(2024-07-30) Cagan The Product Model And Org Design

Martin Cagan: The Product Model and Org Design: one very common question we often get is whether they will need to reorganize as part of that transformation? TL;DR: in most cases, a reorg is not necessary.

Just recently an excellent summary article was published highlighting the two major organizational design models, along with a very common hybrid model, and the pros and cons of each. Most people will immediately recognize the two main models, referred to as the GM (general manager) Model, and the Functional Model. ((2024-06-25) Lenny General Management Functional And Hybrid Models Which Org Design Works Best For Top Companies)

Note that in some companies the GM Model is referred to as the “BU” (business unit) model, or the “STL” (single threaded leader) model.

Amazon leverages single threaded leaders in the GM model to optimize for spinning up a relatively large number of new products and new lines of business, where speed and true business agility are critical.

Apple leverages the functional structure to optimize for the holistic user experience across a relatively small number of very complex, deeply integrated, ecosystem products.

each has very different business strategies, product visions and product strategies, which is why they have different org designs.

The main drivers of the most appropriate org design are your business strategy, and the associated product vision and product strategy.

For example, if your business calls for a portfolio of loosely related products, each pursuing their own product vision and strategy, then it’s likely that the GM model will be the natural fit. But if the business depends on a tightly integrated, holistic product experience, then the functional model is likely best suited.

The main reason the hybrid model is so popular is that many companies do have a portfolio of loosely related products, yet they need the leverage and efficiencies provided by a common platform.

The larger issue impacting the company’s ability to deliver the products and services they need is the quality of their product leaders, the skills of their product teams, and the product culture in the company.

If that seems counter-intuitive to you, just review each of the three product model dimensions, the four product model competencies, the five product model concepts, and the twenty product model first principles. When you consider each element of the product model, you can see how the org design might indirectly make some things a bit easier or harder, but certainly neither org design will prevent nor guarantee success with the product model.

Strong product teams are all about overcoming obstacles, and it’s inevitable that the organizational design, whatever it is, will at some point be one of those obstacles.

The organization structure shows where the individuals on the product teams report up into. The team topology shows what each product team is responsible for, and how the individuals collaborate on cross-functional product teams to solve problems