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Building digital product capabilities

By Sameer Soman

Managing Director for ThoughtWorks in India

There is an evolving enterprise-wide disruption where technology is fast becoming the prime enabler of new business opportunities. We, at ThoughtWorks call this ‘Tech@core,’ and it will make-or-break most enterprises in the next 5-10 years. 


Let’s quickly go over the primary intent of any organization’s digital transformation journey -

  • Strengthen market differentiation by moving from a point solution approach to a product and services-led approach 
  • Bridge business and technology objectives
  • Reorient capabilities and mindsets to drive both product and service innovation

At the same time, it’s just as important for everyone partaking in this journey to acknowledge a few hard truths about transformation. These include -

  • The underestimation of transformation at full scale and the sometimes unpredictable changes it brings/causes
  • The limitations of ineffectual organizational design and inhouse team capabilities preventing collaboration with the larger ecosystem and partners
  • The narrow view of only business imperatives that prevent organizations from highlighting tech issues as a prime cause for failures

In retrospect, the big question is no longer, ‘How can an enterprise transform?’ but, ‘Can it continue to evolve at the required pace?’

I would advise every far sighted enterprise leader (on the digital transformation path) to visualize these five building blocks. They are what I believe will make up an ideal-state Modern Digital Business.

A modern digital business is made up of these 5 building blocks
A modern digital business is made up of these 5 building blocks

A modern digital business is made up of these 5 building blocks

Of these 5 blocks, I have focused on Building Digital Product Capabilities while writing this paper. Here’s why? It’s when modern digital businesses view their technology assets as multiple products (not multiple point solutions) that they can evolve the products to meet dynamic business needs and become responsive to external environmental changes. 


This flexibility stems from the seamless collaboration of people, process and technology while building the product. And, it ensures that digital experiments don’t break down as organizations progress along the path of transformation.


At its core, digital businesses build products with no significant upfront capital expenditure and the product development lifecycle transforms cost and value benefits, effectively converting CapEx into OpEx.

Products built in a traditional business environment vs. in a modern digital business
Products built in a traditional business environment vs. in a modern digital business

Products built in a traditional business environment vs. in a modern digital business

Traditional companies

  • Siloed operations and disintegrated functions
  • Unpredictable costs and increasing tech debts
  • Lack of visibility into business outcomes
  • Opportunity losses due lack of context on market dynamics 

Modern digital businesses

  • End-to-end ownership across value chain
  • Predictable costs and operations - OpEx is the new CapEx
  • Total accountability of digital business outcomes
  • Faster time-to-market

Building a digital product capability


Getting a winning product or service into your customers’ hands begins with your proven value proposition. What follows is your product evolution strategy for enhancing, scaling or transitioning your product over time.


This approach takes businesses down the path of building strong product innovation capabilities that ensure the continued refinement and reinvention of the product. For organizations that are thinking along these lines, the question is, 'What does my end state look and feel like?', 'How will I know that I have arrived?'


My recommendation when trying to answer these questions is to look at the progression across four parameters:

The four parameters to consider when building a digital product capability
The four parameters to consider when building a digital product capability

The four parameters to consider when building a digital product capability

Architecture: monolithic to microservices and composite applications


Agile practices like Continuous Delivery help organizations rapidly react to market changes. However putting them into practice when armed with a big legacy monolith application can be difficult. Over time, the industry has come out with different ideas to solve this problem. And, microservices, pushed by companies like Netflix or Amazon is one such approach.


The integration of disconnected systems using APIs and coupled with microservices enables the distribution of previously monolithic systems. This leads to a powerful mix that leverages tools and processes composed of multiple systems, running in different places.

What does good architecture achieve?

Good architecture balances business and techical requirements

TECHNICAL

doesn't dictate schedule of change

support fast feedback

appropriate coupling

iterative

DOMAIN

matches business capability

enables experimentation

decentralized governance

fitness function

However, it’s no easy task to migrate from a monolith to microservices because it’s hard to decide when to split services. This approach requires a strong underlying platform and great DevOps practices to be in place., making microservices, a great destination with a long journey.


I often see people end up with a distributed monolith — a distributed system with none of the benefits. This is because the domain modeling goes wrong and fails to adopt the microservices architectural style. The result is businesses just winding up with small services.

As represented above, a true ‘microservices operating model’ encompasses shifts in team design, responsibilities and associated organizational impacts. This model should be founded on a series of business and platform capabilities. This should be followed by aligning long-lived teams that plan, build and run products to deliver those capabilities.


