaches?
While terms may be used interchangeably, product operating excellence truly consists of both product excellence and operating excellence.
What is Product Excellence?
Product excellence is an approach to product management with a focus on gaining deep user insights, forming sound product strategies, and building cohesive product roadmaps.
Product excellence is essential for product managers and teams to build products that customers love, aligned to strategies and enable clarity on what’s shipping across the company.
As illustrated below, strategic product management should drive customer love and goals for more immediate business impact and higher ROI.
What is Operating Excellence?
Operating excellence in the context of product portfolio management involves improving effective, on-strategy resource allocation, orchestrating delivery within scope and on time, and discovering customer value through the product development lifecycle (PDLC), including collaboration with go-to-market and launch teams.
How Does an Organization Evolve Its Approach?
1. Expanding product excellence to include revenue insights and the portfolio dimension.
2. Cross-functional collaboration amongst teams as active participants in the same product operating model.
3. Incorporating additional practices in the area of operating excellence.
Product Operating Excellence = Product Excellence + Portfolio Operating Excellence
How to Achieve Product Operating Excellence
When products fail, the company fails. It’s imperative to uplevel your product operating model for innovation speed and capital efficiency.
A product operating model is natively complex, with many participants, and various ways of working by different teams, and their data and decisions are interconnected.
To improve and optimize product operating excellence, a product organization needs to measure and evolve the quality and usage of data across the entire product operating model, practice the aligned and autonomous ways of working across the 6 elements of your product operating model, and continuously and consistently adopt the learned best practices (aka ensure fast and effective change management).
Follow the four-step approach to:
- Understand the current level of product operating excellence (take this assessment)
- Gain alignment on future state with both the executive teams and product teams
- Find a partner who can help navigate the changes
- Use the right technology (tooling) and gain value progressively
“Don’t underestimate the power of your provider to help you get going as an accelerator, especially when you’re a new CPO (short on time and resources).”
At Dragonboat, our mission is to enable product leaders to accelerate outcomes with effective product operations. Our purpose-built product operating platform enables effective orchestration of data and ways of working to make the best product portfolio decisions and deliver outcomes fast.
