TL; DR: Why Leaders Support the Product Operating Model Despite Agile’s Failure
Why might leaders turn to the Product Operating Model (POM) after a previous Agile transformation, for example, based on SAFe, failed?
This article uncovers the psychological, organizational, and strategic reasons behind this seeming contradiction, exploring what motivates leaders to believe that a new approach will succeed where others have not.
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Exploring the Contradiction: Why Leaders Embrace the Product Operating Model After Agile Fails
Next to resilience, one of the organizations’ foremost objectives is pursuing performance enhancement, fostering innovation, and maintaining a competitive edge in a competitive market. When prior initiatives—such as Agile transformations utilizing frameworks like SAFe—fail to yield the anticipated result, it might seem contradictory for leaders to pivot to another new approach, like the product operating model. Nevertheless, pursuing the product operating model is the talk of the town.
Why would leaders believe the product operating model will succeed where Agile methodologies did not?
This apparent contradiction invites a deeper exploration into the psychological, organizational, and strategic factors. Leaders might be influenced by optimism bias, believing that “this time will be different,” or they may be driven by a bias for action, feeling compelled to implement change regardless of past outcomes. The allure of industry trends and peer pressure can also motivate leaders to adopt new models to avoid being left behind.
Additionally, there might be a misattribution of past failures, where leaders perceive that the issues with Agile transformations were due to poor implementation rather than flaws in the methodologies themselves. They may believe that the product operating model addresses specific shortcomings of Agile frameworks, such as better alignment with organizational culture or a more comprehensive approach to transformation.
Let us delve into five categories of reasons:
I. Psychological Drivers Behind Leaders’ Shift to the Product Operating Model After Agile Failures
Several key factors explain why leaders embrace the product operating model despite previous Agile setbacks:
1. Perception of Fundamental Differences
Reason: Leaders may perceive the product operating model as fundamentally different from previous Agile initiatives, believing it addresses shortcomings that Agile did not.
Background: Leaders might view the product operating model as not just another methodology, but a holistic approach to redefine the organization’s operations. They may believe that while Agile focuses on process and delivery efficiency, the product operating model emphasizes value creation through customer-centricity, cross-organizational strategic alignment, and autonomous, empowered teams. This perception leads them to think that the product operating model inherently solves problems that Agile frameworks like Scrum or SAFe could not, such as bridging the gap between strategy and execution by alignment across business entities or fostering true innovation.
2. The Allure of a New Solution
Reason: The product operating model may be perceived as a panacea, offering an attractive solution to complex problems.
Background: There is often a temptation to believe that a new methodology or framework will solve entrenched problems. The product operating model, emphasizing customer-centricity and empowered teams, can appear as an ideal solution. This allure can overshadow practical considerations about implementation challenges or compatibility with the organization’s context. Leaders may focus on the potential benefits without thoroughly assessing the risks or effort required.
3. Fresh Start Mentality
Reason: The desire for a fresh start can drive leaders to adopt a new model, hoping it will revitalize the organization and overcome previous obstacles.
Background: Leaders might seek a new beginning to reset the organization’s trajectory after the disappointment of failed Agile initiatives. The product operating model represents an opportunity to wipe the slate clean and approach challenges differently. This fresh start mentality can be fueled by optimism bias, where leaders believe that past failures were anomalies and that the new approach will usher in success. It also provides a psychological boost to teams weary of previous efforts, reigniting enthusiasm and commitment.
4. Optimism Bias and Overconfidence
Reason: Leaders may exhibit optimism bias, overestimating their ability to implement the product operating model despite past failures successfully.
Background: Optimism bias can lead individuals to believe they are less likely to experience negative outcomes than others. Leaders might think that they can overcome obstacles that hindered previous initiatives with their skills, determination, or new strategies. Overconfidence in their capabilities or the organization’s resilience can result in underestimating the challenges of implementing the product operating model effectively.
5. Change in Leadership or Organizational Structure
Reason: New leaders may bring different perspectives and experiences, leading them to favor the product operating model over previous methodologies.
Background: Leadership changes often lead to shifts in strategic direction. New executives might have prior success with the POM or be influenced by their professional networks. They may view the previous Agile initiatives as misaligned with their vision or unsuitable for the organization’s current challenges. This fresh leadership perspective can drive the adoption of new approaches, believing that their leadership will make a difference in successful implementation.
6. Appeal of a Comprehensive Organizational Change
Reason: The product operating model promises a more comprehensive transformation that aligns strategy, culture, and operations, which can be appealing to leaders seeking significant change. (Even though very few positive examples of a successful “big leap” forward exist.)
Background: Unlike Agile frameworks focusing primarily on processes within teams or departments, the product operating model often entails a broader organizational shift. It encompasses changes in structure, roles, governance, and culture. Leaders who recognize the need for a more systemic change may find this approach more attractive. They might believe that only a comprehensive transformation can address entrenched issues and drive the organization toward its strategic goals.
II. Addressing Past Failures: Leaders’ Renewed Hope in the POM
Leaders turn to the product operating model, seeking solutions to previous Agile shortcomings and unaddressed root causes:
7. Learning from Past Failures
Reason: Leaders may believe that lessons learned from unsuccessful Agile initiatives can be applied to ensure the success of the product operating model.
