Having a project mindset makes it easier for you to please your customers. It takes a personal approach, and you're more likely to factor in processes and techniques involved in controlling costs and managing schedules throughout the project lifecycle, meaning you'll stay within the schedule and budget of your client.

The challenge of the project operating model comes with growth, e.g., when business leaders seek new ways to standardize and deliver a product to many customers.

A project-based business is always scaled according to the number of skilled people on board. Once you have standardized your service into a product, you quickly realize that you are competing with a whole new set of players.

Why is the transition from a project to a product business so difficult?

The difficulty of transitioning from a project to a product business stems from trying to move from a task-oriented operating model to a market-driven one.

In a product business, customers no longer tell us what to do. We must make plans, conduct studies, experiment, prioritize, and guess what features the product should have.

It is especially difficult to be part of the transition if your organization lacks a product culture, even if you personally have experience in a product business, because it has to be a company-wide initiative.

Let’s explore some of the challenges in detail…

A lack of market understanding

Going from a project to a product-focused mindset is not easy. Your existing project customers won't automatically become your product customers, and the same goes for new businesses seeking your services.

You have to work hard to make your product satisfy existing users, and you have to find out what the product needs so that it attracts and solves problems for newcomers.

Understanding the market requires research. This can be collected through surveys, interviews, and by analyzing the metrics of your product usage. The characteristics, strengths, weaknesses, and business models of competing solutions must also be accounted for so that you can find a suitable place in the market.

A way to start gaining an understanding while you’re still in the project way of working is to talk to your current customers to learn their decision-making process. You may start by asking: “Why did you choose us?”

When product management is new

If your organization lacks a product manager or owner, this will likely cause significant challenges when moving from a project operation to a product-oriented one.

In the absence of a product management culture, people who have previously been deciding on work and schedules continue to influence companies. Even if product managers are assigned, it can be difficult for them to feel empowered to act.

There are a few key ways to improve product management skills. Training is an option, but experienced product managers can also be hired in-house. However, it is important to define roles; how do the responsibilities of the project manager, line manager, architect, and product owner differ?

A lack of a product strategy

A product vision describes the state of the product a few years down the line. A product strategy, on the other hand, covers:

  • How to proceed toward the vision.
  • What the product does and doesn't do.
  • The users.
  • Why the product is better than its competitors.

When you make the leap from project to product, you may not have the market knowledge to initially form a solid vision. It is important to treat the initial steps into the product world as experiments and to build your market knowledge. Then, as you learn more, you can and should build a product vision.

Even without a solid vision, thinking about the strategy can still be valuable. Your initial strategy can describe alternative approaches to learn more about the market while building a customer base. It can focus on learning, which will then guide your roadmap and backlog prioritization efforts. The product strategy can also include near-future product goals, which can be used to plan and prioritize work.

Your product vision and strategy are not needed in project activities, but they are a necessary link for development. Without an updated and managed vision and strategy, prioritization is often based on a gut feeling; roadmaps and development queues grow, and the product may develop on the wrong track.

A product vision and strategy will guide development. At this level, the discussion between management and stakeholders about the direction of the product takes place, building the unity of the changing organization.

Building product artifacts is the task of product managers. Their construction must start with the organization's strategy and SWOT analysis. The product vision must be created first, and then the model and content of the strategy thought through.

You should also consider a maintenance program. The vision doesn't change very often, but the product strategy needs to be maintained regularly. All this takes time, which product managers often have too little of. Consider outside help when forming your strategy.

Managing the backlog and roadmap becomes harder

When moving from project to product requirements, one big change is the prioritization of ideas and work. In projects, prioritization can be left almost entirely to the responsibility of the customer. In a product business, you have to make the decisions, i.e., what to do and in what order.

If this management of ideas, roadmaps, and development queues isn’t done systematically from the start, the result is chaos; backlogs get too big, roadmaps are never true (not to mention no one trusts them), and good ideas get buried under a lack of processes.

In the project way of working, when a single customer makes a request, it is likely that it will be treated with high severity and given a lot of thought. But when moving to a product business, a request from a single customer becomes “noise” unless it is also received from many other sources. There is a huge risk that in the rush of product development, good ideas become lost.

By defining the operating method and responsibilities for managing ideas and decision-making, risks can be avoided. It often means a regular process under the responsibility of product managers, where new ideas, customer requests, and market needs are evaluated. Based on these decisions (and the product vision and strategy), product managers then maintain the roadmap and development queue.

The management of the development queue also involves the prioritization of practical work (what should be accepted in the backlog and prioritized). This work is usually performed by a product owner.

Prioritization is one of the most important and difficult jobs of a product manager. In practice, it's guesswork, optimization, and seeking compromises. The basic idea of ​​the entire Agile way of working is built on continuous and transparent prioritization.

A lack of support and investment from leadership

Project work is efficient; product development is more difficult and requires readiness for investments. A product organization has to invest in many things that are not needed in a project business, such as:

  • Good quality features, which must work in several situations and environments, not just for one customer.
  • Product management functions.
  • Market research.
  • Product marketing.
  • Maintenance of product roadmaps, development queues, and design tools.
  • Customer support and services.

When starting the transition from project to product, your stakeholders must accept that the benefits are seen later; it takes time and requires work.

The transition to products requires a cultural shift

Transitioning from a project to a product-oriented operating model calls for an organizational change in culture, processes, and management. Although this change can be challenging and requires significant investment, it has the potential to create long-lasting value.

If done properly, scalable growth, continuous product development, and better customer experiences are the result. However, to succeed, it requires management commitment, a clear vision and strategy, and sufficient resources.

Published: May 2, 2024

AgileProduct management