What will change in product organizations over the next five years, and why? And how will these changes affect organizational management and everyone’s daily lives? In this blog, we create scenarios on what is to come and predict future trends over the next five years.

TREND 1: Comprehensive optimization of product organizations

“Agility is dead. “Agile development has not fulfilled its promises.” Such headlines have become increasingly common over the last year. And they are not entirely wrong. Way too much has been expected from the agile development of digital products in recent years. However, agile development is just an operative competence that cannot solve the challenges involved in customer understanding, overall efficiency and business models. On this basis, the key theme over the coming years will be the comprehensive optimization of product organizations.

The success of a product or service requires much more than just good product development. It is based on an overall approach including product development, marketing, selling, customer service and possibly logistics. The key elements connecting these are understanding of the customer and market, effective portfolio management and the correct operative machinery.

Next years’ major trends will include growing business responsibility within product development organizations. Product organizations will arrange their businesses in such a manner that product development will no longer involve separate, product building organizations. Instead, the same unit and staff will be responsible for the overall success of products. Product managers seem to have played such roles earlier, but have lacked the power to take overall charge of the issue.

Product development and business should be one and the same thing, but are way too often viewed as separate activities. For product organizations, products, continuous improvement, and the development of new products are the business. The silo structure between product development and business operations will crumble, affecting the whole organization from the organizational stage onwards. This trend is unlikely to emerge fully in the next five years, but companies can gain a competitive edge by taking it into account during that period. 

TREND 2: Making the entire value chain agile

Referring to trend 1, people will try to ensure the success of a product by extending agility beyond product development. This has been on the cards for a long time; for example, the latest version of Scaled Agile Framework strongly emphasizes business agility. This trend will continue through other operational models for scaling up agility.

Business agility will be the buzzword over the next few years.

Business agility will be the buzzword over the next few years. People often start trying to solve this from the viewpoint of product development, by combining product development practices with other functions in an attempt to make an entire organization agile. In the case of bigger organizations in particular, this could be likened to trying to make a mammoth agile. In certain kinds of organizations it will boost business efficiency, but in many it will only lead to extra bureaucracy.

Winning organizations will approach the problem from a different angle. Rather than trying to make a mammoth agile, they will build smaller agile units which combine the entire value chain. These are a death blow for the dominant organizational model of the last 100 years, based on which centralization and unification are the solution to all efficiency problems. This way of thinking is so deeply ingrained that it will be very difficult to change, but the winners will succeed in doing so.

Most people in working life are deeply attached to a way of thinking based on which the recipe for success lies in efficiency gained by centralizing functional competences. This means that many still believe that centralized marketing, selling or software platform development are the key to success thanks to the efficiencies achieved. In reality, they are obstacles to an organization’s success, due to the extent to which they slow processes down and encourage groupthink. Of course, branding and the customer experience should remain unified, but there are so many other ways to achieve this besides centralizing functional activities.

This challenge, spreading agility throughout the value chain, will be a very frequent subject of discussion over the next few years. Most companies will try to make mammoths agile, while others will switch to creating smaller, more agile units. Nonetheless, this will be a prominent future trend.  

TREND 3: Omnichannelling of the user experience in product use

Omnichannels have long been discussed  in the context of marketing and the user experience. It has been obvious that users encounter brands in multiple ways, due to which the user experience has had to be managed through the full range of channels. The same phenomenon now extends all the way to product features. Many product features have to be used in a wide variety of ways, creating special challenges for development.

Spotify is an example of this on the consumer side. The same product is used via a computer, mobile phone, smartphone, dashboard display, stand-alone music players and home control systems (e.g. Google Home). An example on the business side would be Atlassian Jira, which can be used to follow and update the progress of the same ticket on a computer, info screen, mobile phone, e-mail, Slack channel, BI-system and smart watch.

Depending on the product, more ways are emerging of using these features and, in many cases, machines and automation robots must also be counted as users. In addition, future ways of using such products will include light and gesture-based controls.

