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The amount of money invested in “Transformation Programs” is staggering.
In the past 20 years, we have seen Digital and Agile Transformation Programs grow and swell to $1.3 trillion dollars in 2020 alone. According to the HBR, 70% of that spending is wasted.
Many companies miss a key component in their Transformation Program.
You only have to whisper the word “transformation” and the next thing you’ll see is people scurrying away.
It’s a word that isn’t commonly favored by the Product community because Transformation Programs rarely allow Product Teams to autonomously decide how they’ll achieve their mission. The term “transformation theatre” reflects how new practices are perceived after a Transformation Program. Organizations arbitrarily issue new role titles such as Product Owner, Agile coaches are bussed in, and teams are organized in “squads”. This seems to be the extent of some Transformation Programs from a Product Manager’s perspective.
Rarely, do we hear of Product Teams given the space and time to conduct Problem and Solution discovery properly? Instead, Product Teams are normally given features to develop, not outcomes to achieve.
But, Transformation Programs incur significant costs.
There are various sources that suggests that the spending on Transformation Programs is astronomical. Some of which are;
Harvard Business Review states,
$1.3 trillion that was spent on Digital Transformation last year (2018)
According to CIO magazine,
Global spending on digital transformation technologies and services was $1.3 trillion in 2020.
And Barry O’Reilly argues that,
By 2023, an estimated $7 trillion will be spent on these initiatives annually.
According to the HBR,
70% of that spend is wasted.
As you can see, the amount of money invested in Transformation Programs is staggering.
Unfortunately, Product People are normally the overlooked recipients of Transformation Programs rather than actively involved change leaders. As Product People, we should not only deeply care about the dollars spent on Transformation Programs but we should find ways to participate and lead the program. These programs affect our practice directly. They affect our ability to do our jobs. Sadly, they can also badly affect our ability to meet our promises to our customers.
Transformation is such an important, emerging topic in the global Product community that we are focusing on it at LTP Digital 2021 | APAC.
Transformation is about embracing a new way of operating – an alternate way of living – for organisations and the people in the organisation.
According to Innosight,
“What businesses are doing here is fundamentally changing in form or substance. A piece, if not the essence, of the old remains, but what emerges is clearly different in material ways. It is a liquid becoming a gas. Lead turning into gold. A caterpillar becoming a butterfly.” The Transformation 20: The Top Global Companies Leading Strategic Transformations
A lot has been written specifically about Digital Transformation as,
“Product-Led Transformation” means re-focusing your business on the fundamentals of real value creation while embracing the benefits of the faster engines that digital and Agile practices have delivered.
Product-Led Transformation is more holistic than other transformations because it begins with the customer. The outcome of a Product-Led Transformation is an organization that is aligned first and foremost towards discovering and quantifying customer problems before designing solutions.
It is about changing established mindsets and practices to ensure that organizations stop throwing random features into their product mix, and hoping that somehow the good will emerge.
Product-Led Transformation creates an environment for companies to build more successful products.
The evidence resoundingly shows that
“Product-Led companies yield better financial results.”
“These companies perform better than other companies including those organizations built for the Sales & Marketing-Led era. Today there are 21 large public companies with a Product-Led model. These companies have a combined market capitalization of $208B and are performing better post-IPO.
Exemplary product-led organizations are Zoom, Datadog, Slack, Fastly, Pagerduty, Elastic, Surveymonkey, Pluralsight, Smartsheet, Docusign, Dropbox, Twilio, Atlassian, Shopify, New Relic, Hubspot, and others.”
Being Product-Led also means using Product-Led growth techniques which reduce the reliance on sales and marketing to drive growth. The product itself is designed to motivate customers to subscribe to the product.
One of the key differences between a Digital Transformation and a Product-Led Transformation is that Product-Led Transformation focuses on introducing:
What often happens after the implementation of a Digital Transformation program is that leaders continue to frame their plans as a series of features, instead of ‘problem’ or ‘outcome-driven’ plans.
This leads to two commonly seen challenges:
This is not to argue that Digital Transformations aren’t valuable. In principle, they are worthwhile. But often these programs run for far too long, and at the same time don’t go far enough. The intent of Digital Transformation is to improve the organization. In practice, however, the Programs do not allow the right teams to participate, and to provide their insights as to the best ways to deliver value to the organization, as well as to customers. Product-Led Transformation builds on the Digital Transformation mindset but provides additional capacity and tools to convince an organization’s leaders to let go of dictating what gets built.
Product-Led Transformation teams do not start by focusing on delivering features. They start by focusing on solving problems, which ultimately delivers more genuine customer and business value. Another key difference between Product-Led and Digital Transformation is the approach to change. The Product-Led Transformation approach is a “minimal viable digital change program, delivered by a semi-autonomous Lean and Agile product innovation team.”
Seriously, stop wasting billions on Transformation projects. Instead, apply smaller incremental changes in the organization, to test and learn if these changes make a positive difference. Consider learning more about The 7Ts of Product-Led Transformation.
Want to improve your company’s chances of Transformation success by learning how others transformed their companies and teams using Product-Led techniques? The evidence shows that Product-Led organizations yield better financial results.