Digital Product Strategy
Digital Product Strategy is the discipline of treating internal and customer-facing digital capabilities as a portfolio of long-lived products — each with a named owner, an outcome thesis, a roadmap, a budget, and measurable user impact — rather than as a stream of project deliveries. The shift is from 'we are running 47 IT projects' to 'we run 9 digital products, each with a P&L.' KnowMBA POV: this is the most underrated transformation lever. Most enterprises adopt agile ceremonies but keep funding work as projects, which guarantees that products decay the moment the project ends. The companies that broke through (Capital One, ING, Spotify, Lloyds) all converted the funding model first and the ceremonies second.
The Trap
The trap is calling teams 'product teams' without changing the funding model, decision rights, or success metrics. The team has a 'product manager' but the budget is still allocated annually by project; capacity is loaned to whichever exec shouts loudest; success is measured on velocity and on-time delivery, not user outcomes. This is theater — the team has a new title but the same operating model. Within 18 months attrition spikes (the PMs leave for real product roles) and the org concludes 'product operating model didn't work for us,' when in fact they never adopted it.
What to Do
Move to a real digital product strategy in five steps: (1) Define the product portfolio — list every persistent digital capability (e.g., onboarding, payments, search, customer service, internal HR portal) and consolidate; aim for 8-15 products, not 50. (2) Name a single accountable owner per product with multi-year tenure. (3) Convert funding from project-based annual allocation to product-based persistent funding (quarterly trim, not annual rebuild). (4) Replace project metrics (on-time, on-budget, scope) with product metrics (active users, completion rates, NPS, business outcome). (5) Stand up product reviews where leaders inspect outcomes, not status reports. Most orgs underestimate step 3 — funding model change is the load-bearing wall.
Formula
In Practice
ING Bank's 2015-2018 transformation reorganized 3,500 headquarters staff into 350 squads grouped into 13 'tribes' aligned to digital products (e.g., mortgages, payments, daily banking). Crucially, ING also changed the funding model — moving from annual project budgets to persistent product funding with quarterly outcome reviews. Reported results included a 30% reduction in time-to-market and significant gains in employee engagement. ING's CIO Peter Jacobs publicly emphasized that the funding model change was the hardest and most important shift, more so than the squad structure.
Pro Tips
- 01
Count your 'products' — if you have more than 20, you have projects renamed as products. Real product portfolios in mid-to-large enterprises typically converge to 10-15 products covering 80% of digital spend.
- 02
Replace the annual planning cycle with a quarterly outcome review. Annual planning forces year-long commitments that lock in the wrong work. Quarterly reviews preserve persistence (the team and product remain) while allowing direction to change.
- 03
Tie product manager tenure to product longevity. If your PMs rotate every 12 months, you have project managers wearing PM titles. Real PMs need 2-4 years to build outcome ownership.
Myth vs Reality
Myth
“Adopting agile ceremonies = becoming a product organization”
Reality
Standups, sprints, and retros are mechanics. Without persistent funding, named owners, and outcome accountability, agile ceremonies just produce faster project delivery — not product thinking. Most large agile transformations stall here.
Myth
“Every team should be a product team”
Reality
Some work genuinely is project work — a one-time data center exit, a regulatory implementation with a hard end date. Forcing project work into product structures creates teams without persistent reason to exist. The discipline is identifying which capabilities are persistent (products) and which are bounded (projects).
Try it
Run the numbers.
Pressure-test the concept against your own knowledge — answer the challenge or try the live scenario.
Knowledge Check
An enterprise CIO renames all 60 of her IT delivery teams 'product teams,' assigns each a 'product manager' (often the former project manager), and continues funding them through the annual project portfolio process. 18 months later, what is the most likely outcome?
Industry benchmarks
Is your number good?
Calibrate against real-world tiers. Use these ranges as targets — not absolutes.
Number of Persistent Digital Products (Mid-Large Enterprise)
Persistent product portfolios in enterprises with $20M-$500M digital spendWell-Consolidated
8-15 products
Reasonable
16-25 products
Project Sprawl in Disguise
26-50 products
Renamed Projects
> 50 products
Source: McKinsey Product Operating Model Benchmarks 2022-2023
Real-world cases
Companies that lived this.
Verified narratives with the numbers that prove (or break) the concept.
ING Bank
2015-2018
ING reorganized HQ staff into 350 squads inside 13 product-aligned tribes. The structural change was widely covered, but ING's CIO repeatedly emphasized that the funding-model change — moving from annual project budgets to persistent quarterly-reviewed product funding — was the hardest and most consequential shift. Reported outcomes included a 30% time-to-market improvement and double-digit gains in employee engagement.
HQ Staff Restructured
3,500
Squads
350
Product Tribes
13
Time-to-Market Improvement
~30%
The org chart change is visible; the funding model change is invisible and load-bearing. ING is unusual in publicly emphasizing the latter.
Decision scenario
The Funding-Model Reform Decision
You are CTO of a $4B insurer. You want to move to a product operating model. The CFO will support either: (a) reorganize teams now and reform funding next year, or (b) reform funding first and reorganize teams next year. The CEO is impatient for visible change.
Annual Digital Spend
$120M
Active Project Charters
180
Self-Identified 'Product Teams'
0
CEO Patience Window
~12 months for visible change
Decision 1
Choose the sequencing.
Reorganize into product teams immediately for visible change; tackle funding reform in year 2Reveal
Reform funding first — convert 5 pilot products to persistent funding with quarterly reviews; then reorganize broadly in year 2✓ OptimalReveal
Related concepts
Keep connecting.
The concepts that orbit this one — each one sharpens the others.
Beyond the concept
Turn Digital Product Strategy into a live operating decision.
Use this concept as the framing layer, then move into a diagnostic if it maps directly to a current bottleneck.
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Turn Digital Product Strategy into a live operating decision.
Use Digital Product Strategy as the framing layer, then move into diagnostics or advisory if this maps directly to a current business bottleneck.