Taking account of these will create new challenges for teams in terms of understanding the customer, and development and testing. For instance, prioritization will no longer be solely quality specific, but it will also be possible to make customer and channel-specific decisions within features. Some features will be intended only for PC users, some for car users and some for, say, smart self-learning systems. People will wake up to this challenge sooner or later, but the trend is here to stay.

TREND 4: Emphasizing self-direction in leadership

Self-direction could be the answer to the need to enhance individualism and job satisfaction.

Self-direction has been growing more popular for some time. It will become even more prominent in the future. One reason for this is the global trend towards individualism, the desire for independence and individual freedom. In addition, perhaps we want to be different and exceptional for its own sake. Self-direction could be the answer to the need to enhance individualism and job satisfaction.

Self-direction can also bring more efficiency to certain aspects of processes. Self-direction creates efficiency, particularly with respect to the practices of individuals or small teams. The goals and boundaries just need to be well-defined. As the number of self-directed people grows, so too will the resulting chaos and forces pulling in different directions. It will therefore be important to set limits on self-direction, based on which chaos can create new value or efficiency that would be unachievable through traditional control. As long as chaos does not lead to excessive waste.

Self-direction will be a major future trend, although many people will fail in this respect. It will require a new approach from leaders, with leadership moving towards lobbying rather than the direct management of issues. Goal-based and team-specific self-direction will become more common. But self-directing organizations are a utopian ideal, the pursuit of which will only damage large organizations.

TREND 5: Challenges and potential of ethical questions

Organizations will encounter situations where some staff refuse to work due to ethical principles.

Ethical questions regarding the internal activities and customers’ behavior, will play a crucial role in the success of product organizations over the next few years. Although product and service organizations will not be the only ones facing this challenge, the challenge will be highly multi-dimensional in such organizations.

Ethical questions will affect organizations’ internal activities and efficiency. Over the next few years, organizations will encounter situations where staff members refuse to work, or at least act in breach of general instructions, due to ethical principles. For example, business trips by air are sure to be a cause of debate; some workshops that have normally been held face-to-face will go digital. Anyone who has participated in workshops knows that there is an at least five-fold, or even ten-fold, efficiency gap between face-to-face and digital workshops.

Ethical questions will affect the purchasing behavior of certain consumer groups, in particular. Although this mainly sounds like a challenge for product organizations involved in consumer business activities, in B2B businesses too buyers are just people with personal motives. In the future, special attention will have to be paid to including ethical principles in our customer understanding.

TREND 6: Robotic process automation (RPA) goes mainstream 

Robotic process automation simply means transferring work assignments to software. In the past, the ‘digitalization’ was used in the same way as ‘RPA’ is used nowadays. So this is by no means a new phenomenon, but the fact that tools are becoming simpler and easier to use makes it a future trend.

In the near future, RPA tools will be so simple that most people who are used to regular software will be able to build bots and automation which will transform the efficiency of workflows. Many services can already be used to create complex automations between Internet-based tools, without the involvement of anyone with a coding background. For many organizations, smart bots are commonplace.

As process automation tools become easier to use, the value brought by RPA will grow exponentially. As long as only a few people know how to do this, such value will remain low. Many problems with data flows within organizations can easily be solved by applying automation expertise. Information finds its way to the right people much more easily through automation than by making all information open.

In the beginning, the management of different RPA solutions may prove challenging. In the case of Internet-based-solutions in particular, organizations may begin by using dozens of systems. Their management will be challenging and, in the worst cases, IT or product development will have to manage different automations created using dozens of tools. RPA solutions have huge potential, but will have to be mastered at an early stage to keep the overall issue under control.

TREND 7: Using AI to manage product development

Artificial intelligence and data utilization are mandatory topics when we consider future trends. AI is emerging everywhere and product organizations are wondering how to use it, in a vast range of ways, in products and services. This is surely an ongoing trend, but we believe that account will also be taken of AI’s potential with respect to doing work AI can be used to increase the efficiency and impact of work.