Background: Reflecting on why Agile initiatives failed, leaders might identify specific factors such as inadequate training, lack of leadership support, or poor change management. Armed with this knowledge, they may feel better prepared to implement the product operating model effectively. This time, they might plan for more comprehensive training, secure executive buy-in, or allocate more resources to change management. The belief is that by avoiding past mistakes, the organization can realize the full benefits of the new model.
8. Misattribution of Agile Failures
Reason: Closely related to #7, leaders might attribute the failure of Agile initiatives to poor implementation rather than flaws in the methodologies themselves, believing that a new model will avoid these pitfalls.
Background: There may be a tendency to externalize the reasons for past failures, blaming them on factors such as insufficient training, employee resistance, or inadequate tooling. Leaders might believe that Agile methodologies were sound but were not executed properly. Consequently, if implemented correctly, they might think that the product operating model will succeed. This perspective allows them to maintain confidence in their ability to drive change without addressing deeper systemic or cultural issues that may have undermined previous efforts.
9. Misunderstanding Root Causes of Past Failures
Reason: Without a deep analysis of why Agile initiatives failed, leaders might mistakenly assume that a new model will succeed without addressing underlying issues.
Background: If organizations do not conduct thorough retrospectives to understand the root causes of past failures, they may overlook systemic problems such as cultural resistance, inadequate resources, or misaligned incentives. Leaders might attribute failure to the methodology itself rather than these deeper issues. Consequently, adopting the product operating model without addressing these root causes sets the stage for repeating the same mistakes.
10. Desire to Address Specific Shortcomings of Agile Initiatives
Reason: Leaders may identify specific limitations in Agile frameworks like Scrum or SAFe that the POM can overcome.
Background: Agile methodologies sometimes face criticism for issues such as scaling challenges, lack of strategic alignment, or overemphasizing processes at the expense of innovation and autonomy. Leaders may believe that the product operating model addresses these shortcomings by providing a more flexible, scalable framework that integrates strategic considerations with day-to-day operations. This targeted approach aims to retain the benefits of Agile while mitigating its perceived weaknesses.
III. Strategic Pressures and Market Demand
Leaders embrace the product operating model to meet transformative challenges and align with external expectations for innovation:
11. Need for Organizational Transformation
Reason: Leaders may recognize that incremental changes are insufficient and that a transformative approach, like the product operating model, is necessary.
Background: When organizations face significant market disruption, declining performance, or strategic shifts, leaders may conclude that radical change is required. The product operating model offers a comprehensive transformation that promises to revitalize the organization. This recognition can drive leaders to embrace the model, believing that only a bold approach can meet the challenges ahead.
12. External Market Signals and Investor Expectations
Reason: Market analysts, investors, or industry reports may advocate for the product operating model, influencing leaders to adopt it.
Background: External stakeholders can exert significant influence on organizational strategy. If investors or analysts view the product operating model favorably, leaders may adopt it to meet their expectations. This alignment can be essential for maintaining investor confidence, securing funding, or enhancing the organization’s market valuation.
13. Pressure to Demonstrate Innovation and Progress
Reason: Leaders may feel internal or external pressure to adopt new practices to showcase the organization’s commitment to innovation and continuous improvement.
Background: Stakeholders, including boards of directors, investors, customers, and employees, often expect organizations to evolve and improve continuously. Leaders may adopt the product operating model to signal their dedication to staying at the forefront of industry practices. This move can be part of a broader strategy to enhance the organization’s reputation, attract talent, or satisfy shareholder expectations. The adoption becomes not just an operational decision but also a strategic and symbolic one.
14. Belief in Enhanced Customer Focus
Reason: Leaders might be attracted to the product operating model’s emphasis on customer value and believe it will improve market responsiveness.
Background: In highly competitive markets, customer satisfaction and responsiveness are critical. Leaders may feel that previous methodologies did not sufficiently prioritize the customer, leading to products that missed the mark. The product operating model’s focus on continuous discovery and direct customer engagement can be appealing. Leaders might believe this approach will lead to better products, higher customer satisfaction, and improved business outcomes.
IV. External Advocacy and Influences
Leaders may adopt the product operating model due to influences from industry trends, internal champions, and trusted consultants:
15. Influence of Industry Trends and Peer Organizations
Reason: Observing competitors or industry leaders successfully implementing the product operating model can motivate leaders to follow suit, fearing they might be left behind.
Background: The bandwagon effect plays a significant role in organizational decision-making. If leaders see that other companies, especially industry frontrunners, adopt the product operating model and achieve positive results, they may feel compelled to do the same. This external validation reinforces the belief that the model is effective. Additionally, industry conferences, publications, and thought leaders often highlight success stories, creating a narrative that the product operating model is the next essential evolution in organizational practices.
16. Pressure from Internal Champions
Reason: Passionate advocates within the organization may promote the product operating model, influencing leaders to adopt it.
