Project vs Product: Why Companies Are Turning to a Product-Driven Approach

With the current business environment being prone to fast changes, more and more organizations decide to transform the way they deliver value. A traditional, project-driven approach that focuses on short-term tasks often proves insufficient when companies need to navigate dynamically developing markets and customer expectations. To address these challenges, businesses increasingly turn to a product-driven approach, which emphasizes long-term responsibility for a product, iterative development and continuous delivery of value to users. 

This transformation of the work model is particularly significant for companies in the tech industry where innovations and fast adaptation to market needs are essential for succeeding and staying competitive. The product approach enables teams to work in a more agile way, increases employee engagement and promotes better cooperation among departments. Read this article to learn the key differences between the project and product approaches and explore best practices that help companies, teams and employees benefit from the product-driven mindset. 

Project vs product approach – definition and key differences 

Project and product approaches differ from each other not only in terms of work management, but also when it comes to the philosophy of managing activities and reaching goals. In the project-driven model, people focus on defined goals that should be met in a specific timeframe and within an established budget. The key aspects of this approach include a clearly defined start and end of a project, a detailed roadmap and limited resources dedicated to completing the project. Success is measured by meeting requirements in a specific timeframe and within a budget. 

The product-driven model is more concerned with the long-term development and continuous improvement of a product that consistently delivers value to users. Product teams don’t work to finish a project; they focus on implementing iterative changes that increase the value a product offers. This approach emphasizes regular user feedback and measures success in the quality and usability of delivered functionalities, rather than in completing planned tasks. 

Key differences 

Timeframe: Projects have a specific completion date, while products are developed steadily and iteratively. 

Success criteria: In the project approach, success is measured in completing planned tasks. The product model sees it as delivering value to users. 

Team structure: Project teams are created temporarily to execute a specific project, while product teams are fixed and focused on long-term product development. 

Attitude towards change: The product-driven approach is more agile and flexible, concentrating on adapting to changing market needs, while the project-driven method often sticks to a strictly specified plan. 

Why the product-driven approach is becoming more dominant 

The modern market, driven by fast technological growth and increasing consumer expectations, forces businesses to continuously adapt. The traditional project-driven approach isn’t flexible enough for dealing with dynamic changes. However, the product model offers more agility and a focus on long-term value, which is why it’s becoming the dominant work management method in many industries, particularly in technology and digital services. 

One of the main reasons for its popularity is the need for companies to quickly address users’ evolving needs. Products have to be constantly improved to stay competitive in the market. In the product approach, iterative development enables a steady delivery of new functionalities, which can be modified according to customer feedback on an ongoing basis. In contrast to the project model, which focuses on a one-time delivery of a solution, the product approach ensures constant improvement, which, in turn, encourages innovation and adaptation to market changes. 

Additionally, product-driven ways of working promote collaboration between different teams – from development through marketing to IT support. These teams work together towards one goal: to increase the product’s value for users. This enables businesses to manage priorities more efficiently and implement changes faster, which is essential for effective digital transformations. 

Mik Kersten’s book Project to Product illustrates these differences well and points to the need of optimizing workflows, while avoiding wasting resources and energy, which is often the case in the project-driven approach. Kersten highlights that organizations which adopt the product-driven mindset increase their effectiveness and are able to deliver value to their customers faster, which is a significant advantage when you’re navigating a highly competitive market. 

Best practices for adopting the product approach 

Shifting to the product-driven approach is a process that requires companies to implement both cultural and operational changes. The key to a successful transformation is not only to introduce new processes, but also to change the mindset of the entire organization, including among teams and leaders. Below you’ll find a few best practices that will help you make these changes effectively. 

1. Change the mindset 

The most important step is to change the project-driven mentality to product-driven. Instead of focusing on completing defined tasks within a limited timeframe, teams have to think about the long term and concentrate on the value delivered to users. Responsibility for a product, continuous improvement and regular delivery of new functionalities over a longer period are key elements of the product-driven mindset. Teams also have to adopt an approach based on experimentation and iterative work, which enables them to quickly adapt to dynamic market conditions. 

2. Optimize workflows 

In Project to Product, Mik Kersten describes the “Flow Framework” – a tool for optimizing an organization’s value flow. It involves eliminating bottlenecks, limiting resource wastage and ensuring that all actions strive to maximize the value delivered by a product. Constant monitoring of key flow metrics (e.g., completion time, work in progress) and the optimization of these processes help teams act faster and more effectively. 

3. Frequently collect and give feedback 

The product approach requires businesses to regularly communicate with users and collect their feedback. The Build, Measure, Learn cycle, known from the Lean Startup method, enables teams to quickly test hypotheses and implement needed changes. Product discovery – a process where you explore user needs and verify which features will bring them the most value – becomes an integral part of a product team’s work. This way teams can better adapt to and address changing requirements. 

4. Build cross-functional teams 

Cross-functional teams play a significant role in the product approach. They combine different competences, such as software development, UX & UI, marketing, data analytics and IT support. Cross-functional teams should have full responsibility for the entire product life cycle – from planning through development to maintenance. This autonomy enables them to quickly make decisions and take actions more effectively. 