AI’s potential for boosting the activities of product organizations includes requirements management, customer understanding, and predictability. We believe that we will see several solutions based on which an organization’s internal information can be used for developing better solutions with the help of AI.

The key opportunities created by AI regarding requirements management lie in analyzing the quality of requirements and identifying dependences. It does not take an extremely smart system to recognize faults in requirements and ensure their structural quality. More advanced analysis is needed when exploring the contents of requirements management and thereby enabling the automatic identification of key details and their interdependences. Because requirements management is, after all, a key way if creating efficiency and having an impact, even small victories are crucial in this area.

In the future, AI may offer better predictions of the actual status of development projects.

Customer and market understanding are a key source of decision-making in product organizations. The better we understand the needs of the customer and market, the better our resources will be for making the right, winning decisions about products and services. With the help of AI, we can interpret customer behavior regarding current products in particular. We will be better at identifying customers’ current paths and thereby perhaps understanding their true, hidden needs. At best, AI can also gather data from elsewhere and combine it with customer data to spot patterns which would not be so apparent to people. At the moment, organizations can only use a fraction of the customer data they have collected, and this gap keeps growing exponentially.

The predictability of product development projects is a very common problem within organizations. Predictability is crucial to businesses, but product development does not want to engage in this because it can be understood as making promises. We believe that, when combined with history data and current status, AI will be able to provide better predictions of the duration and actual status of development projects. An organizations’ ability to innovate does not advance in leaps and bounds, but progresses steadily from one year to the next. If we could use backlogs and requirements to make AI recognize the complexity of projects, it would surely be better to predict the readiness of projects than trying to anticipate the human mind.

AI is subject to major hype and a lot of ordinary software is being referred to as AI. Some people may claim that some of the above-mentioned solutions do not meet AI standards, but they still involve areas where machine learning could help organizations to improve their businesses and the impact they have.

Our desired trend: Needs-based budgeting

Budgeting came up several times while we were considering our list of trends for the next five years. Restrictions due to current budgeting practices are extremely harmful for many product organizations. In most organizations, budgets set limits on portfolio management which are so strict that many portfolio management opportunities go to waste. For example, staff are budgeted for certain fields, features or activities, and re-prioritization is impossible in these respects.

We want budgeting to change during the coming years. So far, no one has come up with a good solution for budgeting in another way. Beyond budgeting is probably the best-known attempt to do things differently, but its models do not provide an alternative approach to budget-based management. In addition to strategy, budgeting is management’s most powerful tool for leading an organization. On this basis, we do not expect major changes for the better in budgeting over the next five years. Nevertheless, we sincerely hope that opportunities to do budgeting differently will emerge during that time. We would be positively surprised if the challenges of needs-based budgeting were solved in the 2020s.

Conclusion:

Product organizations will continue to change in the coming years, due to which the topic of future trends is set to remain as interesting as it is now. The major themes over the last five years have included the spread of agility and service design. Both have been enthusiastically embedded in organizations, some of which have found them useful. As usual with trends, some are overhyped, with things being done for their own sake. Agility will continue to become more common and service design themes will remain topical in one form or another. We believe that they will take a step towards better value creation over the coming years.

Technologies will continuously develop and products and the organizations that develop them will steadily become more automated. Within five years, automation and AI are sure to be handling tasks of which we would never have dreamed them capable. Hopefully, this will provide people with more time to do the tasks at which they are better than machines – namely, solving multi-dimensional challenges.

There have been major changes in global politics and the ideological environment in recent years. Climate change, migration and personified media are changing people. People tend to stay in their own echo chambers and extremism of all kinds is growing. This will affect organizations, which need to react accordingly. Winning organizations will be able to leverage these phenomena, while the losers will be in big trouble.

The next few years are going to be very busy ones for many organizations given that, amidst all this change, they are already behind in their digital development. The key issue is to remember that not everything can be changed at once. Development may be continuous, but it should be done in waves. If you want to enjoy change, remember to celebrate whenever you find yourself riding the crest of a wave.