Introduction
Many organisations are reorganising around products with the aim of creating teams that own a product or service and improve it continuously. This approach is often called a 'product operating model'. Instead of delivering work through temporary projects, teams remain responsible for the product over time.
The idea has become widely accepted across technology organisations, financial services firms, and digital businesses. Product ownership, agile teams, and continuous delivery are now common elements of modern operating models. Leaders hope that these structures will allow organisations to move faster and remain aligned with customer needs.
In practice, many organisations experience difficulty after adopting product operating models. Teams are created and roles are renamed, yet delivery becomes slower and coordination becomes more complicated, the organisation begins to experience uncertainty about ownership, delays in decision making, and an increasing number of dependencies between teams, and whole-organisation viscosity increases rapidly.
These outcomes occur because the product operating model is often introduced without redesigning the structures that support it.
The Rise of Product Thinking
Product thinking focuses on long-term ownership of services rather than temporary delivery of projects. A product team is responsible for improving a service over time, responding to feedback from users, and maintaining performance as conditions change.
This approach supports continuous improvement. Teams gain knowledge of the systems they operate and can gradually refine the services they deliver. The organisation benefits from stable teams, stronger accountability, and better understanding of customer needs.
Product operating models also encourage organisations to think about outcomes rather than activities. Teams measure success through customer experience, reliability, and value delivered over time.
For these reasons, many organisations have adopted product language and product structures.
Structural Changes That Appear Sufficient
When organisations move toward product operating models, the first changes are usually structural. Teams are reorganised around products or customer journeys, product owners are appointed, and agile teams are formed to deliver new capabilities and improvements.
These changes create a visible shift in the organisation. Leaders communicate a new model that emphasises ownership, speed, and customer focus, and delivery teams begin working in short development cycles and prioritising improvements through product backlogs.
These adjustments are important, creating the foundations of long-term ownership of services. They also signal a shift away from temporary projects toward ongoing improvement.
In many organisations these structural changes are only the first required step.
Legacy Governance and Funding
While product teams may exist, the governance structures around them often remain aligned with project delivery. Funding is approved through annual project budgets, and investment decisions are made through business cases designed for short-term initiatives.
Product teams operate continuously rather than temporarily. They maintain services, improve performance, and respond to new requirements over time. When funding remains tied to projects, teams must repeatedly request approval for work that is part of their ongoing responsibility.
Governance structures may also require multiple approval steps before teams can make changes. Steering committees and review boards may continue to operate according to project timelines rather than continuous delivery cycles.
These processes introduce delays and create uncertainty about authority. Teams responsible for outcomes cannot act independently because key decisions remain external to the product structure.
Fragmented Ownership
Product operating models depend on clear ownership of services. Teams must understand the outcomes they are responsible for delivering and must have authority over the systems and processes required to deliver those outcomes.
In many organisations ownership remains distributed across several departments. Development teams build new capabilities, operations teams manage production environments, and architecture groups maintain technical standards and control key systems.
Each group plays an important role, yet the separation between these responsibilities creates coordination challenges. Product teams must negotiate with several departments to deliver improvements. Viscosity increases rapidly, and the flow of work slows as decisions move across organisational boundaries.
The organisation continues to operate as a collection of departments rather than a collection of end-to-end product services.
Dependencies Between Teams
Product operating models are often introduced within large organisations that already operate complex technology environments. Systems may be shared between many services, infrastructure may be controlled centrally, and data and integration layers may sit outside the product teams.
These conditions create dependencies between teams. A change in one product may require support from several other groups, and delivery schedules become difficult to predict because each change relies on coordination between multiple teams.
Dependencies are not unusual in large organisations. They must be understood and managed carefully. When product teams are introduced without redesigning the architecture that supports them, these dependencies become more visible and more disruptive.
The Importance of Flow
Product operating models work best when services can evolve continuously with minimal interruption. Teams should be able to introduce improvements, resolve issues, and deliver new capabilities without excessive coordination.
This requires attention to the flow of work through the organisation. Funding structures, governance processes, architectural boundaries, and team responsibilities all influence how work moves from idea to outcome.
When these elements support continuous delivery, product teams can operate effectively. When these elements remain aligned with project based delivery, the flow of work becomes restricted.
The organisation then experiences the appearance of product ownership without the operational conditions required to sustain it.
Product Models and Value Streams
Many organisations have begun to combine product thinking with value stream structures. A value stream represents the end-to-end activities required to deliver value to a customer or stakeholder. It connects strategy, delivery, and operational performance within a single structure.
Product teams can operate effectively within value streams because the value stream defines the broader context in which the product exists. Funding, governance, and architectural boundaries can be aligned with the outcomes the value stream is responsible for delivering.
This alignment helps organisations maintain clarity about responsibility and performance. Teams understand how their work contributes to the broader outcome delivered to customers.
Designing Operating Models That Work
Successful product operating models depend on more than team structures. Organisations must also design the systems that support those teams.
Funding models should recognise the continuous nature of services. Governance processes should allow teams to make decisions within clear boundaries. Architecture should provide stable platforms that allow services to evolve over time.
Leaders also need clear visibility of performance across products and value streams. This visibility allows organisations to maintain alignment with strategic priorities while supporting local decision making within teams.
When these conditions are present, product teams can deliver improvements steadily and reliably.
Conclusion
Product operating models provide a way for organisations to focus on long term service ownership and continuous improvement. Their success depends on the structures that surround them.
When governance, funding, architecture, and accountability remain aligned with project delivery, product teams encounter increasing complexity. Viscosity increases, delivery slows, and coordination becomes difficult.
Organisations that design their operating models around the flow of value create a more stable environment for product teams. In this environment teams can maintain services, introduce improvements, and support long term strategy execution with clarity and confidence.