By Peter Ndaa
A common challenge for organizations is knowing when and how to shift the emphasis of their value proposition at different stages of their product or industry life cycles. Successful organizations consciously factor the need to adapt their strategy over time.
The Modern Operating Model is an updated approach to business operating models. It describes a new way of thinking regarding how to best align, run, change, adapt, and optimize your business. In turn, you can bridge the strategy execution gap and better navigate a fast-changing world.
As an overview, here’s what the model looks like:
With 70% of chief strategists reporting challenges with strategy execution, there is substantial evidence to suggest that conventional operating models are no longer meeting the demands of business today and driving strategic results. In fact, the concept of the Modern Operating Model was created in response to three issues impacting businesses:
Strategy execution is arguably the hardest yet most important challenge for businesses to overcome. There is a reason for this — all goals and outcomes including market leadership and people retention are directly influenced by strategy execution. From this perspective, strategy execution can be framed as one of the key enablers of business success.
But what makes strategy execution so difficult? There are many factors to get right including:
For strategy execution to be effective, an operating model must account for and optimize these different variables. As it stands, many operating models fail to incorporate these factors into a cohesive, self-optimizing unit. Particularly, modern elements of strategy execution such as OKRs and AI driven observability are not utilized to their full potential.
But it’s not only these lingering challenges that need to be addressed. We also need to think about current and emerging trends that are influencing strategy execution.
At the heart of these trends is one core idea: the rate of change across all dimensions of life is accelerating. Although change can be observed throughout the entirety of history, what’s different now is how quickly it’s occurring — all aspects of our lives are evolving at an increasing rate.
Particularly at the business level, the rate of innovation, disruption, and competition is increasing. The ubiquity of data and information, direct-to-consumer channels, and greater access to capital mean market opportunities are filled faster by a greater number of vendors. What’s more, this rate of change will continue to increase as time progresses.
A new generation of workers: 35% of the current workforce are millennials and by 2025, 27% will be Generation Z. These generations value autonomy, flexibility, and social impact. They also place less value on company loyalty and longevity of tenure.
New ways of working: Accelerated by the pandemic, the way we work is changing. Remote and hybrid work, gig work, asynchronous, and decentralized work environments are becoming more common.
The age of uncertainty: The business environment is becoming more complex and difficult to navigate. Risks have evolved in the form of pandemics, supply chain disruptions, climate change, war, recessions, inflation, interest rates, inequality and cybersecurity.
With lingering strategy execution challenges amplified by a fast-changing world, a company’s operating model must not only optimize for efficiency, speed, and productivity, but also for adaptiveness and agility.
Aside from the accelerated rate of change, a core megatrend at the technological level is the fourth industrial revolution. This describes the level of technology that includes autonomous systems, microservices, edge computing, interconnectivity, artificial intelligence, data, and the digitization of the physical world through the internet of things.
This new suite of technologies represents a significant opportunity to rethink conventional operating models — particularly when it comes to data. Factors such as how decisions are made can be completely overhauled through edge computing and interconnectivity — to become more data-driven, at the edge of the network, and closer to the points of execution.
Artificial intelligence can be leveraged to gain insight and foresight to solve problems before they manifest. Overall, strategy execution can be optimized using the wealth of data and tools provided by the fourth industrial revolution.
With the historic challenges of strategy execution and the megatrends in mind, let’s now look at how the Modern Operating Model is best suited to meet the business demands of today.
From the collective components of the model, two key themes arise which produce various business outcomes:
Alignment is achieved primarily through OKRs and strategic objectives, but other factors such as a strong mission, transparent culture, and a more flexible organizational structure also contribute to alignment within the Modern Operating Model.
Through greater alignment, your entire team can focus and prioritize the right things with a clear connection to top-line objectives. This creates less waste and a more outcome-focused culture which boosts efficiency and productive power. Alignment also contributes to adaptability — your organization will be able to change form or direction without operational lag or cultural resistance.
Greater alignment serves to empower your employees through a clear line of sight, both vertically and horizontally. This boosts engagement as your people feel better connected to the company's objectives, in addition to improving collaboration as silos are removed. Decision-making power, backed by data, is distributed across the organization which increases accountability and ownership.
