Product Operating Model Marty Cagan

Who Is Product Operating Model For?

One very common question we hear is: “We’re not a tech company, so is the product operating model even relevant for us?”

This is a very widespread confusion, and it’s putting countless companies at risk of disruption, so I’m hoping to do what I can to try to clarify this.

When our industry refers to a “tech company,” this is not referring to what the company sells, it is referring to how the company believes they should power their business.

Tesla sells cars. Netflix sells entertainment. Google sells advertising. Airbnb sells vacation lodging. Amazon started with selling books and now sells just about everything.

The difference is not what these companies sell; it’s how they design and build what they sell, and how they serve their customers.

The product operating model is for companies that believe they should be powering their business with technology

Today, that’s a very wide range of businesses across virtually every industry. 

One very common manifestation of this confusion is the framing in so many legacy companies of “digital product” versus “non-digital product.”

So many people think that – at most – the product model applies to their “digital products.”  But the real power of the product model is when applied holistically to all products.

I realize that there is selection bias with the companies I work with, but virtually every product I see is a powerful blend of the digital and the physical world.

Consider when you use the app on your phone to request an Uber, the many digital and physical-world interactions behind this experience.

Or when you use your banking app to easily transfer funds to a friend on the other side of the world.

Or when you track an important overnight delivery from a retailer.

Or when you translate a printed menu written in a foreign language.

Or when you track your fitness using your watch or engage in a Peloton workout.

Or when you enlist the help of your veterinarian to decide if a pet’s behavior is something that might need treatment.

Or simply to find the fastest route through traffic to your destination.

Every one of these examples is a blend of on-line and off-line, digital and non-digital experiences powered by technology.

When I compare companies that take a holistic view of product where everything is powered by technology in order to serve customers, with those legacy companies that draw artificial lines around where they think they should apply technology, it’s easy to see the seeds of disruption.

Can you separate the physical and digital?  Of course.  And sometimes there are domain-specific reasons to keep specialized people focused on non-digital aspects.

But I am seeing a growing stream of new companies, in nearly every industry, that are applying the product model to disrupt their legacy competitors.

In fact, I find it much more difficult to imagine a company that would not benefit from enabling technology across their offering.

If you want a simple heuristic, if you have a set of engineers working to build technology that helps to power your business, then I would argue that you would benefit from the product model.