January 19, 2022

In the digital world,

product management beats project management

Are your technology investments aligned with critical business outcomes?

The vast majority of companies are still trying to improve their on-time and on-budget project performance. This approach overlooks the question of if the project should even be done in the first place.

Most, if not all, organizations no longer have the capacity to meet the accelerating demand from their customers, employees, supply chain partners, and other key stakeholders for faster, friction free ways to engage and connect. From product development to marketing to sales to customer service and IT, teams with limited resources and budgets are stretched to the breaking point to try and keep up with unprecedented increases in demand.

Against this backdrop, I was interested to read the results from a research study by the Hackett Group that analyzed how companies attempted to “tame project demand.” The study focused on what top project management performers did better than their peers:

  • The largest gap between top performers and others was in the project vetting stage where top performers were able to reduce the percentage of project requests by 44% compared to their peer group. Using inclusive project governance tools, up-to-date business case templates, and transparent project request logs, top performers greenlit an average of just 38% of project requests vs. 69% for their peers.
  • This up-front demand management discipline had the cumulative effects as follows:
    • Growth in project volume over the past two years at top performers averaged 19% vs. 39% for the peer group
    • Resources required to service project demand rose only 5% at top performers vs. 19% at the peers
    • Top performers delivered 66% of their projects on time vs. 45% for their peer group

The results of this research suggest there is a strong business case to be made that the key to improved project management performance is “less is more”.

From project management to product management 

In his book Project To Product author, Mik Kersten, makes some very compelling arguments for the essential need to align and connect technology investment priorities to critical business outcomes for any company that wants to succeed in the age of digital disruption. 

As he says, “tracking software delivery to business outcomes and treating it as a profit center is one of the main reasons why tech companies are faring so much better than their enterprise IT counterparts who are stuck in the cost center trap.” 

A key part of this transition is to utilize business outcome metrics instead of activity performance proxy metrics. 

Understanding the difference between project management and product management

Over the past several years, I’ve had the opportunity to work with several companies to help them build a demand management discipline and set of repeatable processes to evolve from a project management to a product management operating model.

The following criteria must be in place in order to have a high degree of confidence that the product development process will achieve its desired business outcomes.

  • An agreement that all key stakeholders must participate from the beginning to the end of the development cycle
  • A clearly defined and understood problem & solution
  • A common understanding of what needs to be done to deliver the ultimate user experience to core stakeholders
  • A replacement of inside-out user interface thinking with outside-in user experience thinking
  • A joint commitment to a rapid iteration development process
  • A mutually understood vocabulary and taxonomy to discuss and resolve build or buy trade-off decisions
  • A series of metrics that measure actual outcomes against desired outcomes

Using the 4 Zones framework as a product management template

A foundational component of this work has been our 4 Zone Model framework which has been deployed as shown below:

Early adopters have used the 4 Zones framework to segment their new product and application projects in the following way:

  • Are they sustaining innovations or disruptive innovations? 
  • Are they enabling systems productivity and cost optimization?
  • Are they increasing business unit performance and revenue growth?
  • Are they enabling business model transformation?

This process results in the creation of a product development portfolio which can be used to prioritize and align future IT investments with mutually agreed upon critical business outcomes. It has also been instrumental in redeploying scarce resources and budget away from lower value run-the-business to higher value change-the-business product development priorities.

In addition, instead of using resource capacity and budgeting constraints to make prioritization decisions, the following three questions are used to help make go/no-go decisions:

  • Should we do it? Does it align with and support critical business outcomes?
  • Can we do it? Do we have the relevant skills, capabilities, and tools to achieve the desired outcome?
  • Did we do it? Do we have the right metrics up front to measure the achieved outcome vs. the desired outcome?

This approach moves product prioritization decisions from a budget exercise to a business value creation exercise that helps clarify when it makes sense to say no instead of yes.

Early practitioners of this product management process have significantly increased their time to value and have greatly reduced the costs of do-overs or extended release schedules driven by unclear or changing product requirements.

As always, I am interested in your comments, feedback and perspectives on the ideas put forth in this blog. Please email them to me on linkedin. And, if this content could be useful to someone you know please share it here: