Marty Cagan's method for successful Product transformation

  • Updated: 19 March 2024
  • 9 minutes
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Sebastian Nankervis and Elias Ghali, Organisation Coaches at Thiga, have read Marty Cagan's latest book, out today. Here's what they learned from his method for helping business leaders succeed in their Product transformation.

We can’t begin to explain the excitement we had (Elias and I) of being the first Thiga crew members to have the book in our hands. As two consultants with our hands deep in the day to day of product transformations in mainly large organizations, our expectations for this book were high, and we were not disappointed.

"TRANSFORMED" is crafted for product leaders and coaches working on or considering a product operating model. It's also valuable for stakeholders in the midst of transition, offering deep insights into the expected changes and benefits. Most notably, it speaks directly to CEOs, aiming to resolve any hesitations or doubts about shifting to a product operating model. Marty Cagan emphasizes that such a transformation requires the CEO's full support.And it makes sense, without the conviction and sponsorship of the CEO for such a defining transition, transformations often fall short. Furthermore, it does not target any particular sector, as Marty puts it this book is for

The book is a concise 345 pages, filled with principles and real-world transformation stories, ending with advice on structuring transformations and handling objections. Easy to read and impactful, "TRANSFORMED" encourages a rethink on adopting a product operating model. Elias and I consumed it in just a few days, finding it a significant resource for the product community, packed with insights that provoke thought and dialogue about the future of technology-driven business.

It’s a daunting task to try and summarize such an important book for the current (and future) product community. But we’ve tried to come up with the elements that struck us the most from this first reading. Let’s deepdive:

Why transform your company to the Product Model?

"Everything we build has two outputs that could create value : what we make and what we learn. In the project model, we lose most of what we learn. When we want to work on that area again, we spend time and money relearning things we already paid for once. Or, more likely, not learning them, and making costly mistakes."

Marty Cagan's book opens with the most compelling "prize" for CEOs: the transformation of their companies into innovative, forward-thinking, and adaptive organizations. The book promises to guide leaders through the process of understanding and implementing the changes necessary to achieve this coveted state. By starting with the end in mind, Cagan effectively captures the attention of his audience.

To make his premise relatable to his readers, Marty Cagan lists many of the challenges facing most companies nowadays such as:

  • Attracting investors
  • Understanding and meeting client needs
  • Scaling solutions
  • Navigating a world of uncertainty
  • Retaining top talent
  • Overcoming project costs and delays

Through this approach, Marty Cagan ensures that his audience, especially CEOs, are captivated by the potential for significant rewards and prepared for the journey towards them.

🤔Our take : As product coaches, it's crucial to keep these reasons for transformation at the forefront of our strategy. Understanding the specific drivers for each client's desire to change enables us to tailor our guidance effectively. At THIGA, we not only recognize which of these motivations resonate with our client but also continually remind them of the tangible rewards that await. This ensures that both the journey of transformation and its ultimate "prize" remain clear, keeping the client's focus sharp and their commitment unwavering.

What is the Product Model?

"Essentially, the product operating model is about consistently creating technology-powered solutions that your customers love, yet work for your business"

The Product Operating Model, as Marty Cagan describes, focuses on creating technology-powered solutions that not only delight customers but also align with business objectives. Unlike traditional models where departments like Sales or Marketing dictate the IT development roadmap, the Product Model places the product team at the forefront. This team is responsible for leveraging technology to meet user needs and deliver business value, necessitating a shift in roles and competencies.

Here are some highlights of the roles Marty Cagan details in his book:

Product Managers are central, tasked with ensuring both the value to users and the viability within the business context. This requires a deep understanding of customer needs, market trends, and the business's operational aspects. However, when they are incorrectly staffed—due to a lack of understanding of their complex role—it can lead to stakeholder mistrust.

Tech Leads play a collaborative role, not just executing plans but also helping devise innovative solutions alongside Product Managers and Designers. Their involvement in Product Discovery is key to building effective solutions.

Product Leaders are responsible for building competent teams and providing strategic direction. Their job is to recruit, onboard, and coach team members, ensuring they have the necessary skills for innovation, improvement and to gain the trust of their customers and stakeholders.

The book underscores the importance of CEO support in adopting the Product Model. CEOs act as the chief evangelists for this transformation, crucial for overcoming resistance and ensuring the organization's successful transition to new ways of working. Without their endorsement, transformations risk losing momentum or reverting to old practices.

This model represents a radical shift, affecting roles and responsibilities across the organization, and requires firm leadership to navigate the challenges of change.

🤔Our take : This section, with its detailed exposition on the philosophy and operational dynamics of the Product Model, stands out as the heart of the book, offering invaluable insights into the transformation towards a technology-powered, customer-centric business approach.

How does the Product Model interact with the rest of the company?

"Every product team has a competent product manager who has put in the work to understand the various constraints of the business and to be an effective partner to the stakeholders"

In this crucial part of the book, Marty Cagan delves into how the product team, under the new Product Model, should effectively interact and collaborate with various stakeholders, setting clear expectations for these interactions.

The customer, whether a user, buyer, approver, or an internal colleague utilizing technology for end-customer benefit, stands as the primary stakeholder. Cagan emphasizes the importance of maintaining a direct and frequent line of communication with customers. The product team must be honest, avoiding promises until they have a thorough understanding of the solution and can make confident estimations.

The sales team relationship also undergoes a transformation. Previously in a sales-driven model, sales teams had significant influence over feature development. Cagan acknowledges the adjustment sales teams must make in this new dynamic but argues that Product and Sales have aligned interests at their core: both aim for satisfied, paying customers. The path to alignment involves building trust and learning from one another.

Dealing with internal stakeholders represents another significant shift. Historically, IT resources were allocated based on internal stakeholder needs. Now, with a focus on customer-centricity, the product team must navigate this transition. It's their responsibility to build trust with internal stakeholders, ensuring collaboration and valuing their insights on various constraints.

Cagan's discussion on stakeholder interaction is not just informative but foundational, explaining not only the what and how but also the why behind these new dynamics in the product model. This section highlights the nuanced understanding and approach required for effective stakeholder engagement, critical for the success of any organizational transformation.

🤔Our take : Cagan does not shy away from highlighting the inherent challenges and resistance to change within organizations. While he offers strategies for aligning stakeholder objectives with product outcomes, these are often just starting points. Effectively managing these relationships and navigating the transformation demands comprehensive change management, clear definition of roles and responsibilities, and the cultivation of soft skills within product teams. This comprehensive approach is vital for making the shift to a product-centric model work across all levels of the company, and often requires the active support of a coalition of leaders, experts and coaches working with the teams on a daily basis.

How to approach a Product transformation ?

If a product team doesn’t produce real results for your customers and your company, then what have you really accomplished?

The book constantly argues for making Product teams accountable for palpable business results, and this is the key indicator and milestone for the success of a transformation. Therefore it is not enough just to deploy new techniques and practices once, the people who are driving transformations must take a continuous, outcome driven approach for the long term.

So how to go about the transformation itself? Cagan defines 4 key techniques;

Assessing: An accurate picture of the current state of the organization to be transformed is essential to plan the transformation. Organizations (ranging from 1 team to a full business unit) are rarely doing everything wrong, in most cases, pockets of the product model exist already, this is important to determine where to focus. The topics covered should follow the competencies described previously (a detailed view) with an overview of the way products are built today (a high level view).

Tactics (Competencies, Concepts & Adoption): With the assessment in hand, the hardest part on developing competencies begins, i.e getting collaborators to learn skills and assume new responsibilities. This implies creating new jobs (not just renaming old ones), and balancing them out (managing the gaps that may result in the reorganization, i.e not having enough designers for all product teams). In this section, Cagan draws a line in the sand with a strong position on insourcing tech resources:

With those competencies in place, people can start working on a wide range of “concepts” (which I broadly interpret as artifacts and practices) such as Product Teams, Culture, and Strategy.

Finally, an adoption section broadly covers the approach to deploying the transformation, introducing the concepts of Pilot teams, and attacking specific dimensions of the product models if several teams are involved (one team introduces new delivery approaches, the other experiments with Discovery, etc). A minimal part is dedicated to the human aspect of change management, specifically advocating for creating dedicated spaces for impacted stakeholders.

Evangelizing: This section concentrates on the importance of preparing a formal transformation plan with clear ownership, and of constantly communicating the wins and victories, particularly to detractors. It also briefly mentions the common setbacks product (or any kind of) transformations may encounter including the departure of a key sponsor, or an impactful event that puts strain on the business.

Getting help: The book acknowledges that the new skills to be developed may not be available in house, so learning the new ways of working might imply getting help from experts. One initial solution is to hire product leaders, but this is a limited solution as they may not have the time to lead the organization while coaching individuals. Therefore Cagan argues for dedicated coaches, either full time or external, to accompany individuals across all levels of the organization, and on a particular dimension (Strategy, Discovery, Delivery) both to accelerate the speed of the transformation and ensure its results.

🤔Our take : As a product organization consultant I’ve seen too often situations where our clients believe that the work is done once they put new job descriptions in place, or once they’ve run their first Product Review. Therefore, as obvious as it may sound, I can’t insist enough on the importance of having business outcomes targeted from the start of (and throughout) a product transformation. That being said, I feel that by dedicating such a small section to describing setbacks and challenges, readers don’t necessarily get the full picture of the effort that a product transformation entails. For example, the book reduces the human element of change management to something as simple as role switching or replacing people (we know that in Europe this is a lot less trivial).

Handling Objections

“It’s true that there are always some people who resist change just because they don't like change…But the more difficult case is that people often have very legitimate concerns, and they simply don’t see how those concerns would be addressed in this new model.”

The last part provides a thorough list of typical objections (including many that we’ve heard before at Thiga) that key stakeholders will employ to resist a move to the product operating model. Note that Cagan acknowledges the legitimacy of these concerns,a subtle indicator for the reader that they will most certainly face some (or many) of these objections. The value is in the simplicity and clarity of the responses, which consistently echo the core principles exposed in the earlier chapters. It covers a wide range of profiles, from customers to the executive board, here are some of the answers I found most compelling:

When sales teams dictate what product teams should build: “The customer and the salesperson do not know what is technically possible. They are often experts in their own domain, but rarely are they experts in the enabling technologies used to build the solutions they buy.”

When finance is inclined to keep tech resources externalized: “A smaller team of employees usually outperforms a significantly larger team of outsourced staff…And if you look not at projects but at achieving business outcomes, outsourcing is dramatically more expensive. In fact most outsourcing firms refuse to even sign up for outcomes.”

When the Project Management Office insists on respecting timelines and milestones at any price: “Predictability is important only if it delivers the value the company depends on. So, the product model is based on a very different set of goals and priorities, often characterized as time to money rather than time to market.”

🤔Our take :This is one of the reasons to keep this book handy, it’s a guidebook to navigate around stakeholders and to adopt the right posture to explain the transformation. I see how our consultants at Thiga can benefit from this content to ensure an empathetic, yet transparent position with stakeholders.

Reflecting on "Transformed" by Marty Cagan, we uncover a wealth of insights, while also noting points that may leave readers seeking additional clarity:

✅ The book's accessibility and ease of reading stand out, making it a valuable resource for a broad audience, especially CEOs, who are central to driving organizational change. The real case studies from Trainline, Gympass, Datasite, and Almosafer provide concrete insights into the transformative benefits companies can achieve, bringing theory into the realm of practical application.

✅ Cagan's detailed exposition of the product model clarifies its operational dynamics and the essential roles within, offering a comprehensive guide for successful adoption.

✅ By setting clear expectations about the transformative impact across the company and offering pragmatic tips for managing these changes, Cagan ensures readers are well-prepared for the complexities of the journey ahead.

✅ The strategic advice on stakeholder engagement and the emphasis on the importance of continuous transformation underscore the nuanced understanding necessary for effective organizational change.

❌ The case studies, while insightful, lack detailed discussion on the technical challenges faced, such as Datasite's transition to the cloud. A deeper dive into these challenges would have provided a fuller picture of the intricacies involved in transformations.

❌ The narrative could benefit from a stronger focus on supporting individuals through change, highlighting the importance of change management processes to mitigate the human and procedural impacts of transformation.

❌ The absence of examples from Fortune 500 companies undergoing transformation while maintaining core operations leaves a gap in understanding how large, established companies navigate the balance between innovation and ongoing business demands. Our experience shows that a "shift to product" for these organizations is more complex than for tech pure players, particularly with regard to the objections we mentioned above about internalizing resources and meeting strict deadlines.

Thanks to Sebastian Nankervis for his help in co-writing this article!

Marty Cagan is coming to Paris for a workshop on April 25th to coincide with the release of his book! More information about the workshop here