This empowers employees to do their best work and provides freedom to innovate without needing higher-level approval. Finally, employees adopt a growth mindset and are continuously learning and improving through regular OKR reviews and retrospectives. Taken together, engagement, distributed power, and continuous learning contribute to boosting organizational output and problem-solving.
KPIs, OKR data and reports, and market intelligence are used for monitoring and business observability. Through the interconnectivity and monitoring of data, your organization gains greater certainty, validation, and precision about working in the right direction.
You gain a more complete picture of your organization’s progress and can identify any potential roadblocks toward objective achievement. This also serves as a mechanism for incremental improvement. The organization now has an embedded learning system which collects data and information, turns that into knowledge and then utilizes it to improve how the organization functions.
Ongoing monitoring also boosts the speed of your business. As feedback loops are compressed, you don’t have to wait for quarterly or even annual reviews to make important adjustments. Speed is also increased through decision-making power being distributed and closer to the points of execution.
Decisions no longer need to go up and down the chain of command so they can be made quicker. Combined, greater organizational speed, observability, and alignment improve adaptiveness. You will be able to more readily identify threats and opportunities in your business and move quickly in response.
Most executives know that improvements, sometimes major, need to be made to their strategy execution. But the discipline of strategy execution is often framed through the perspective of solving challenges such as a lack of alignment. Although this is valid, what’s less spoken about is the opportunity — what happens when your organization achieves mastery over strategy execution?
Through an updated operating model and correct implementation, strategy execution can become the ultimate competitive advantage — achieve strategic goals faster and navigate the threats and opportunities of a fast-changing world.
Effective strategy execution is the catalyzing force behind better goal and outcome achievement. The Modern Operating Model acts as an updated driver and engine of strategy execution.
Hence, through the increased productivity, efficiency, and speed that the Modern Operating Model offers, you can achieve strategic goals and outcomes faster and more effectively. Your various strategic imperatives of growth, diversification, and innovation can be simultaneously optimized toward by updating your operating model and approach to strategy execution.
Only 52 US Companies have been on the Fortune 500 since 1955. Fundamentally, corporate extinction comes down to not adapting both strategy and strategy execution to a fast-changing world. Although change comes with new threats, it also comes with new opportunities — there will be a new generation of winners and losers.
Through the Modern Operating Model and the adaptiveness and agility it provides, you gain the ability to navigate the threats and opportunities of a fast-changing world. The productivity, efficiency, and speed increases also ensures that your organization is operating at its best to overcome challenges.
By achieving goals and outcomes more effectively, in addition to navigating threats and opportunities, you gain two significant competitive advantages which help you win in hyper-competitive, evolving markets.
Strategy execution, amplified by the Modern Operating Model, represents a hidden opportunity for all companies. Regardless of size, stage, or industry, you can gain a needed edge in the complex, uncertain, and hyper-competitive business environment of today.
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The only true consistent figure in this process is product management. Product managers take the reigns as early as product definition and concept vetting. They bring it to life, nurture its growth, and ultimately put it to bed one final time.
Before diving headfirst into any of the strategic phases of the product development lifecycle, it’s essential to understand all the steps. While mostly discrete activities, they do build on each other. A faulty foundation can result in a wobbly, flawed future.
This initial phase might be the most fun and creative stage in the product lifecycle, and it’s the most critical. Businesses come up with lots of ideas. So only the most promising projects must get the traction and resources they deserve.
So, once there’s an initial idea internal folks are excited about, it’s time to employ some of the available tools and techniques for some quick market validation. These tests give the team confidence they’re onto something with real promise.
A key step in this phase is product discovery. This process gives the product team a much deeper understanding of the problems potential customers face and the user personas the solution can target. Without a solid foundation of who the product is for and which of their pain points it solves, there’s little hope of finding product-market fit.
Armed with a good idea and a solid understanding of the key problem, the concept is then fleshed out while gathering additional information.
If a company has stumbled onto a great idea, it’s likely they’re not the only ones to have this epiphany. That’s why the next step is surveying the landscape. You do this to see how the product concept compares to what’s already available or under development.
