Project to Product Technology Transformation

Companies are not reaping the benefits of their technology teams and see technology as an expensive necessity that adds little value.  Transformations focus on improving and maturing the delivery capability of technology teams, and getting closer collaboration with business. This can happen as part of an official company wide digital transformation, or as a technology mandated effort to reduce costs and increase business value.

Beyond Agile Transformation

Many Agile transformations fail. Common reasons include lack of executive support, existing technical complexity, inability to secure resources for cross functional teams. In many cases in a ‘Waterfall to Agile’ transformation there is a tension between established delivery practices and new practices. A significant problem is that when stripped down, agile requires cultural and behavioural changes that either do not exist in the company, or that the company struggles to adopt because it is simply too far away from those ideals.

Individuals and interactions over processes and tools

Working software over comprehensive documentation

Customer collaboration over contract negotiation

Responding to change over following a plan

Unless it's a software product company, software development in itself isn’t the prime source of value, and is instead something that needs to be done well to ensure that value can be delivered to customers.  

Whether its shipping pairs of jeans, selling pharmaceuticals, making cars, or managing property, all these ways to create customer value rely in part on an ability to deliver software solutions well, but software remains just a link in the chain.  

There are many ways a company can deliver its value without having to develop its own software in house, and large companies with architectures that bake in every required component find themselves in a position where technology becomes hugely expensive and slow moving. This is what prompts the adoption of agile practices and trying to address a perceived localised problem in technology.

True digital transformation is about solving broader, systemic, company wide problems, creating new ways to deliver value to customers, and finding more effective ways to utilise the inherently expensive proposition that is technology. 

Agile principles come from Lean manufacturing and are based on a philosophy of waste reduction to achieve effectiveness and high quality. There are several kinds of waste but two of the most prominent (in facts others fall into one of these categories) are: 

• Building the wrong thing. Misalignment on what is needed from technology to deliver customer value
• Management Overburden. Placing demands on teams for work that do not provide customer value.

Building the wrong thing with pace and high quality is a much bigger problem than iteratively building the right things to a reasonable standard.

The Product Approach

Many transformations have a broader and more strategic remit. They adopt a product centric approach and implement business wide changes in support of value creation.

Non product companies can benefit from a product approach. No matter how a company creates value there are important product techniques that can help do it better.

A primary benefit of a product approach is that value can be easily duplicated and multiplied, providing a platform to scale your business. In essence this is the key goal of going digital, namely how can we provide value to customers in a way that scales, and create a platform for company growth. Digital is the development of plans and ways of working that turns technology advances into sources of differentiation and competitive advantage.

A product business has the following characteristics:

1. Create an item of value that can be purchased or licenced
2. Produce each item of value for as little cost as possible
3. Sell as many of these units of value for as high a price as possible
4. Make it as easy as possible for a customer to get the value. (Increase customer convenience and decrease the costs of sale)

In a retail context, Analytics and Machine Learning can help identify the needs of certain customer groups and provide them what they are looking for. It can identify buying patterns in particular locations and demographics and ensure that stores are stocked appropriately. New value comes by feeding information back to suppliers whose brands are stocked, enabling them to tune production and become price competitive. Understanding customers using data also helps to launch new products, and has high potential for driving new revenue streams.

Websites help customers transact effortlessly, and find what they want easily. Effective web experiences help to engage and build relevance with customers, and retain the ‘goto’ place in their mind in an attention economy.

Use of APIs with partners can help reap the benefits of wider marketplaces that allow smaller retailers to sell under your brand and via your eCommerce platform, or to distribute your own product via other digital platforms. Being a specialised, recognised player in a network bring benefits of network effects, and has been the source of new breeds of technology and API only companies.

Using technology and a product approach to address and build on the key benefits of products. Even if the end product that is purchased or rented by a customer is not a technology one, by planning technology investments with a view to improving each of the above product characteristics will help a company move toward a more effective and less expensive use of technology.

Cultivating a Value Proposition

Lack of delivery pace and poor quality, clearly needs urgent focus and rectification to get technology teams working as effectively as possible. Often an extended period of intense delivery focus results in a lack of attention to core capabilities, accumulation of technical debt and complexity, and systemic problems that are harder to unravel.

