Coined by others but popularized by SVPG, a [[Product]] operating model (or product model) is "a *conceptual model* based on a set of first principles that strong product companies believe to be true." By "conceptual model", he just means the way a company *conceives* of itself, and its way of building products. Said a few other ways, it's a way of operating that Cagan and others have noticed "the best product companies consistently use... consistently creating technology-powered solutions that customers love, yet work for the business."[^1] From a financial perspective, it's about getting the most out of technological investment. My observation: This is not a neutral term. Any companies claim to a product operating model can be evaluated agains the benchmark of *what the strongest product companies believe to be true*. [[There is no single right way to build products—but there are better and worse ways]], and I presume that a product operating model should be founded on the better ones (as understood by those who practice). A [[Prior Model]] is what Cagan calls *alternative* product models that do *not* represent best practices. He calls these "prior models" in the context of transformation or change—they're the company's models *prior* to transformation into a company with a true product operating model. Cagan et al. note that there are other terms this can go by. They've heard "product-led" or "product-centric", but don't like those terms as it implies the product organization is taking over. Similarly, they've sometimes heard a company called "customer-driven", but in their eyes, "that terms' been misused to the point that it has lost its utility." Cagan doesn't directly distinguish what makes this different from a [[Business model]], but drawing on the [[Business Model Triangle]], it's pretty clear that a product operation model is agnostic concerning *who* the customers are, *what* is being offered, and *how* the company makes money. Really, a product operating model is mainly focused on the value chain—how a product gets made and delivered to the customer. ## Flashcards | Q | A | | --------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------- | | What is a product operating model? | A conceptual model, based on first principles, that strong product companies believe to be true | | By "conceptual model", Cagan means | The way a company *conceives* of itself and its way of building products | | Cagan says a POM consistently creates | technology-powered solutions, that customers love, yet work for the business | | Which part of a business model does a product operating model overlap with? | The value chain | ## Reference [Cagan, Marty. "The Product Operating Model: An Introduction" (SVPG, February 2023).](https://www.svpg.com/the-product-operating-model-an-introduction/) A stellar list of links that go along with the concept of a product operating model. [^1]: Cagan, Marty. Transformed: Moving to the Product Operating Model (Silicon Valley Product Group) (p. 6). Wiley. Kindle Edition.