5. Set a clear product strategy and priorities 

For the product approach, a clear vision and strategy for each product are essential. Priorities should be established based on business objectives and product value for users. Product owners are key to defining these priorities and communicating them to their teams so that they can focus on key functionalities and tasks. 

These best practices create a foundation for a successful transition to product-driven ways of working. Introducing them to your organization will not only increase team effectiveness and flexibility, but also help your business adapt to market and user needs, which will lead to long-term success. 

The benefits of the product-driven approach 

The product approach brings both operational and strategic benefits. Agile product management helps companies quickly address changing market conditions, boost team productivity and increase their ability to deliver value to customers in a steady, predictable way. Here are some other advantages of this approach for organizations: 

1. Faster reaction to market needs 

In contrast to the project-driven model, the product approach offers businesses the flexibility needed to constantly adapt to market changes and customer expectations. Instead of adhering to strict project plans, product teams can quickly react to user feedback, while implementing changes and new functionalities on an ongoing basis. This agility can be a key success factor in highly competitive markets. 

2. Improved value delivery 

By focusing on the product, you can constantly improve and optimize solutions, which directly impacts customer satisfaction. Regular implementation of improvements and new features, based on real user needs, leads to better user experience and strengthens customer loyalty. By following the product approach, organizations can deliver more valuable solutions within shorter timeframes. 

3. Increased innovation 

The product-driven model encourages teams to experiment, test new ideas and develop novel solutions. By consistently collecting user feedback, they can quickly verify and implement innovations, which can prove much more difficult in the stricter project approach. 

4. Higher operational productivity 

The product-driven way of working enables better resource management and process optimization, while avoiding unnecessary waste of time and effort. Instead of allocating resources to short-lived projects, businesses can focus their efforts on long-term product development. This also helps them plan more strategically and utilize their talent more effectively. 

5. Raised team engagement 

Fixed product teams have more autonomy since they’re in charge of the entire product life cycle. This responsibility fosters higher engagement as employees feel that they have a real impact on a product’s development and market success. More autonomy also means faster decision-making, which further boosts effectiveness. 

6. Better cooperation between teams 

The product approach emphasizes collaboration between different teams such as IT, marketing, sales and customer service. This enables teams to stay aligned, solve problems more efficiently and work together to achieve product-related goals. Eliminating silos and increasing transparency are key to improving cooperation and information flow. 

7. Enhanced predictability and stability 

The product approach facilitates more stable long-term planning. Companies can predict future product development needs and adapt their resources accordingly. Additionally, teams have more visibility regarding the product roadmap and can plan iterative development based on real market and technological requirements, which reduces risks related to sudden priority changes. 

Overall, companies that implement the product-driven approach not only boost their operational agility and speed up their value delivery, but also improve cross-department cooperation and build stronger, more engaged teams. In the long-term perspective, this results in increased resilience and competitiveness even in dynamic markets. 

How teams and employees benefit from the product approach 

The product-driven method offers advantages not only to businesses, but also to teams and individual employees. Changing ways of working to focus on a product results in better work conditions, higher engagement and a sense of responsibility for outcomes.  

1. More autonomy and responsibility 

Product-driven teams can often autonomously decide on priorities, technical solutions or ways to complete tasks. Instead of working on project priorities that were established in advance, these teams can react to market changes on their own. Their motivation and active engagement are further supported by a strong sense of agency, which is driven by their responsibility for the product life cycle and their impact on the final solution. 

2. Better cooperation and communication 

The product approach is rooted in the collaboration of cross-functional teams, in which specialists from different fields work together to reach the same goal – developing and improving their product. This team structure fosters better communication and knowledge-sharing, which improves work quality. By eliminating silos between them, teams can make decisions and solve problems faster. 

3. Work transparency and prioritization 

Because teams work on one product or its part for a longer period, their priorities become clearer and enable better focus. Long-term objectives, combined with a product roadmap, help teams plan their tasks more effectively and avoid excessive switching between tasks. Steady iterations and cyclical value delivery (e.g., through sprints) enable teams to constantly monitor their progress and tweak it to meet current needs. 

4. Skill development 

By working on one product, employees get to deeply understand technologies, tools and problems related to it. This long-term involvement creates opportunities for expanding your skills and developing expertise in a specific domain. Employees can also refine their technical and soft competencies, such as communication, collaboration or time management. 

5. Increased job satisfaction 

The product-driven approach increases employees’ sense of meaning and purpose at work. Product teams can observe the direct results of their work and feel more satisfied with their achievements. By regularly delivering new features and improvements, they can see on an ongoing basis how they impact the product and users. This transparency and ability to quickly implement fixes empower teams and assures them that their work is meaningful.  

6. Decreased stress and burnout risk 

In the traditional project approach, teams often have to work under time pressure, which leads to stress and, sometimes, even burnout. The product method, on the other hand, with its iterative product development, enables a more sustainable work rhythm. Clear priorities and increased autonomy foster better task management and work-life balance. 

7. Transparency and clear objectives 

Product teams have more visibility into their organization’s long-term vision and goals, which helps them understand which actions will have the most impact on product success. This way they can alter their plans to align with the company strategy and make better decisions, which further increases their sense of purpose. 