I’d very much caution against the idea of creating a monolithic ‘platform’ team or simply hoping that shared business capabilities will emerge by chance and be curated by osmosis.

A distributed engagement between ThoughtWorks' London and Bangalore offices for over 12 years (with a peak team size of 240 people)



Business challenge:

The client’s business was constrained by an unscalable platform 

This resulted in:

  • Very high time to market when launching new features 
  • Very high operational costs due to maintenance of the multi-version solution/s

What we did:

  • ThoughtWorks helped migrate the client’s existing monolith architecture to a new microservices based architecture 
  • This ensured:
  1. Feature toggling capabilities that helped launch new functionalities both rapidly and safely
  2. Cost reduction because of code reusability between iOS and Android 
  • When building the mobile application
  1. Data driven feature prioritization guaranteed that appropriate KPIs were measured against every new feature 
  2. Test automation framework significantly improved time to market for new features

Business outcome:

  • We delivered strategic business benefits for the Train Operating Companies, TOCs
  • We reduced time to market by 90% which resulted in significantly improved revenues
  • Trainline improved their conversion from ~4% to over 9% across digital channels
  • Scaled to a 250+ development organization that followed agile, XP and lean principles of software development
  • Moved client away from project mode to embrace product mode teams

Infrastructure and deployment: linear, sequential, designated and on-premise to iterative, continuous and cloud


Most organizations have already adopted infrastructure automation tools and dynamic private or public clouds. However, technology alone cannot help IT quickly respond to changing opportunities and challenges. At worst, the ability to rapidly spin up new infrastructure could lead to a sprawl of poorly maintained systems.


Infrastructure as Code, IaC manages infrastructure by leveraging software engineering practices. Ultimately, infrastructure should aim at reducing system-related friction while increasing flexibility and ease of scaling. Companies like Facebook and Etsy are exploiting the IaC approach and can incorporate changes far more frequently while ‘upping’ the reliability, security and quality of their IT services.



I believe that a defining characteristic of the ‘Cloud Age’ is how infrastructure can now be treated like software. Couple this shift with effective software development practices and businesses can take advantage of the growing ecosystem of tools that has been designed to support change.

A year long partnership with a 35+ strong team mobilizing technology understanding, local market context, strong agile practices and a customer-first approach


Business challenge: 

  • The client was looking to transform-and-replace their retail platform and grow digital loans from zero revenue
  • The customer-facing digital loan platform had the potential to originate retail products like loan origination, risk assessment, digital underwriting, handling approvals and disbursement
  • Client’s capability could not scale
  • It took weeks or months to roll out changes due to legacy and silo-ed systems

What we did:

  • ThoughtWorks employed an approach that combined digital platform thinking, microservices and the continuous delivery principles
  • Our flexible loan origination platform for retail customers was built to quickly rollout products and respond to market needs with agility
  • Integrated the company’s existing banking loan management systems and existing offers database
  • Consistent business consulting consistently oriented our client towards product thinking and strategic approaches

Business outcome:

  • Grew digital retail loans to more than 10,000 online applications with 100+ disbursements for auto loans as a starting outcome
  • Took approximately 6 months to go to production

Product excellence: ad hoc requirements to a value based prioritization and outcome based strategy 


As businesses continuously innovate their digital products and services, there is a relentless focus on human-centered design and frictionless customer experiences. Once a business’ value proposition has been proven to customers, it’s time for leadership to think about the product evolution strategy. This will focus on enhancing, scaling or transitioning the product over time. 


At its core, product thinking involves a shift from the traditional approach to development, where software or products are built to order and are ‘handed off,’ to a more expansive, holistic process, defined by continuous ownership and improvement. 

Applying the right resources to a customer problem can be a delicate art. With customer value being the ultimate goal, customer-centricity is the defining characteristic of the product mindset. This course works best when everyone involved in the product cycle, designers to C-suite, occasionally serve on the front lines and involve themselves in customer interaction. This same approach works with respect to the intelligent use of data as well; supplementing caches of data with real-world analysis and experience.


Along with learning more about its customer base, the enterprise aiming to excel at customer experience will need to look within. Particularly at companies saddled with legacy structures, product thinking often requires cultural and organizational changes.

