Follow the Money (or at least the Funding)…

Ask any actor in a Police drama and they'll tell you the same thing “…if you want to catch the bad guy, follow the money…”

in this case for ‘bad guy’ read effective Digital Product Management, for ‘money’ read funding and for the rest read a process to approve and allocate funds… so as you can see a perfect analogy!

All joking aside, I would argue that one of the potentially biggest barriers to successful Digital Product enablement is the funding model used in corporate environments today

Traditional corporate frameworks centered on Portfolios of Projects want to define, fund and manage money at an initiative level; aligning with the business / customer to fund new work through a Project to hopefully deliver a specific outcome. Regardless of how effective we believe this approach may be what is clear is that the funding model in this instance is deigned to work in conjunction with a specific governance model - one centered on Project delivery and Portfolio based goverannce

This governance model which is characterized by more centralized control, approval and prioritization of what work should be carried our closely linked to central budgets and a release of funds for specific activity

In itself this is a legitimate, and potentially effective way to deliver outcomes, however it only one way to deliver value and one, that I believe, is typically at odds with effective enablement of Digital Product Management and Teams

If we consider one of the key principles of agile that arguably underpins today’s Digital Product it will tell us that we want to democratize and empower decision making to the lowest effective level in an organization. To enable Teams and Products to act as autonomously as possible, working with their customers to achieve agreed outcomes in an iterative way; prioritizing what is worked on based on the feedback that they get and changing direction based on what provides the most benefit to the customer / business

….all of this is enabled by the Product and Teams having funding and and associated governance model that does not need multiple approvals and reference back to a centralized, cumbersome structure. The Product Managers and Teams are able to redirect their efforts enabled by having their own Budget that creates autonomy; empowering those with the knowledge and relationships to do what is needed based on short feedback cycles with the customer(s) that consume their Offerings and Solutions

Of course there are significant complexities to achieving this in Corporate environments, not least dependencies, politics and competing priorities across different Customers and Business Divisions. What seems clear is that for a Digital Product to be successful it needs to have a different governance and funding model to that of a traditional, Project based Portfolio - we can’t claim to be ‘agile’, wanting responsive changes in direction for our customers, building what they need effectively using lengthy, cumbersome, centralized Governance models and funding

Having said this we do need to recognize that there are initiatives that require coordination across multiple Products and the different Capabilities and Offerings they provide; to properly sequence and understand the dependencies in order to achieve the value that and needs that the Customers have. In this setup, having a totally democratized funding and governance model with complete independence in decision making and what work is delivered is also not going to be effective

So the question becomes how to have enough goverannce with and associated funding model to enable complex, Offerings and Solutions to be built for the Customer / Business whilst retaining enough day-to-day Autonomy for Products and Product to be self determining, delivering regular features and functionality to iterate the required Capabilities

The goal in writing is not to go into which governance models may be best to solve the challenge of empowering Products but rather to highlight that there are two ends of a spectrum - from total Autonomy and democratized ‘Block’ funding on one hand, through complete ‘top down’ control and allocation of funds with minimal self determination by Products and Teams on the other

A summary of the two approaches might look something like this…

The suggestion is that for Digital Products to be successful we need to consider a different approach to funding and associated goverannce, one that uses more block funding and less traditional Portfolio centric approaches. A model that provides ‘enough’ governance and funding of truly complex cross-product / Domain outcomes where appropriate but looks to move the needle much closer to an empowerment model for the day-to-day planning, delivery and operations of Offerings and Solutions provided through a Product led approach

in writing I want to acknowledge the huge contribution of my friend and colleague Brandon Nelson. I encourage you to take a look at his excellent work!