Many organizations find their traditional funding model, built for pre-planned large-scale projects, clash with the needs of teams working in more fluid, agile ways. Allocating funds based purely on fixed scope and timelines hinders the very responsiveness these teams aim to achieve.

To truly benefit from agile operations and accelerate value delivery, businesses must rethink how they fund and govern work. This means shifting towards a model that supports continuous value creation through product-oriented teams. The core idea is moving beyond funding projects to funding persistent teams focused on specific products. This isn't just an accounting change; it's a different way to think about investment, success, and value with both operational and cultural implications.

Project process versus product reality

Traditional project funding works well for specific work with a defined scope and end-point. You estimate the cost, assemble a project team, and measure success based on delivering that scope on time and within budget. Value validation often happens upfront with a business case where tracking focuses on cost burn-down. Unlike continuous product delivery where you expect to see value realisation from a very early state, for projects the value is often not realised until the end of the project where the budget is used and the team is disbanded. Tracking actual long-term value and return on investment beyond project end does not typically happen.

Agile, product-focused work operates differently. You expect to see value delivered early. Markets shift, customer needs change, and the best path forward emerges through iteration. Here, funding needs to support a stable team over time, allowing them to continuously discover, build, and refine. Success isn't just about hitting milestones; it's measured by improvements in business outcomes — like customer growth, revenue increases or operational efficiency. Value validation is continuous, relying on tracked customer and business metrics, and the repeated delivery of small, tangible improvements with demonstrated impact. The team persists as long as the product remains relevant and delivers value. Investment decisions should consider the product's strategic fit, commercial impact, and where it is in its lifecycle. While major funding decisions might remain annual, empower product owners to adjust their backlogs based on learning within agreed budget boundaries.  

See Products Over Projects

Adapting your financial framework

Making this shift doesn't require throwing out your existing financial processes entirely. The goal is to adapt current annual and quarterly cycles to accommodate this product-oriented approach. 

This means expanding the budget planning model from this…

…to also include this:

Where for projects the focus is funding deliverables until a handover, with products it is instead focussed on ongoing return on investment by a long-standing team. Product planning, similar to operations, uses a stable base investment and flexible budget adjustments based on value. Work previously planned as projects or operations now falls under product planning, reducing upfront effort and increasing team autonomy.

Impact on the wider operating model

The expected challenges on evolving the funding model and evolving the operating model will overlap in some aspects with the following as common examples:

• Assignment of dedicated standing product teams with empowerment and ability to work autonomously.

• Cascade of accountability from higher business level to product teams.

• Target setting in the cascade from business to product team.

• Use of measures of success and ongoing value tracking over cost.

• Creation of backlog and roadmaps, that are evolved iteratively in value increments.

• Authority on deciding on call-offs and spending, aligned with current business review cycles.

Annual planning adjustments

Your yearly budgeting process needs updates to handle the operational and capital expenditure mix for long-running product teams. One example is the need to plan for ongoing discovery work alongside delivery. Doing this involves developing clear methods to state the expected value of a product, potentially using business case templates specifically designed for standing teams rather than fixed projects. Clear criteria are also needed to help prioritize investments across new products, existing projects and essential business-as-usual work. Here, the change to the process is to include products with clearly articulated value as part of the investment case. This creates a product landscape that in the annual process can then be compared and invested in strategically.   

Quarterly governance changes

Within the year, quarterly cycles can be adapted for product teams. A central governance body such as an investment committee, should review the quarterly budget needs of products that may change with roadmap updates or new insight (as a separate event or as part of a wider QBR). Governance checkpoints need adjustment to allow for regular fund drawdowns based on demonstrated progress, not just fixed milestones. Product roadmaps and backlogs become key tools for planning and reviewing progress. Frequent prioritization (at least quarterly) ensures teams stay focused on the most valuable work. This also requires defining clear roles within autonomous teams and giving authority to product owners or similar roles to manage their quarterly commitments. Governance focus must shift from deliverables and cost to support regular reviews comparing the actual value delivered against expectations.   

Weaving funding into the target operating model

These funding adjustments are one part of a larger change in how the business operates. Your company strategy should explicitly mention key products. Portfolio management needs to make clear funding decisions for these strategic items. Operationally, this means establishing long-standing, cross-functional teams that bring business and technology expertise together for strategic products. Tracking systems must also evolve to monitor product performance, feeding data back for operational adjustments or even strategic shifts. It's important to distinguish between different types of reprioritization. Adjusting product backlog items to better hit a target is an operational decision for the product owner. However, if value projections seem unrealistic or strategic goals change, that requires a strategic reevaluation involving central governance.     

Actionable recommendations for leaders

1. Map your strategic products: Begin by identifying your strategic products — those critical to your goals, needing faster delivery or holding high innovation potential. Mapping these helps align everyone, guides investment, and provides a basis for tracking progress. This isn't a one-time task; revisit this map regularly, perhaps every few months, as strategies evolve.

2. Use the product map to guide investment: Moving beyond project funding enables your organization to consider and manage an internal product portfolio. This lets you compare cost and revenue generation over time to make informed bets into product investment based on lifecycle stage, product potential, and risk appetite.

3. Adapt, don't replace: Modify your existing annual and quarterly budget cycles to incorporate product-team funding rather than building entirely new processes. Introduce new standing teams in manageable waves to build capability gradually.    

4. Empower product teams: Clearly define the product team, its scope and its roles (like product owner) and give them authority to manage their backlogs and make operational prioritization decisions within their approved funding.   

5. Continuously measure value, not just cost: Implement a product operating model with regular (e.g., quarterly) value reviews focused on business outcomes and progress towards goals, not just spending.   

    

Conclusion

Shifting from purely project-based funding to incorporating a product-oriented model is fundamental for organizations seeking greater agility and value delivery. It aligns funding with how modern digital work often happens — iteratively and focused on outcomes. While it requires changes to financial processes, governance, and mindset, adapting your funding approach provides the financial structure necessary to support flexible, high-performing teams and ultimately compete more effectively. Assess where your current funding model creates friction for agile teams and begin the conversation about how a product-oriented approach could unlock more value for your business and customers.