More often that not these early conversations turn into wider and more strategic ones about what capabilities are needed, the current state of readiness to achieve this, and the longer term enablement plans that go beyond immediate, but important, deliveries. A balance needs to be agreed between short term fixes and longer term foundational activity.

In many cases teams have been working hard, often in less than ideal circumstances, hampered by wider problems that remain unaddressed, and seeing their effectiveness decline despite working harder than ever. People burn out, lose interest, and move on when they can't utilise their problem solving engineering skills and the onus is delivery of a poorly though through venture at any cost. Turnover and instability leads to situations in which achieving the basics of delivery becomes incredibly difficult, and executive stakeholders are right to be concerned about mounting costs, and perceived lack of progress.

In these cases engineering and technology teams have become separated from the business, and are expending huge effort and cost just to remain static. The lack of alignment between strategic plans and technology capability widens. This alignment can be addressed by adopting a product oriented approach, and clarifying the value proposition for technology.

Often the desire to see a more rapid pace of delivery comes from confusing activity and value. The first is easy to measure, but the second very tricky. More people, and more activity do not automatically translate into more value. But they do automatically translate into more cost, and a diminished perception of value.

The key goal of going digital, and adopting product thinking, is providing value to customers in a way that scales, and creates a platform for company growth. In basic financial terms, it's finding a way to achieve revenue growth without associated increases in operating costs that undermine profitability.

Value doesn't come from the amount of projects undertaken. It comes from the ability to deliver those projects with minimal cost that comes from having built the right infrastructure, teams, working practices and technologies. In some cases this can go as far a turning the entire company into a technology enabled platform.

Technology Transformation

A transformation goes beyond just the delivery aspects and must not be approached in an technology only way in an attempt to rectify problems at the point where they are manifesting. Engineering led transformation must work across the following facets of the business, and should be viewed as a journey rather than a initiative with a start and and end.

• Strategy alignment
• Senior stakeholder buy in
• Architecture and Technology Strategy (as is, to be and migration)
• Teams and Operating Model
• Outcomes and Value Proposition
• Enablement

A recent transformation I led involved changing a large shared service IT organisation within a global company. Working closely with their Head of Architecture, Head of Programmes, HR, Finance and the board over the course of a year, to change the technology operating model and enable stronger product, engineering and technology capabilities.

The problem manifested as technology teams not delivering effectively, with high costs and lengthy project timescales impacting the company's overall profitability. Over many years, technology debt had accrued, and efforts to minimise costs by careful management of a central pool of technology resources (people) had not had the desired effect. There was no concept of teams working on common themes and a lack of focus. Accountability was a problem as a 'resource' would be drafted onto a project for a few days to do a particular item of work, then be pulled away to another project when done. Fluctuating demand led to a high percentage of contractors, and overall high costs.

The result was duplicated work, and duplicated costs to provide the same value to more than one customer. In short, lots of waste, and an unclear view on priorities and where customer value was coming from.

The change involved undertaking a technology maturity assessment, and breaking apart the shared service, lessening management overhead associated with endless resource management, and identifying leaders and engineers who would form cross functional, domain specific development teams that were in the headcount and budget of each business unit.  

A small cross cutting enablement team consisting of Product, Engineering and Agile leaders was also formed to set standards and ensure that capabilities were continually improved across all teams. 

The result was easier planning and execution of delivery work, adoption of effective technology practices and building of business domain expertise across technology teams. The company is not yet a fully digital company and may never need to be one, but has embraced platforms, products and Agile over bespoke projects previously run with traditional methods. These are the basics required for further growth.

What does it mean to ‘Go Product’?

A shift to product means establishing product thinking and product leadership that promote the following changes:

• From bespoke to repeatable
• From satisfying an immediate customer to satisfying as many customers as possible
• Minimising duplication and variation
• Understanding customers needs
• Understanding business opportunities from technology
• Establishing value propositions that inform road-map and delivery priorties
• More value with less effort.

While many companies may not see themselves as product companies, if it uses technology to any degree to try to build an advantage, a product led transformation approach is well worth considering.