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Product-centric funding

How to configure the software development funding process to incentivize measurable product outcomes

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Target state: Product funding 

Each greenfield opportunity, digitize, transform, or capture new market share, should either be killed off due to a lack of ROI or transformed into a mature product. A half-state may exist for middle-tier software (such as services), but even those need an active roadmap to maintain, support, and evolve as the business evolves.

When an opportunity demonstrates the desired outcomes (e.g., required adoption, revenue trends), then shift into a theme-based funding model. At this point, the business should be confident in the ROI of the product and evaluate how much throughput is necessary to meet customer demands, resolve growing technical debt, and stay ahead of the competitors.

These considerations dictate the number of teams to fund and which themes each team owns. Teams should have vertical ownership of components with oversight from product architecture.

Once teams and associated themes are identified, the product managers should leverage demonstrated velocity and burn rate to predict both the annual cost of the team and the maximum amount of scope that a single team can deliver to market. These metrics then inform the sponsors, who decide if additional teams are necessary to reach the objectives.

new opportunity PCF

A Fortune 1000 industrial supply distributor identifies five teams with five themes for investing.

Customer workflow teamsImplementing a roadmap of features requested by customers as well as those necessary to stay competitive
eCommerce teamImplementing a roadmap for the eCommerce experience and checkout
Search teamImplementing a roadmap for product search, associated keywords, and bundle products
Merchandising teamImplementing a roadmap to enable merchandisers to add additional products to the catalog
Performance teamResolving technical debt, continually optimizing the performance of all the components above

Continue to:Use product metrics to justify investment