An 8 member team built a mobile Web site for different smartphones across the iOS, Android, BlackBerry, Windows platforms


Business challenge: 

  • Client was revamping all their customer facing applications including delta.com and mobile apps
  • But, once the existing delta.com is brought down, the mobile Web site would cease to exist
  • Client needed a strategy for the new mobile Web site launch and its scalability
  • There were dependencies on not-so-robust APIs

What we did:

  • Developed the ‘Book a Flight’ feature
  • Revamped user experience for the Delta mobile app across platforms
  • Added an Anti-Corruption Layer, ACL which ensured quicker time to market for desired mobile experience
  • Enhanced platforms with new features: flight notification, track my bag, inflight entertainment and ‘today mode,’ a personalized dashboard for day of travel
  • Automation suite ensured test automation at both various levels and layers of the application
  • Agile and continuous delivery principles embedded into the client team’s mobile group 

Business outcome:

  • Mobile app delivery revised from 3-4 releases a year to 1 a month
  • Delta’s Android app won the coveted Google ‘Top Developer’ accolade
  • Active Users: iOS stands at 2.8mn a month, and Android at 0.8mn a month
  • Client saw $1mn in weekly revenue from the iOS app
  • The iOS app handles over a $1bn in annual transactions

Organization design: project based teams, focused on specific scope to long lived, cross-functional and product based teams


I believe Martin said it best when he said, “Don’t run it like a city.” His analogy goes on to describe the similarities between the ‘projects-mode’ and how cities are run. A city has to keep the lights on across departments such as water supply, sanitation, transportation, law and order etc. The people that work in these departments are the equivalent of ops (run) teams. 

When a new metro line is to be introduced, the city funds them as projects and contractors execute them, the equivalent of build (change) teams.


Traditional enterprise IT has followed the two-pronged city model of permanent ‘run’ teams and on-demand ‘change teams’ i.e. the ‘projects’ approach, and have paid the price in terms of responsiveness to the business. Digital-age businesses can ill afford to be sluggish in responding to feedback from business stakeholders or the market. Business-capability aligned teams need to have access to funding, staffing and the authority to pivot their approach to a problem on the fly.


Product teams should ideally be empowered to own a product end-to-end and throughout its lifecycle - from envisioning and discovery through to delivery and optimization or evolution based on customer feedback. Product thinking recognizes that digital experiences deliver value to customers in the same way that physical products and services do, so they need to be continually enhanced and refreshed to stay competitive.

Building teams that are diverse and cross-functional, blending designers, developers and business representatives, helps make sure that they’re efficiently self-contained and empowered to deliver a successful experience from end to end.

An engagement spanning 5 years with a team of over 95+ people at peak, in 4 streams across ThoughtWorks' Cincinnati and Bangalore offices


Business challenge:

  • Client, on a digital journey, was looking to scale quickly
  • ThoughtWorks, in the partnership, took end- end ownership of certain digital portfolios
  • Owned domain capabilities like account management, click and collect offering for mobile apps, CMS platform and coupon management
  • Owned entire lifecycle of these product capabilities from inception to design (or UX) to features to development to production support

What we did:

  • ThoughtWorks built an extensible and scalable web platform for the retailer’s grocery and pharmacy business 
  • Client could unify development for all web properties while still providing customized user experiences for the local brands
  • Collectively championed a product strategy comprising business goals, product roadmap and KPIs
  • ThoughtWorks embedded the culture of a product-focused team, outcome oriented development and practices like Extreme Programming, Test Driven Development and domain driven design

Business outcome:

  • We scaled the offering to approximately 800 stores and online shoppers could pick from over 70,000 items
  • Improved client’s digital revenues by over 126%
  • Reduced cycle time of Concept to Cash through right engineering and product practices like KPI driven prioritization, inceptions, XP Practices and CI/CD etc. 
  • Ramped up client’s team from 15 to 400+

This paper extols product building capabilities as a critical enabler for building an innovative and dynamic organization. And, I believe this to be an imperative, in the emerging hyper-connected marketplace also called the Fourth Industrial Revolution. In fact, according to the World Economic Forum. We are looking at a “....transformation...unlike any humankind has experienced before...disrupting almost every industry in every country.” 


Businesses like yours are functioning in an environment where, on the one hand, new digital organizations are disrupting old businesses and traditional enterprises, who, on the other hand are acquiring new firms to protect their turf. 


Traditional enterprises are in the habit of developing several point solutions and then integrating them vertically - to form an end to end service or product for their customers. But, they are fighting for their place in a world where the digital natives are thinking product-first. The latter are building capabilities and infrastructures to horizontally scale these products - across market segments, customer bases, geographies etc. The winning formulae speaks for itself!


My hope is that this article will provide you with the required nudge and also present a starting point from where you can take forward your product-first approach.