Advantages of product-centric organization

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A product-centric organization prioritizes product and product-related issues. Because product centrism occurs when the product is at the center of the company, all attention and processes related to it are focused on it: its design and development, optimization, and use. Is it deserving of the title of design product-centric organization?

In this article, we will learn about what actually is a product-centric organization with an  example and how to become the same.

What is a product-centric organization?

A product-centric company focuses solely on the product and develops newer and more advanced products regardless of market demand. All strategies and business processes revolve around the product and function accordingly. These companies spend a lot of money on R&D to develop advanced products, and they grow by adding new product lines to their portfolio.

When a product performs exceptionally well in a market, the company decides to expand its distribution to newer customer segments or even to a new country.  And, for the underperforming product, the company decides to discontinue it and devote its time and resources to high-performance products.

Product-centric businesses do not operate on the premise of meeting the needs and challenges of their customers. They operate on the principle of presenting a product that customers have not yet realized they require.

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Example of product-centric organization

Some of the most successful global organizations have risen to the top of their respective markets with their product-focused approach. These product-centric companies focus their efforts on developing newer and more advanced products regardless of customer demand. 

Apple is a prime example of a product-centric organization. Apple’s organizational structure is divided based on the products of its primary products. There are teams dedicated to developing iPads, iPhones, and Macs. These teams are experts in their respective products and are rewarded based on the number of new products developed or the number of new patents obtained.

Apple does not typically update or release products based on consumer wants or needs. Instead, their target is on creating simple, elegant products that prioritize quality and function, which a small niche of customers will evangelize. 

As a result, this product evangelism comes from the customer rather than the company, resulting in a natural consumer appeal based on the value of the product itself.

What are the advantages of a product-centric organization?

Let’s look at some of the advantages that the product-centric approach can provide.

1. Concentrate on developing the best features

Being product-oriented allows your company to concentrate on one thing: developing the best products and features. This allows you to focus solely on developing and improving products that work, saving you and your team time and effort.

2. Create a strong brand positioning

Another advantage of the product-centric approach is that it can create strong brand positioning based on the quality of your product. Everyone remembers the sensation of a great product, no matter how small.

3. Boost customer loyalty

Customers will never leave your brand if you focus on creating great products. Apple is an excellent case study. Since the 1980s, Apple has been blowing people’s minds, and we’re still obsessed.

Customers are always eager to get their hands on a new product when it is released. They create products that satisfy people in ways they didn’t even realize they needed, but they can’t imagine not having them. 

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How to become a product-centric organization?

1. Establishing the fundamental concepts

The first key to establishing a successful product organization is, adopting a product-centric mindset, which leverages an approach to developing products, and services while maximizing value to the enterprise. This represents a significant shift in how businesses operate internally, serve customers, and attract top talent.

We recommend beginning with these four foundational elements to prepare for the process of conducting the organization’s approach:

  • The strategic pillars serve as the organization’s north star, guiding all priorities.
  • The product vision takes the corporate strategy and defines the intended functionality of the product based on market and customer needs.
  • Then each product team works on road mapping with the future in mind. 
  • And after realizing the product’s purpose, the vision is translated into metric-rooted objectives and key results (OKRs) that are used to achieve data-driven goals on the roadmap.

2. Reimagine the product-centric organization

Leaders are drawn to the product organization’s promises of customer focus, agility, accountability, and transparency, but they may miss out on these benefits if they don’t rethink how they’re structured, how ownership is divided among teams, and how people collaborate. 

To enjoy the advantages of product organization, businesses must establish a clear reporting structure, clearly define ownership between cross-functional teams, and establish ways of working to encourage teaming. 

It’s best to prioritize thinking about what kinds of organizational and operational changes you will need to make as the company embarks on the journey to reimagine the product organization.

  • The product operating model defines how the team interacts with one another.
  • Product organizational design defines how an organization’s teams are structured.
  • Product working methods define the process of working and collaborating within and across teams.

3. Organize the product teams

The most effective product teams are designed to be cross-functional and may include a Product Manager, Business Representative, Engineer, and Designer. While communication methods and tools may differ, it is critical to establish clear responsibilities for each of the product team roles to optimize coordinated efforts and hand-offs. 

Without clearly defining each role’s responsibilities, the organization risks duplication of effort, a breakdown in communication between teams, a lack of autonomy across product groups, and an ambiguous accountability structure.

4. Establish product-centric practices

The most effective product-centric organizations develop processes and strive for consistency. To ensure consistency across the organization, leaders should implement a product delivery playbook, consolidate the tool stack, and identify procedures for roadmap prioritization and budget requests. 

Many will quickly discover how difficult it is to establish a consistent governance structure, reduce friction across competing teams, and change the culture to embrace an iterative agile, product-centric mindset.

5. Helping talent through change

After defining the business case strategy, establishing the product organization, and organizing the operating model around processes that effectively build product-centric capabilities, a company must consider how it supports employees. 

Product management is in high demand, and companies are constantly challenged to retain and attract top talent.  A successful product organization will foster a culture that values individual empowerment by providing opportunities for skill advancement, advancement, and career advancement.

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Conclusion

A product-centric organization structure is not just the organizational structure but the entire way of working. It aids in aligning the structure, technology, and processes to work in unison, providing flexibility to innovate while also improving customer centricity rapidly. This is how all innovative things are created. 

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