Hi Reader,
Over the past decade, I've guided dozens of traditional organizations through their transition to product-led operating models. From pharmaceutical giants to financial institutions, I've seen what makes this transformation succeed or fail.
One critical mistake consistently derails even the most well-intentioned efforts:
Organizations start their product transformation while still viewing technology as a cost center rather than a strategic advantage.
This mindset—deeply embedded in organizational DNA—undermines every other change they implement. Here's why this matters and what to do about it.
The Cost Center Trap
When assessing product capabilities across organizations, I've identified a consistent pattern.
Ask executives about their strategy, and in companies stuck in the cost center mindset, the answer is almost always some version of "reducing costs."
These organizations can articulate their market differentiators—their offerings, target segments, market approaches. But when I ask, "How is your technology vision helping you compete better?" I get silence and uncomfortable glances.
Their once-strong competitive advantages are weakening as rivals catch up, particularly those using technology as a strategic differentiator rather than just an expense.
This approach is corporate whack-a-mole. You solve one cost problem but miss the bigger opportunity. What if that process you streamlined wasn't necessary at all? What if you could innovate away from traditional approaches entirely?
Why Agile Alone Isn't Enough
Most transformations begin with Agile—and for good reason. Traditional organizations struggle with slow, rigid development cycles, and Agile promises faster delivery.
But faster software development doesn't automatically mean better business outcomes.
Agile without product thinking often reinforces an output-driven mindset—measuring success by how quickly teams complete backlogs rather than whether they're solving real business problems.
This is where transformations stall. Teams get faster at building features but aren't building the right things.
When transitioning to product thinking, we also have to address how we view our software products. Are they strategic enablers? Do they help us win? Or are they just there to “run the business”? Without this mindset, we create product strategies that are weak and uninspiring.
Becoming Product-Led: The Mindset Shift
Even if your software isn't sold as a product, it can be your most powerful strategic differentiator. This requires a fundamental shift in thinking.
Consider Capital One's journey. They disrupted banking in the 1990s by pioneering an "information-based strategy" for credit cards. Rather than using simple credit score cutoffs, they leveraged data analytics to create sophisticated risk models, profitably serving markets others considered too risky.
They didn't stop there. Remember when you had to call your bank before traveling? Capital One eliminated this pain point entirely. Rather than streamlining the notification process, they used algorithms to predict travel patterns, removing the need for the call altogether—improving customer experience AND reducing support costs.
What about "internal tools" or "platforms"? For a pharmaceutical company, bringing drugs to market is their lifeblood. Instead of just accelerating existing processes, what if your clinical trial software could more accurately identify study participants and predict outcomes? Could your technology help you do this 10x better than competitors?
The difference is in the questions you ask. "How do I make this process cheaper?" leads to streamlining old workflows. "How do we reimagine this entire process while delivering an exceptional experience?" unlocks innovation.
Where Transformation Begins
If your organization is on this journey, start by changing the conversation. Ask "why?" and "what if?" Move from cost-cutting to value-creation, from outputs to outcomes, from project management to product thinking.
The most successful transformations aren't about reorganizing teams or implementing new processes. Those matter, but they're secondary to the fundamental shift from viewing technology as a cost to be managed to a strategic capability that drives business value.
That's where the real transformation begins.
PS: If you're ready to leverage technology as a strategic enabler, try Liveblocks to seamlessly integrate ready-made collaborative features into your product. Sign up for a free account at Liveblocks.io.
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See you soon,
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Melissa Perri
Founder Product Institute, Board Member, and Teacher
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