Link: https://blog.planview.com/why-your-agile-transformation-stalled-and-how-to-fix-the-real-problem/
From Planview Blog
Your teams have adopted agile practices. Sprint ceremonies run like clockwork. Velocity metrics look impressive. But somehow, the business still complains about slow delivery, and executives question the ROI of your transformation investment.
Sound familiar?
Here’s what most transformation leaders discover the hard way—agile methodology alone hits a ceiling. The real breakthrough happens when you pair a product operating model with your agile practices.
Dr. Mik Kersten, Planview CTO and author of Project to Product and the upcoming Output to Outcome, defines a product operating model as “the overarching structure that aligns strategy, funding, and delivery around value streams [or product lines].”
Think of the relationship between agile and operating model as matching the right vehicle (agile practices) with the best highway system (product operating model) so your execution methodologies can actually deliver business results.
Read Next: The Case for Adopting a Product Operating Model
The Hidden Friction Killing Your Agile Investment
Most transformation initiatives focus on changing how teams work—new ceremonies, different planning cycles, updated tools. However, the biggest waste occurs at a level that most change programs overlook: how teams are formed, funded, and measured in the first place.
Consider the restart penalty your organization pays every few months. Teams form for a project, build working relationships, establish communication patterns, and then dissolve when funding ends. The next project starts with new people who need time to gel again. Meanwhile, your best agile coaches spend their energy on relationship-building rather than delivering customer value.
This constant reformation creates coordination overhead that consumes your talent’s time. Even worse, it drives teams to optimize for project completion rather than customer outcomes.
Here’s the irony: a project-based approach directly contradicts one of Agile’s core principles—that work should flow through persistent, stable teams.
Your organization is unknowingly fighting against the very methodology it’s trying to implement. No matter how well your teams execute agile practices, they’re still operating within a structure designed for temporary initiatives rather than continuous value creation.
That’s why agile transformations often stall at the team level. Individual squads improve their practices, but the business doesn’t see a measurable impact because the organizational architecture still treats software development (and any other discipline that’s embracing Agile) like a series of discrete projects rather than an ongoing product capability.
The good news? When you shift to a product operating model with persistent teams, you get a two-for-one deal: you eliminate organizational friction and align with true Agile principles at the same time.
Read Next: Product Operating Model KPIs and Metrics to Measure Success
Product Operating Model vs. Agile: Different Levels, Different Questions
The confusion happens because leaders try to solve organizational problems with team-level solutions. Here’s how these two approaches work at different levels:
Aspect | Product Operating Model | Agile |
Level | Organizational/Strategic | Team/Tactical |
Question Answered | “How should we organize to drive outcomes?” | “How should teams work together to respond to market changes?” |
Decisions | Funding, governance, team structure, objectives/KPIs | Sprint planning, feature prioritization |
Stakeholders | Executives, product leaders, finance | Development teams, product owners |
A product operating model addresses the structural questions that create context for your teams. How do we fund capacity versus projects? How do we form permanent teams around customer value streams? How do we measure business outcomes instead of feature delivery?
Agile methodologies address the execution questions within that context. How do we plan iterations? How do we prioritize features based on feedback? How do we improve our practices through remote retrospectives or in-person retrospectives?
Both matter, but they solve different problems. Your agile teams become dramatically more effective when they operate within stable structures designed for continuous value delivery rather than temporary project completion.
The organizational stability of a product operating model actually enables the market responsiveness that Agile promises.
Watch On Demand: Dr. Mik Kersten’s “5 Steps to Implement a Product Operating Model” Presentation
How Agile and a Product Operating Model Work Together
When you implement both levels together, something powerful happens. The product operating model creates organizational stability that lets agile practices focus on what they do best—rapid iteration based on customer feedback.
At the organizational level, your product operating model establishes:
- Continuous funding. Instead of approving individual projects, you fund team capacity over more extended periods. Teams can make product decisions without waiting for budget approvals or scope changes. This eliminates the stop-start cycles that kill momentum.
- Value stream/product line organization. You form permanent, cross-functional teams centered on customer outcomes rather than traditional functional departments. Marketing, development, and operations work together continuously, rather than handing work back and forth across organizational boundaries.
- Outcome measurement. You track business results and customer impact rather than feature delivery counts. Teams optimize for market success rather than project completion, which changes how they prioritize and execute work.
At the team level, agile practices become more powerful with:
- Stable iteration. Teams sprint against evolving customer outcomes instead of fixed project requirements. They can pivot based on market feedback without disrupting the organization or renegotiating the budget.
- Continuous feedback loops. Feature prioritization happens through ongoing market validation rather than upfront project planning. Teams learn from real customer usage and adjust their approach accordingly.
- Deeper improvement cycles. Retrospectives focus on customer value delivery rather than project coordination. Teams build expertise in their domain instead of constantly adapting to new contexts and relationships.
The bottom line is this: Permanent teams eliminate the coordination overhead that currently consumes your talent’s time. Your people can focus on solving customer problems instead of navigating organizational friction.
Agile and Product Operating Model Integration Tips
As a transformation leader, you need both levels working together, but the sequencing matters. Organizational structure changes should happen alongside—or even before—scaling agile practices.
Start with executive alignment
Position the product operating model as business architecture, not methodology. Show leadership how funding decisions and team formation affect business outcomes. Use language they care about: customer retention, market responsiveness, competitive advantage.
Design pilots that demonstrate both levels
Don’t test agile practices within existing project structures. Test permanent teams with continuous funding and outcome-based success metrics. This shows executives what’s possible when both organizational and team levels align.
Address functional leader concerns directly
Department heads worry about losing control when teams organize around value streams instead of functional areas. Show them how product operating models create clearer accountability, not less control. Teams own business outcomes, which makes performance easier to measure and manage.
Measure transformation impact at both levels
Track team-level improvements like velocity and cycle time. But also track business-level results like customer satisfaction, market share, and revenue per employee. This dual measurement approach proves ROI to different stakeholder groups.
Build sustainability from the start
Product operating models create self-reinforcing momentum because teams see the connection between their daily work and business results. Unlike process changes that teams can abandon when attention shifts, structural changes like funding models and team formation become embedded in how the organization operates.
Your Next Move
The tension between agile practices and organizational structure doesn’t have to paralyze your transformation efforts. When you align both levels—embedding agile teams within a product operating model—you create the conditions for sustained business impact rather than just improved team performance.
Think of it this way: When paired with a product operating model, your agile investment becomes a strategic enabler instead of an operational expense.
Ready to move beyond team-level improvements to organization-wide results? Download “Creating an Outcome-Based Enterprise” to discover the five pillars that transform busy teams into high-impact value creators, complete with detailed assessments that reveal exactly where your organization stands today and your clear next steps forward.