1. The missing bridge between strategy and execution
Building an IT product business can be quite challenging if you don’t have certain foundational
elements well understood and institutionalized. This applies to not just startups but large
organizations too. The goals in any sized company are similar. For example, getting a new idea out to
market, entering new markets, trying to achieve scale, reducing cycle time between an idea to
market, reaching the right set of customers etc. Large organizations will need to maintain their
leadership positions by continuously innovating, whereas startups agile nevertheless, have a lot less
room for errors due to scarce resources. Some of the symptomatic situations of a shaky foundation
are; building a new product with several features without involving potential customers; depending
heavily on sales to gather customer requirements; misaligning outsourced development outcomes;
mixing custom solutions and products while positioning etc.
There is an implicit operating model in product organizations, which has rarely been explored or
discussed so far. An operating model describes how organizations execute. Imagine a product team -
what conversations do they have to execute their goals and strategy? How are information and
decisions flowing between team members and with their external stakeholders? Is it aiding or
impeding their speed of execution and thus eventually their business? This is not to be mistaken
with functional best practices in creating or marketing a product successfully, rather this is more
foundational for any product organization. There are four factors for that make up the operating
model for product companies and they are product mindset, organizational design, development
model and decision making structure.

2. Product Mindset
Mindset is the basis of culture. Product mindset can best be described as the set of beliefs and
assumptions that power the creation of inspiring products. Our beliefs and assumptions are hidden
deep in our psyche and it takes a conscious effort to realize and shift to the mindset needed. The
challenges are in unpacking the beliefs and repacking them with new ones that enable creating
products. The mindset drives how we perceive success, failure and efforts in every aspect from
deliverables to revenues.
For example, if the customer asks you to add a feature for them, do you jump on it and implement
or do we understand why do they need it and how does it help them? Do we also pause and collect
data points from other customers on similar needs and then begin to work on it? It is easy to mistake
a customer’s ask for Promise to Pay. Instead we should explicitly check for Willingness to Pay before
launching the product.
There are three assumptions we need to watch out for. First, are we paying too much attention to
what the customer is asking us to do instead of understanding what they really need? Second, are
we jumping into technical solutions before spending enough time trying to understand the problem
and reframe the problem in multiple ways? Third, are we building for each client instead of exploring
repeatability for many?
A good product organization considers product failures as valuable learning lessons (as long as you
can afford it) and success only when you have happy, paying and returning customers. Shifting to
product mindset requires sustained effort. Ideation or brainstorming is one of the ways. Exposure to
inspirational stories is another. Several companies encourage new ideas through internal hackathons
but fall short of nudging their employees to think bigger and from a customer point of view.

3. Organizational Design
Organizational design looks at reporting structures and size of teams. Engineering, Sales and
Marketing are well defined organizations. Product companies need a Product Management
organization that reports to the CEO. This is not to be confused with the Marketing organization,
which is essentially Sales in internet consumer companies. It is important to balance the
perspectives of engineering and sales with a product management team. Very simply put, product
management organization is responsible for representing customer interests during product
development. A good Product Manager recognizes and navigates through the dynamics while
diligently advocating for the customer regardless of reporting structures. It is not easy to balance
with generating revenues or feasibility constraints.
A typical product team consists of a product manager, designer and several engineers. Product
ownership is critical and a basic ingredient to making the product a success. Some very successful
global product companies have figured out that a good team size is which can be fed with two large
pizzas. That’s roughly 8 including engineering, quality assurance, designer and product manager.
Being able to do “more with less” is an oft-heard statement. Most founders in startups are the first
product managers but quickly exceed their bandwidth. An easy milestone for the founder-CEOs to
know when you need a product manager is when you are not able to spend enough time with the
customers. Even though customer empathy and advocacy is something that the whole organization
should embrace, a product manager can greatly help drive the process.
Development model
Product companies must build in-house engineering talent which they usually do. For startups, it is
becoming increasingly expensive as well-funded companies are going all out to attract top talent
with much better compensation. Large companies may also want to hire someone outside for
temporary work to rapidly build a proof of concept. So, there have been and will be situations that
require the team to outsource development. When product companies outsource development,
there is a great amount of risk in velocity. The difference between the client and the vendor is in
operating rhythm. The outsourced vendor expects a well-defined Statement of Work with fixed
scope to ensure quality and timely deliverable. This is the antithesis of product development where
scope is inherently flexible and changes during development are almost a given in the first few
versions when working closely with customers. One way to getting around this problem is for
vendors to innovate their business models and/or engagement models so that the lines are blurred
between consultants and core team members. For this to happen, the conversations between the
client and vendor needs to change from time and materials based outcomes to value based
outcomes.
Decision making structure
There is always an element of continuous discovery and refinement in the product world that
demands continuous decisions. We need to embrace this uncertainty at the same time work towards
minimizing the risk. Modern methodologies like The Lean Methodology greatly help in minimizing
the risk by cutting down the time taken between implementation and feedback. Also, with the
advent of experimentation tools in the market, it is easier to compare user behaviours. For e.g. do
the users click more when presented with a green button or a red button. Product level decisions

4. should be clearly aligned with business goals set by the executive leadership. It becomes easier to
evaluate and track product performance and impact on annual targets which is also very rewarding
in high performance teams since they are visible and recognized. Most product organizations have a
flat hierarchy that enable easy collaboration and brainstorming.
In summary, it may be useful for product organizations to pay attention to their operating model
while working on strategy and execution.
The author is Founder of Pravi Solutions, a Product Innovation & Marketing Consultancy and can be
reached at ravi@pravisolutions.com