Melissa Perri: Funding Models, Not Roadmaps, Define Product Success

In a recent LinkedIn post, product leadership expert Melissa Perri argues that the most critical strategic decision for executives isn’t found on the product roadmap, but rather within the organization’s funding model. Perri, founder of the CPO Accelerator, highlights how traditional budgeting practices often undermine product development efforts by prioritizing solutions over problems and features over outcomes.

Perri points out the disconnect between the energy spent on roadmap negotiations and the relative neglect of the systems that allocate resources. She states:

The most consequential product decision you make as an executive is not on the roadmap. It’s in the funding model.

According to Perri, annual, project-based budgets inadvertently pressure teams to commit to solutions prematurely. This approach, she explains, fundamentally misunderstands the iterative nature of product development. Instead of funding a problem that needs solving, these budgets often fund a pre-determined set of features. This creates a structural impediment where a team discovering their chosen approach is ineffective is discouraged from pivoting, as the budget cycle is not designed to accommodate such changes.

The Flaw in Project-Based Funding

Melissa Perri elaborates on how these budgeting cycles create misaligned incentives and hinder true innovation. She notes that the very structure of annual, project-based funding encourages teams to deliver what was promised, even if customer needs or market conditions have shifted.

Think about what an annual, project-based budget actually asks of your teams. It asks them to commit to a solution before they have the information to know whether it’s the right one. It funds a set of features rather than a problem worth solving.

This, Perri argues, leads to a predictable outcome: teams ship what they committed to, not necessarily what customers require. The pressure to adhere to the original plan, dictated by the budget, overrides the product team’s ability to respond to new information and customer feedback effectively.

Shifting to Outcome-Oriented Funding

To counter these systemic issues, Perri proposes several structural changes. She advocates for funding stable, mission-oriented teams rather than individual projects. This approach fosters deeper domain expertise and allows teams the time needed to truly understand and solve customer problems.

Perri also suggests a stage-gated funding path for innovation initiatives. This would protect longer-term, potentially transformative ideas from being derailed by short-term revenue targets, a common pitfall in traditional quarterly or annual budgeting.

Fund outcomes and standing teams rather than projects. Give innovation bets a stage-gated funding path so a two-year idea doesn’t get killed by a one-quarter revenue target.

Furthermore, she emphasizes the importance of staffing teams based on the actual requirements of their mission, moving away from standardized templates that may not align with strategic goals.

The Executive’s Role in Structural Change

Perri underscores that implementing these changes requires executive-level buy-in, particularly from the CEO and CFO. These are not decisions to be made solely by engineering or product leads. Building strong relationships with these key stakeholders is crucial for product leaders aiming to reshape the operating environment for their teams.

She observes that many new product executives are surprised by the extent to which this relationship-building is a core part of their role.

That is what surprises most new product executives. Half the job is building relationships with the CEO, CFO, and CTO so you can change the structural conditions your teams are operating inside.

Perri notes that addressing these structural funding challenges is a significant focus within her CPO Accelerator program, indicating its prevalence and importance in the CPO community. The upcoming cohort applications are open, with a deadline of September 15.