Organizing Product Teams for Customer Value, According to Melissa Perri

In a recent LinkedIn post, Melissa Perri discusses a common organizational pitfall within companies: structuring product teams around technical components rather than customer value. Perri, a recognized expert in product management, highlights how this misstep can hinder a company’s ability to effectively solve customer problems and deliver meaningful business outcomes.

The Pitfall of Component-Based Teams

Perri observes that this issue often surfaces when companies are first establishing their product management functions. She notes a tendency to assign product managers to specific technical areas, such as the API, the billing system, or the frontend, rather than to broader customer needs or business objectives.

“I see this mistake happen especially when companies first introduce product managers. They’ll assign a PO to the API, another to the billing system, and another to the frontend. It sounds logical, but it’s not.”

According to Perri, while this approach might seem rational on the surface, it leads to teams optimizing for technical pieces rather than addressing the holistic needs of the customer. This fragmentation can create silos and prevent the delivery of complete solutions.

Focusing on Value Streams and Customer Outcomes

As an alternative, Melissa Perri advocates for organizing product teams around value streams and customer outcomes. This model ensures that teams have a clear mandate and the necessary resources to deliver end-to-end value.

Healthcare Software Example

To illustrate her point, Perri uses the example of a healthcare software company. Instead of having separate teams dedicated to the database, API, or frontend, she suggests organizing around core functions like “clinical workflow” or “billing operations.” This structure empowers each product manager with control over the entire technical stack required to address a specific customer need.

“Instead, organize around value streams and customer outcomes. Take healthcare software as an example. Don’t have separate teams for ‘database,’ ‘API,’ and ‘frontend.’ Instead, organize around ‘clinical workflow’ and ‘billing operations.'”

Perri argues that this shift in organization directly impacts a team’s focus and effectiveness. When teams are aligned with value streams, they develop a sense of ownership over significant business results.

The Ultimate Goal: Delivering Value

Melissa Perri emphasizes that the fundamental objective of product development should not be the management of technical components, but the successful delivery of value to customers and the business.

“When you organize by architecture, you’re optimizing technical pieces instead of solving customer problems. When you organize by value streams, your teams have clear ownership over outcomes that actually matter to your business.”

She concludes by posing a critical question to her audience, prompting reflection on their own team structures:

“How are your product teams organized? Are they focused on technical pieces or customer outcomes?”

Perri’s insights underscore the importance of strategic team organization in achieving product success and driving business growth by keeping the customer at the center of all efforts.