The product operating model (or simply "product model") has become more popular in recent years. While the core concepts have been known for years, it gained more attention after Marty Cagan wrote about it more extensively in a series of articles, leading up to his 2023 book "Transformed: moving to the product operating model."
What is the Product Model?
The product model is a way of organizing and operating that enables companies to consistently create technology-powered products that customers love, yet work for the business.
The model is based on lessons learned from the world's leading product companies such as Google, Amazon, Apple, Netflix, and Spotify.
So how are they different from the way other companies operate?
Empowerment as Core Idea
Companies waste talent when they limit engineers to just writing code.
The most effective companies give their engineers more mandate and context.
The product model takes this approach further: instead of teams just fulfilling requests from stakeholders, they are empowered to solve customer problems that help the business grow. When teams have the authority and skills to discover and build solutions, they create better products.
These empowered teams need more than just freedom to succeed - they need clear direction, structure, competence, and understanding of customer needs and business goals.
Therefore, these teams have:
- Direct, unfiltered access to users/customers
- Direct access to product data
- Direct access to business stakeholders
- A “product sense”, a deep knowledge of their product, customers, users and stakeholders. This requires engineering to be treated as a core competency
What does this idea mean in practice? What do these product model companies do differently from other organizations, based on this core idea?
1. A Different Way to Build and Deploy
Product model organizations don’t do big, infrequent releases, they do small, frequent ones. Instead of making customers wait months for updates, teams deliver improvements continuously - often several times a day.
This isn't just about speed - it's about reliability. Small, frequent releases are less risky than big releases since it's easier to spot and fix problems when you change less at once. Modern product companies know that "reliability is our most important feature" and invest heavily in monitoring, instrumentation, and deployment tools to ensure their products stay stable while enabling rapid, safe changes.
Frequent releases also enable teams to learn and improve faster through rapid feedback cycles. They can test different solutions with real users through A/B testing, gather data quickly on what works, and adjust course based on actual customer behavior. This experimentation in production helps teams validate assumptions and solve complex problems in new ways.
2. A Different Way to Solve Problems
The second difference is about moving from taking orders to solving problems. Instead of stakeholders telling teams what features to build, teams are given problems to solve and the freedom to find the best solutions.
Teams manage four key risks when solving problems:
- Value risk: Will customers actually buy it and will users choose to use it?
- Viability risk: Does it work for our business?
- Usability risk: Can users figure out how to use it?
- Feasibility risk: Can we build and support this?
Teams test ideas quickly and cheaply before building anything. They talk directly to customers, create prototypes, and run experiments. This helps them learn what works without wasting time and money building the wrong things.
This approach depends on having cross-functional teams with product management, design, and engineering skills working closely together. Each brings crucial expertise to help address these risks effectively.
3. A Different Way to Decide what Problems to Solve
The third difference is about choosing the right problems to work on. Rather than trying to make everyone happy by doing a little bit of everything, organizations need to focus on their most important opportunities and threats.
An insight-driven product strategy enables this. Teams gather data about customer behavior, market trends, and new technologies. They use these insights to spot opportunities others might miss and to make better decisions about where to focus their efforts.
A compelling product vision helps everyone understand where the company is heading and why their work matters. This vision, combined with clear strategy, helps teams make good decisions even when working independently.
4. A Different Way to Lead
The final difference is in how organizations lead and manage their people. Instead of telling teams what to build, leaders provide context and coaching to help teams make good decisions.
Leaders still have important work to do:
- Creating product vision and strategy
- Developing team skills through coaching
- Building trust with stakeholders
- Ensuring teams have what they need to succeed, removing obstacles in their way
This can be challenging for leaders used to having all the answers. But in today's complex world, the people closest to the customers and technology often know best how to solve specific problems. Leaders need to trust their teams while ensuring they have the context and capabilities to succeed.
Product Model Principles, Competencies, and Concepts
As we have seen, the product model is not a theoretical process or framework, it’s a model that emerged from observing what the best product companies have in common. Marty Cagan and SVPG describe it as a set of principles, competencies, and concepts, an approach we’ve also found useful in capturing our own understanding
Product Model Principles: The Foundation of Empowered Product Teams
Clear principles guide teams in evaluating priorities and making daily decisions. While there are many important principles to consider, these are the ones we consider fundamental:
- Empower and Trust - Teams are empowered to decide what to build, how to build it, and how to work together while doing it. Transparency and autonomy are natural consequences of trusting people.
- Outcomes over Output - Success means making things better for users and the business, not just releasing new features. A team might ship fewer features but create greater impact by improving key outcomes.
- Innovation over Predictability - While meeting deadlines matters, companies need fresh ideas to stay competitive. Teams should have room to try new approaches, even if they don't always work out.
- Discovery to Build What Matters - Teams save time and money by testing ideas before spending weeks or months building them. This might mean showing simple prototypes to users first. Ultimately, this is key for shortening the company’s time to money.
Product Model Competencies: Building the Right Capabilities
Building on these principles, the model requires specific competencies to help teams manage new risks as they take on broader responsibilities and mandates:
- Product managers figure out what's valuable for customers and viable for the business.
- Product designers ensure solutions are usable and make sense for users.
- Engineers determine what's technically feasible and bring solutions to life.
- Product leaders are the managers of product management, product design, and engineering. These leaders provide the strategic context (e.g., product vision, strategy, team topology) that enables teams to make good decisions. More importantly, they are responsible for developing their people through active coaching and staffing.
Product Model Concepts: How Work Gets Done
Finally, there are some key concepts that shape how work gets done:
- Product Teams bring together different skills in one group that can make its own decisions. A designer, engineers, and a product manager work as one team to solve problems together, rather than working separately.
- Product Discovery means testing ideas with customers before spending time building them. Teams might show simple prototypes to users or try quick experiments to see if an idea works.
- Product Delivery involves building and releasing new features in a way that's reliable and quick. Teams work to get improvements to customers steadily, while keeping the product stable.
- Product Strategy helps teams choose which problems to solve first. Teams use their time wisely by focusing on changes that matter most to customers and the business.
- Empowering Leadership creates an environment where teams can innovate and deliver value autonomously. Instead of directing work, leaders focus on coaching, developing capabilities, providing context, and removing obstacles. This approach builds strong, capable teams that consistently solve customer problems.
The Product Model - For Tech-powered Organizations
The product model isn't just another methodology - it's a proven approach for creating products customers love while building a sustainable, innovative organization.
While many assume this model is only for tech companies, it's actually for any company that sees technology as a core driver of its success. This includes organizations across virtually every industry - from healthcare to retail to financial services - that need to effectively leverage technology to serve their customers.
And while some companies were "born" operating this way, many successful organizations have transformed to this model from traditional approaches - a journey we'll explore in depth in future articles.