Product-Based Organizational Structure — The Most Effective Approach

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Every year, organizational structures and business models remain a hot topic of discussion, with renewed focus and emphasis on how organizations are structured.

Blueprint Plan

The new year is right around the corner, and with it comes several changes, including working together as cohesive teams, robust project management tools, and more agility.

While several proposed organizational models and team structures exist, what if the simplest and most effective way to organize and structure an organization has yet to be discovered?

This article explores product-based organizational models and why they are more effective than any other approach. First, let’s take a look at the benefits of product organization structure!

Product-based Organizational Structure Benefits

1. Greater Visibility of the Total Organization Through a Single Product Lens

Product-based organizational structures provide a more holistic, clear, and accurate view of the organization and its product portfolio. This can help ensure that goals, objectives, and partnerships are aligned to support the overall business strategy by offering greater visibility across the enterprise. 

The organization can work with one product at a time, which allows for a more simplified product-to-market approach and can help ensure that the organization is fully delivering on its promise. Organizations must know the product manager interview questions!

2. Improved Communication Across the Organization

Focus is more clearly defined around each product as each product will be viewed through a single lens. While stakeholders may view this as an improvement in visibility, there may be negative impacts on communication across the organization.

Increased transparency is associated with increased risk, and the organization may be overwhelmed with information.

Product-based organizational structures can improve communication, but communication within and across product lines will significantly benefit companies when implementing a product-based organizational structure.

3. Improved Productivity through Better Communication

Product-based organizational structures also provide greater visibility of potential improvements to the organization. This allows for better communication between teams and stakeholders as they can identify areas where they are not fulfilling their respective goals or objectives. 

The structure works hand-in-hand with corporate objectives and can help improve productivity due to the organization’s ability to identify inefficiencies more easily and align resources with goals.

4. Improved Management and Leadership

Leaders with clear visibility of the organization will be able to manage it more effectively. Leadership is simplified in a product-based organizational structure, as each product is handled through a single lens.

5. More flexibility:

A product manager is on a product team in charge of a product with a single customer. One can address the requirements of different product bases by creating cross-functional teams who report to the product manager. One can think about it as how a small company operates. Any team is relatively small, and all work together to achieve the common goal: survival (or fulfilling the customer’s demand).

6. Products to market faster:

One example of this is when Dell launches a new laptop. The marketing team, the design team, and the manufacturing team all need to work together. 

Now with one product manager on one product, the entire marketing department has to continue to market that product for months before it launches. With a product-based organizational structure, communication can be done early on and will have less overhead as a single person handles each product. Marketing for one product can be done at once, making it a faster time to market.

Is Product Organization Right For Your Business?

A product-based organization architecture makes it easy to work with multiple products because each product has a team that can focus on specific goals. This structure is great for companies with various related products, such as fashion brands with different clothing and shoe styles. 

When multiple products are within the same industry, having a product-based organization model will help ensure the products from one company align with those from another.

Product-based organizations successfully create organizational structures that are easy to manage and can be easily transferred to other business operations.

Product-based organization structures are simple but effective, as they eliminate the need for each product team to overlap in terms of purpose and strategy. Product-based organizational models will allow companies to better align their products with their customers’ needs and strategies, providing a simpler way for businesses to market and purchase products.

For example, if a company has two different software products, having two separate teams for each product will make it easier for the organization to create cohesive strategies and marketing plans for each product. This helps companies a great deal as they strive to balance the needs of their customers with those of their internal teams.

While there are many different organizational structures in business today, few are as simple and effective as the product-based structure.

Wrapping up!

Product-based organizational structures provide a more holistic, clear, and accurate view of the organization and its product portfolio. This can help ensure that goals, objectives, and partnerships are aligned to support the overall business strategy by offering greater visibility across the enterprise. 

The organization can work with one product at a time, which allows for a more simplified product-to-market approach and can help ensure that the organization is fully delivering on its promise. Communication is improved as the focus is more clearly defined around each product, as each product will be viewed through a single lens.

Facing Disruption: When To Consider A Change To Product Structure!

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Since January 2020, a disruptive transformation has been a hot topic. However, it has existed for the last three decades. The only difference is that enterprises need more time to manage the transition in the digital age since disruptions happen more frequently. For many leaders, disruption is a source of uncertainty and fear. It can create a feeling that there is nowhere to hide. For example, what do you do if your business has just been disrupted by new technology, but you don’t have the resources to do anything about it? This guide will discuss how to consider changes in your product structure so that you can safely navigate disruption without losing too much market share or falling into debt.

Product management

Why Does Changing Product Structure Matter?

Disruption can take many paths for your industry and business models. At the core, it means that the way you operate your business and likely how you operate the business of others in your industry will change. That is why it’s important to understand how customers want to purchase your products and if they want the same product offering in their hands once they have had time to make the transition.

Problems can arise when you don’t anticipate how your industry will change. It may seem like a good idea in the present, but once disruption takes place, you may have decided to use emotional pressure instead of logical thinking. If you are trying to anticipate the disruption, you must put your decision in the right perspective. The idea is for you to think about how your product structure challenges impact your business model and whether or not it would allow you to compete with the businesses trying to disrupt you.

When To Consider A Change To Product Structure?

To change your product structure, you must have a good idea of whether or not your current product structure can survive disruption. The Leaders are compelled to think about modifying their product organizational structures because of several internal and external disturbances. Potential internal change disturbances include the following:

  • Modernizing architecture and putting best-in-class agile, continuous deployment techniques into practice
  • Silos resulting from the functional organization over time need to be dismantled. There is a mismatch between engineering priority, product needs, and customer priority that needs to be addressed.
  • To increase revenue prospects by enabling customers to fully utilize the product suite, there is a need to promote integration and coordination across businesses and decrease duplication of work due to the GM model.

An external disturbance could be attracting and retaining new customers with different buying habits and conditions. In the digital age, customers no longer want to avoid in-depth conversations with an account representative about what product or service to purchase. This may seem like a luxury for some business leaders, but it is necessary for many customers. Thus, you need to ensure that you can offer your product how your customers want to remain competitive. So here are some external disturbances that are as follows:

Cloud:

Some businesses recruit new personnel, rethink their product architecture, and change how they market due to the requirement to develop cloud-native and SaaS products. The organization must take a step back to evaluate how to operate and be successful in a cloud-first environment to produce cloud-native products and migrate on-premise products to the cloud. Customers’ switching costs are meager in a SaaS world, and consumer expectations of product capabilities are high. Organizations must have the proper organizational structure to ensure they can fulfill the demands of modern product development processes and expectations of frequent releases and upgrades driven by the cloud.

Innovations:

Innovations are the driving force behind disruptive innovation. For example, more is needed to offer a product with a great user experience. You should also create features and use cases that accommodate the new shift from technology to design. A good example is how businesses are starting to focus on “bundling” features for their customers.

Data:

As AI technology is pushed forward by cloud and big data, more is needed to be good at data. To be competitive, you need to use the most effective tools available to gain valuable insights from your collected data. The key difference between now and the past is that companies can gain intelligence from those insights using advanced AI algorithms. Businesses must put their products into the hands of these businesses, or their competitors will realize an edge by improving their products before yours.

Ecosystem & Platform:

Many businesses have realized this and are looking for ways to improve their competitive advantage. There’s a need to develop an ecosystem or platform around their products to offer the public better value and reduce the risk of losing customers. For example, there is no distinction between what is hosted on-premise or in the cloud. You now need to create a hybrid environment that seamlessly runs on-premise and in the cloud for customers and partners.

In summary, you should always keep an eye on how your product structure will help you compete in the business environment. Try to be a leader instead of a follower with the same old product organization that may not function as it once did. Understand what changes you want to make and how they will impact your business.

 
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