Background: Employees or middle managers enthusiastic about the product operating model may lobby for its adoption. Their passion and conviction can persuade leaders to consider the new approach. These internal champions might present compelling arguments, pilot results, or research highlighting the model’s advantages. Leaders may be swayed by this internal momentum, especially if it aligns with their own inclinations.
17. Consultant and Vendor Influence
Reason: External consultants or vendors may promote the POM as the solution to the organization’s challenges, influencing leaders to adopt it.
Background: Consultants and solution providers often play a pivotal role in shaping organizational strategies. They bring expertise, frameworks, and success stories that can persuade leaders to embrace new approaches. In some cases, consultants may downplay the reasons for previous failures and position the product operating model as the superior alternative. Leaders may trust these external advisors, especially if they have a track record of delivering results in similar contexts.
V. Fostering Cultural Alignment and Simplifying Complexity
Leaders may use the product operating model to align with their culture and streamline organizational complexities:
18. Anticipation of Cultural Benefits
Reason: Leaders may expect the product operating model to foster a more innovative, collaborative, and agile culture.
Background: Cultural transformation is often a strategic goal for organizations seeking to enhance innovation and agility. The product operating model emphasizes empowered teams, cross-functional collaboration, and a learning mindset. Leaders might believe adopting this model will catalyze the desired cultural shift, improving employee engagement, retention, and performance.
19. Belief in Better Alignment with Organizational Culture
Reason: Leaders might believe that the product operating model aligns more closely with the organization’s culture and values than previous Agile methodologies.
Background: Every organization has a unique culture shaped by its history, values, and people. Leaders may perceive that the product operating model resonates better with their organization’s way of working. For example, the product operating model might seem like a natural fit if the culture emphasizes customer focus, innovation, and cross-functional collaboration. This perceived alignment can bolster confidence in its potential success.
20. Desire to Simplify Complexities
Reason: Leaders may perceive the product operating model as a way to simplify complexities in organizational processes and decision-making.
Background: Large organizations often struggle with bureaucracy, slow decision-making, and fragmented processes. The product operating model promises to streamline operations by aligning teams around products, clarifying roles, and reducing silos. Leaders might believe this simplification will increase efficiency, speed, and clarity, making the organization more agile and responsive.
Food for Thought
Our exploration has delved into why leaders might adopt the product operating model after previous Agile transformations have failed to deliver the desired results. We’ve examined psychological motivations, cognitive biases, organizational dynamics, and external influences drive these decisions.
Yet, you may ask many more questions to understand a leader’s decision to pursue the product operating model where previous “Agile initiatives” have failed.
Here are some questions to get you started:
- Are We Addressing the Root Causes of Past Failures? Have we thoroughly analyzed why previous initiatives, like Agile transformations, didn’t deliver the expected results? We risk repeating the same mistakes under a new banner without understanding and addressing these underlying issues—cultural resistance, misaligned incentives, or inadequate resources.
- Does the Product Operating Model Align with Our Organizational Culture and Values? How compatible is the product operating model with our existing culture? Will it build upon our strengths, or does it require a cultural overhaul? Understanding this alignment is crucial to ensure smoother adoption and genuine commitment from all levels of the organization.
- Are We Prepared for the Deep Organizational Changes Required? Implementing the product operating model isn’t just a procedural adjustment; it demands significant shifts in structure, mindset, and behavior. Are we ready to undertake this comprehensive transformation, and do we have a clear plan to manage the change effectively?
- Do We Have Strong Leadership Commitment and Capability to Drive This Transformation? Successful transformation requires unwavering support from leadership. Are our leaders equipped with the necessary skills, self-awareness, and adaptability to guide the organization through this change? How will they model the behaviors and values essential for the new operating model to take root?
- How Will We Engage and Communicate with All Stakeholders to Ensure Buy-In? Effective communication is critical to overcoming resistance and fostering collaboration. What is our plan for engaging employees, customers, investors, and other stakeholders? How will we craft messages that resonate and establish feedback mechanisms to address concerns and adapt as needed?
- Are We Influenced by Cognitive Biases or External Pressures in Our Decision to Adopt This Model? It’s important to reflect on whether factors like optimism bias, overconfidence, or the allure of industry trends are driving our decision. Are we choosing the product operating model because it’s genuinely the best fit for our organization or because of external influences and a desire to ‘keep up’ with others?
Conclusion
Leaders’ belief in the potential success of the product operating model, despite previous failures with Agile initiatives, is multifaceted. It encompasses psychological factors like optimism bias, strategic considerations such as the need for comprehensive transformation, and external influences from industry trends or stakeholder expectations. While the product operating model offers promising benefits, it’s crucial for leaders to critically assess their motivations, understand the root causes of past failures, and ensure that they address underlying organizational challenges.
Success with the product operating model requires more than adopting new practices; it demands a genuine commitment to cultural change, investment in capabilities, and alignment across the organization. By recognizing and addressing the factors discussed, leaders can increase the likelihood of a successful transformation that delivers lasting value.
Therefore, start by analyzing why the previous Agile transformation did not work out as expected. My free Meta-Retrospective Facilitation Template is an excellent tool for that purpose; see the Meta-Retrospective Facilitation Template.
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