Companies find themselves navigating through a digital transformation that’s fundamentally changing the way they operate and deliver value to their customers. Nowhere is this transformation more apparent than in software development and delivery. We’ll explore into the advantages of adopting a product and platform operating model, highlighting its direct correlation with business performance, enhanced customer engagement, and the key components that make it work.

Direct correlation with business performance

Adopting a mature product and platform operating model can be very impactful on a company’s business performance. This model empowers cross-functional teams to work autonomously, fostering an environment where software development and delivery are streamlined, efficient, and focused on delivering value. The data speaks for itself, with companies that have mature product and platform operating models outperforming their counterparts in several key metrics.

Shareholder returns and operating margins

Companies with mature operating models enjoy a staggering 60% higher return to shareholders. Additionally, their operating margins see a remarkable 16% increase compared to companies with less mature models. These outcomes underscore the model’s ability to drive not just short-term gains but sustained profitability.

Scalable and reusable components

The secret sauce behind these impressive numbers lies in the model’s emphasis on creating scalable and reusable software platform components. By breaking down silos and encouraging collaboration across departments, companies can develop components that serve multiple products, thus optimizing resource allocation and reducing redundancy.

Enhanced customer engagement and brand awareness

Customer engagement and brand awareness can’t be ignored in today’s competitive market, and the product and platform operating model plays a central role in boosting these core business metrics.

Customer centricity

Advanced operating models prioritize customer centricity, going beyond the superficial to truly understand customer personas and their evolving needs. This deeper understanding informs the development of products that resonate with users, driving up customer engagement. Businesses with advanced models experience a significant 38% increase in customer engagement.

Brand awareness

Building a strong brand presence is equally crucial. Companies that embrace this model see a remarkable 37% rise in brand awareness. This is a testament to the model’s effectiveness in aligning business objectives with the development of products that not only meet user needs but also reinforce the brand’s identity.

Key components of the operating model

Effective ways of working 

At the heart of this model are the “ways of working.” These encompass product management practices that are identified as having the most significant impact on business performance. It involves managing cross-product and platform dependencies, defining clear roles in the product development lifecycle, and adopting modern product management and engineering practices.

Dependency resolution

There is a strong need for mechanisms to resolve product and platform dependencies to ensure that teams can collaborate seamlessly without bottlenecks, paving the way for a smooth and efficient development process.

Consistent product development lifecycle

Defining a consistent product development lifecycle is crucial for maintaining a structured and predictable approach to delivering software. It ensures that everyone involved understands their roles and responsibilities at every stage of development.

Modern practices

To stay competitive, companies must adopt modern product management and engineering practices. This includes agile methodologies, continuous integration and deployment (CI/CD), and robust testing procedures. By staying at the cutting edge of these practices, businesses can iterate and deliver quickly while maintaining high-quality code.

Culture, talent management, and tooling

Culture, talent management, and tooling form the foundation upon which the product and platform operating model thrives.

Psychological safety

A culture of psychological safety is a strong enabling agent for fostering innovation. Teams need to feel safe to experiment, make mistakes, and learn from them. This open environment encourages creativity and risk-taking, which are key for driving consistent innovation.

Cross-functional collaboration

The model promotes cross-functional collaboration, breaking down silos between business, engineering, and operations. This collaboration leads to a holistic understanding of the product and its impact, resulting in better decision-making and more effective problem-solving.

Talent attraction

To succeed, companies need to attract top talent. This model offers strong value propositions for talent, as it provides an environment where they can make a real impact and be part of cutting-edge projects. Companies that embrace this model become magnets for top-notch professionals.

Advanced tooling

The right tooling is a must for efficient and cost-effective software development. This includes DevSecOps pipelines that integrate security into the development process and generative AI tools that automate repetitive tasks, freeing up developers to focus on creative problem-solving.

Implementing the model

Transitioning to the product and platform operating model is a significant undertaking, but the rewards are worth the effort. Here are some strategies and areas to focus on when implementing the model.

Building high-impact capability areas 

Interaction models

Develop interaction models that align with user needs and business goals. This ensures that the product remains user-centric while contributing to the company’s strategic objectives.

Backlog alignment with business goals

Ensure that the backlog of features and improvements is closely aligned with measurable business goals. This ensures that every development effort directly contributes to the company’s success.

Funding tied to measurable goals

Align funding with measurable goals, creating a clear link between investment and outcomes. This approach ensures that resources are allocated efficiently and in line with strategic priorities.

Managing technical debt

Address technical debt promptly and effectively. By doing so, companies can maintain code quality and prevent issues that could hinder future development efforts.

Promoting a product culture

Establish processes and tools that promote a product culture throughout the organization. This culture shift ensures that everyone is aligned with the product’s goals and understands their role in its success.

Final thoughts – Necessity for long-term success

The product and platform operating model is a necessity for companies looking to lead, innovate, and compete in the digital and AI age. While the transformation to this model may seem daunting, it’s a journey that companies must embark on to survive the software transition. By prioritizing actions that deliver the highest impact and building a solid product and platform foundation, businesses can position themselves for long-term growth and success.

Tim Boesen

January 23, 2024

5 Min