The goal here is to understand the other options potential customers already have. Sometimes there will be a direct competitor with a relatively similar offering. There may be broader solutions that include similar functionality to the product in question. An effective competitive analysis must include completely unexpected, less-than-elegant workaround solutions potential customers use to solve their pain points.
This includes using spreadsheets for building product roadmaps, authoring code in a plain text editor, or building animations in PowerPoint. People often use the tools they already have at their disposal. Changing those behaviors may be just as important and challenging as taking on direct competitors.
Still not done with homework! Now that the business has a handle on how its solution fits into the scene, it’s time to see if its differentiated approach to solving user problems holds up.
Market research typically involves both qualitative and quantitative research. Surveys and aggregated data can indicate trends, help calculate the total addressable market, and serve as valuable input to the prioritization process.
Meanwhile, qualitative research can help product teams get to the “why” at the heart of the solution. Using focus groups, interviews, and other in-depth research methods. These methods add both color and a sense of humanity to the research and development process. An added benefit is that they challenge assumptions.
The tail end of the market research phase may also entail developing a Minimum Viable Product. An MVP is functional for gauging the reaction and interest of likely buyers. It only includes the most vital features and functionality based on the business’s understanding of which user stories customers need most. It is laser-focused on solving core problems.
During MVP definition and development, the team may begin employing prioritization frameworks. MVPs determine which items would deliver the most “bang for the buck” and must be in place for the initial product offering. Frameworks focused on core functionality versus product line expansion are a good fit at this time. Examples include the jobs-to-be-done framework, which ensures the business is building products customers actually want and use.
By getting something to the market quickly, the company can validate its concept and generate user feedback. This is crucial during these early stages. It serves to inform for adjustments to perform key tasks at launch, and the value proposition and messaging matches the offering.
With “Version 1.0” about to become a reality, it’s time to take this idea to market. Even if it still bears a “beta” label. The hard work of generating awareness and demand often starts well before the “download” link goes live.
The product marketing team should be generating demand and building some buzz for the offering in anticipation of the release.
Using A/B testing on different messaging and price points to build up a list of interested parties and validate the value proposition’s efficacy. Press and analysts are briefed in advance and given product demos. This seeds the media market with coverage when the grand unveiling occurs.
A robust mechanism for soliciting, collecting, aggregating, and analyzing user feedback must be in place at launch. Asses the first impressions and the efficacy of different campaign messages and tactics. The results inform plans and how to allocate resources for wider promotion and growth.
Employing product analytics and customer research, product teams can begin measuring product-market fit. If gaps are identified, they can be added to the product backlog in preparation for future prioritization and product roadmapping activities.
Mature products enter a new phase of existence. Typically, this is a cycle of iterative improvements and modifications. Interspersed with more significant expansions (or removal) of functionality and capabilities.
At this point, the product roadmap becomes indispensable. As processes mature, release cadences are established, and the focus shifts to enhancements and growth. KPIs, goals, outcomes, and objectives will evolve throughout the product lifecycle. It will shift based on both the success and struggles of the product as well as the organization.
While rarely boring, this is the most predictable and routine phase of the product lifecycle. Suppose the product continues to find traction and adequate growth while establishing profitability. This phase may last for years, if not decades assuming the product remains viable and there’s a persistent market for it.
To synchronize strategic objectives with resource allocation and development priorities, structure a product roadmap using themes. Themes are excellent to ensure efforts remain focused on what matters most. This method still gives the implementation team some latitude in an Agile development framework.
All things must end. For some lucky product management professionals, this never happens on their watch. However, statistically, there’s a pretty good chance they’ll have to say goodbye to an entire product or major component at some point during their career.
This isn’t always a bad thing. In fact, it’s just an inevitable part of the strategic phases of the product planning process. It’s a phase in which you are retiring a product due to a superior offering’s arrival. Another reason is a dwindling need for a particular solution. This is because the problem is no longer acute enough to warrant a product.
But wrapping up a longstanding offering has many implications. Using a checklist can ensure all the aspects are properly addressed during the wind-down period.