How can IT companies move from a project to a product mindset? (based on my experiential insights in umpteen IT engagements till date)

Balaji T

Pragmatism in Agile, Executive Coaching, Digital/Strategic Transformations, Program & Delivery Management, Product Management in IT, AI, Generative AI (GenAI) & Data Science in IT Engagements

Published Oct 16, 2024

Introduction & Context Setting

To move from a project-focused to a product-focused mindset, IT companies must take a structured, phased approach that emphasizes value-driven, customer-centric development. This transition can bring sustainable growth, competitive advantage, and a long-term view to technological solutions. This paper provides a step-by-step methodology for practical implementation, real-world use cases, and critical success metrics to gauge effectiveness.

My YouTube Shorts Video related to this - Things to focus on to move from project to product mindset - my Video based on experiential insights. Below is the link.

Things to focus on to move from project to product mindset - my Video based on experiential insights (youtube.com)

You can watch my YouTube Video on

Day2 - Track1 Topic - "Value Stream Management & Building Productized IT Models" by Balaji.T as part of Agile Coach Summit March 2023

Day2 - Track1 Topic - "Value Stream Management" by Balaji.T as part of Agile Coach Summit March 2023 (youtube.com)

The crux of the article

1. Understanding the Shift from Project to Product Mindset

The transition from a project to a product mindset entail moving from a temporary, deliverables-focused approach to a continuous, outcomes-focused approach. In a project mindset, success is measured by timely delivery, budget adherence, and requirements fulfillment. In contrast, the product mindset focuses on creating, managing, and evolving a service that provides sustained value to end users. Here’s what this looks like in practical terms:

Project Mindset: Time-bound with specific goals, requirements, and closure criteria. Once delivered, maintenance and evolution are generally outsourced or neglected.
Product Mindset: Long-term vision with a lifecycle-based approach, continuous evolution based on customer feedback, and iterative enhancements to meet changing market needs.

2. The Pragmatic Step-by-Step Transition

A structured, five-phase approach is outlined to ensure a smooth transition:

Phase 1: Define Product Vision and Strategy

Create a Product Vision: Collaborate with key stakeholders to define the long-term vision and purpose of the product.
Align on Outcomes and Objectives: Develop Objectives and Key Results (OKRs) that reflect business outcomes and customer satisfaction rather than mere completion timelines.
Map to Customer Needs: Translate strategic goals into features or services that address specific customer pain points.

Phase 2: Restructure Teams for Product Focus

Form Cross-functional Teams: Create dedicated product teams comprising developers, testers, UX designers, and product managers.
Empower Product Ownership: Assign a Product Owner (PO) or a Product Manager (PM) responsible for decision-making, prioritizing customer value, and maintaining the product roadmap.
Enable Autonomy and Accountability: Shift to an agile framework like Scrum or Kanban, allowing teams the autonomy to make decisions based on customer feedback and iterative development.

Phase 3: Establish Agile Product Development Processes

Implement Continuous Delivery: Use CI/CD pipelines for rapid, frequent releases and updates, ensuring customer feedback loops are integrated into each release cycle.
Focus on MVPs and Incremental Value: Launch a minimum viable product (MVP) and iterate based on customer feedback, enhancing the product in manageable stages.
Adopt Agile Metrics for Product Success: Track metrics like Net Promoter Score (NPS), customer satisfaction, and user retention rather than project-focused KPIs like on-time delivery.

Phase 4: Shift from Project Management to Product Management

Reframe Metrics: Move away from time and cost-based metrics toward user engagement, lifetime value, and customer retention.
Develop Product Roadmaps: Focus on customer needs and long-term goals, with roadmaps evolving based on feedback.
Budget for Product Lifecycle: Instead of project budgets, allocate funds based on lifecycle needs, enabling continuous development, support, and upgrades.

Phase 5: Continuous Feedback and Adaptation

Implement Feedback Loops: Gather real-time customer feedback via NPS surveys, customer interviews, or in-product analytics to continuously improve the product.
Iterate Based on Insights: Use agile retrospectives and sprint reviews to adjust priorities and address any emerging customer or market needs.
Refine Product Backlog Regularly: Keep an active, prioritized backlog aligned with customer demands and product evolution.

3. Real-World Use Cases of Project-to-Product Transition

Use Case 1: Microsoft’s Transition with Office Suite

Microsoft transformed Office Suite from a boxed software (project-based) to Office 365, a subscription-based (product-focused) service.

Approach: Implemented agile methodologies and established dedicated product teams.
Outcome: Transitioned from a project-based licensing model to an ongoing, subscription-based model. Continuous updates allowed Microsoft to stay ahead of customer needs, boosting engagement.
Metrics: User retention rate, monthly active users, and subscription renewal rate.

Use Case 2: Spotify’s Move from Projects to Squad-Based Product Development

Spotify moved from traditional development teams to product-oriented “squads,” each owning a specific product feature or aspect.

Approach: Established cross-functional squads, with each squad responsible for a product feature, running in agile iterations.
Outcome: Enabled rapid product innovation and quicker responses to market demands, creating a more personalized user experience.
Metrics: Feature adoption rate, customer satisfaction, and reduced time-to-market.

Use Case 3: Adobe’s Shift to Creative Cloud

Adobe transitioned from selling software licenses for individual products to offering Creative Cloud as a subscription-based model.

Approach: Focused on continuous delivery of new features, performance improvements, and cloud-based integrations.
Outcome: Adobe was able to generate steady revenue while adapting its offerings based on user behavior and feedback.
Metrics: Customer lifetime value, churn rate, and subscription growth rate.

4. Key Goals, Success Indicators, and Metrics for the Product Mindset Transition

Defining Success Goals

User-Centric Development: Products evolve based on feedback and usage, not solely on requirements defined at the start.
Market Responsiveness: Ability to pivot or expand features rapidly to meet evolving demands.
Sustainable Revenue Models: Enhanced profitability through subscription models, up-sells, and lifetime customer value.

Success Indicators and Metrics

5. Practical, Hands-On Example

Scenario: A mid-sized IT consulting firm transitions from managing projects to developing an enterprise HR platform as a product.

Steps to Implement

Define Vision and Strategy: Outline a vision for a scalable HR platform addressing critical employee needs. Set OKRs for product adoption, engagement, and retention.
Reorganize Teams: Form a cross-functional team including product managers, developers, UX designers, and customer support.
Agile Implementation: Establish Scrum processes with two-week sprints and CI/CD pipelines for rapid releases and adjustments based on user feedback.
Focus on Customer Feedback: Regularly gather insights through in-app surveys, analyze usage metrics, and host customer feedback sessions to inform product enhancements.
Measure Success: Track key metrics such as active user growth, churn rate, and NPS to assess product adoption and satisfaction.

Example of Goals and Metrics

Goal: Improve employee engagement and reduce turnover. Metric: Measure DAU/MAU, user satisfaction (NPS), and feature usage.
Goal: Achieve continuous improvement with minimal downtime. Metric: Monitor defect density and customer-reported issues per release.

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Closure Thoughts

Moving to a product-centric model requires a holistic shift in processes, culture, and structure. By focusing on customer value, cross-functional collaboration, and continuous improvement, IT companies can achieve sustainable, scalable growth while delivering higher customer satisfaction. A successful transition relies on measuring impact-driven metrics, fostering agility in teams, and maintaining a long-term vision that evolves with user needs.

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