Challenges to adopting the product approach and how to mitigate them 

Though the product-driven model comes with many benefits, businesses might have to overcome a few challenges when they first start implementing this approach. Below you can find key challenges you might encounter during this transition as well as strategies for effectively mitigating them. 

1. Changing mindsets and the organizational culture 

Changing the mindset in your organization is often one of the most difficult aspects of this transformation. The project-driven model, with its clearly defined goals and timeframes, is firmly ingrained in many companies. Switching to the product approach requires changes in the wider organizational culture to prioritize a focus on long-term product development. This can be hard for teams that are used to working on short-term projects. 

To make these mindset changes, it’s essential to engage a company’s leadership team in supporting and promoting the new approach. It’s a good idea to invest in training, workshops and mentoring to help teams understand and adopt the new ways of working. It’s also important to openly talk about difficulties and fears so that employees feel safe during this transition. 

2. Reorganizing the team structure 

Going from department silos to cross-functional collaboration can be challenging, especially when your teams have worked within separate structures until now. Problems can also occur when you need to change your teams’ areas of responsibility in this reorganization. 

To do this, support from leadership is essential to encourage cooperation between different departments. It’s important for teams to have shared, appropriate goals and access to tools that enable effective communication. At the same time, managers need to understand that the reorganization process isn’t a one-time event, but rather a long-term endeavor that requires time and constant optimization. 

3. Difficulties with defining a product 

Some organizations, especially those that offer many products and services, might find it difficult to clearly define what “a product” is. Is it an application? A service? A functionality within a larger system? Lack of a clear product definition can cause confusion and make effective management challenging. 

That’s why it’s important to define a product in the context of your organization. You should also establish its product owner, development team and objectives. Understanding the needs of end users and market expectations can further help you identify product scope, which facilitates product management. 

4. Long-term vision and planning 

The project-driven model is often based on short-term plans so that a team can quickly complete one project and move on to the next. In the product approach, it’s crucial to define the long-term product vision, development roadmap and continuous value delivery. Lack of these elements can lead to chaos in completing tasks and misalignment between teams. 

A long-term product roadmap is essential to mitigate these risks. It should combine business goals with user needs. You should also regularly review and update it to reflect market changes. Additionally, establishing clear priorities and success metrics (e.g., KPIs) helps teams stay consistent and focus on long-term objectives. 

5. Transitioning from project-driven work to continuous product maintenance 

Project teams usually work to complete a specific task, after which their project ends, and the team has to be dissolved or assigned to a different task. Product teams, on the other hand, have to constantly maintain, expand and optimize a product, which requires a different approach to time and resource management. Continuous product maintenance can be a challenge, especially for teams used to working on projects within limited timeframes. 

A good way to handle this issue is to implement iterative development cycles, such as Scrum or Kanban, which enable teams to steadily deliver new features and updates. It’s also important to monitor and manage the tech debt so that your product won’t become difficult to maintain. Additionally, teams that have been developing and maintaining the same product are more knowledgeable about it and can effectively react to changes or problems. 

6. Maintaining employee engagement and motivation 

In the product-driven model, teams tend to work on one product for a longer period, which can sometimes lead to decreased motivation, monotony and boredom. It’s easier to maintain engagement in a project that has a clearly defined goal and end point. Lack of visible milestones in the product approach can negatively affect team morale. 

To mitigate this, you should constantly encourage your team to innovate and experiment with new ideas. Regular retrospective meetings and progress reviews can show your team the tangible impact of their work on product development. It also helps to establish smaller goals and milestones so that your team can gain a sense of achievement at each product development stage. 

7. Handling the imperfections of early products 

In the product-driven model, it’s important to quickly deliver value to customers, which often means launching Minimum Viable Products (MVPs) – products at an early development stage. This strategy can prove challenging for organizations that are used to releasing only fully completed projects. For example, they might fear that customers will react negatively to a less than completely flawless product. 

A key strategy here is to communicate with customers and establish realistic expectations. Your company and team need to understand that early product versions are an integral part of continuous improvement. MVPs enable you to collect valuable user feedback, which drives further product development. Methodical iterations help your team gradually improve the product and create a solution that addresses real user needs.  

Drive your software development by implementing the product approach 

Switching to the product-driven model is a strategic step which benefits companies both on a business and operational level. It enables organizations to address market changes more effectively, deliver value faster and manage resources more efficiently. Focusing on long-term product development, rather than completing short-term projects, can boost your company’s stability and helps build lasting relationships with customers. It also improves employee engagement and fosters skill development. 

However, this transformation can also pose challenges, such as changing the organizational culture, restructuring teams and creating a long-term product vision. Preparing for these potential issues, ensuring leadership buy-in and constant adaptation to new conditions can help you facilitate the transition. 

Even though the implementation of the product-driven model might not be immediately smooth, it’s becoming the dominant approach on the market because it fully supports businesses in being agile, staying ahead of competitors and delivering tangible value to customers. For companies that want to remain innovative and competitive, the product approach isn’t just an alternative, but a strategic necessity. 

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