In today’s business environment, clear and consistent communication enables your team to have a shared understanding of the status and direction of your product. To this end, an operating plan collects your strategic objectives in one place, allowing everyone to grasp what they need to do, and how the product will remain successful.
In this article you will learn what a product operating plan is, how it can help you achieve your objectives, and best practices for effectively implementing one within your project team.
Table of contents
- What is an operating plan and why is it important for product managers?
- What goes into an operating plan?
- How to develop an effective operating plan
- Implementing and monitoring an operating plan
- Common challenges and how to overcome them
- Operating plan example
- Operating plan template
What is an operating plan and why is it important for product managers?
A product operating plan is a document that outlines the strategic actions your team will take to achieve a specific goal. Most operating plans only cover a period of one to two years and serve a crucial role in the product development process. You can expect your operating plan to include budgets, resource allocation, timelines, and key performance indicators (KPIs).
The operating plan moves away from the big picture vantage point of vision and strategy, towards a more granular and tactical plan for the execution of product strategy.
The operating plan helps product managers assess the impact of changing business priorities and customer needs on the product roadmap. Product managers can use the operating plan as a tool to factor in and communicate changes across the organization, allowing the product development process to remain agile.
What goes into an operating plan?
An operating plan seeks to outline your product strategy to guide decisions and deliver on your stated goals. The operating plan comprises of the following:
- Product goals and objectives — Define the product goals and objectives based on your product vision. Objectives should have clear deadlines and measurable outcomes that align with the business strategy
- Milestone based plan — Create a milestone oriented plan to map your goals and objectives that can be tracked and measured against target
- Structure of team, budget, resource, and timeline — Design your team, resources for the project, and budget allocation in order to work on the scope of the project and adhere to the milestones
- Product metrics to measure progress — Identify and create the product metrics which can be used to measure the success of the product once it goes live to customers
- Status check and interactive corrections — Iterate to customer requirements and watch for opportunities to make changes to the product
How to develop an effective operating plan
To better understand what goes into an effective operating plan we will breakdown each step and discuss best practices for approaching the following:
- Identifying the product goals and objectives
- Aligning with the strategy and vision of the product
- Selecting and tracking the product metrics
Identifying the product goals and objectives
The product goals derive from the product vision and strategy. To define these you should:
- Break your vision into executable tasks (include the ‘what’ and not the ‘how’)
- Ensure consistency with the product vision
- Make you have a way to measure success
Aligning with the strategy and vision of the product
In order to align with the product strategy and vision, one should:
- Infuse the product strategy and vision into all the steps of the product life cycle
- Align the product vision with customer and business needs, as well as the values and principles of the company
- Check alignment and correct any deviations with the vision
Selecting and tracking the product metrics
Identifying and tracking the right metrics is key to the success of any product and therefore the product team. Below are the steps to identify and track the right product metrics:
- Identify the goal of your business and business strategy
- Ask the right questions to help determine which goals would help track the success of your product against the business goals
- Assign metrics as acquisition, engagement, retention, revenue, or referral
- Create a platform to visualize and track the metrics
Implementing and monitoring an operating plan
A product operating plan provides you with an instrument to ensure your product will deliver on the stated vision, strategy, and goals. However, the success of your operating plan depends upon your ability to manage and monitor it throughout the course of the product lifecycle. Proper management of the operating plan includes:
Tracking success
You can measure the success of a product operating plan by developing product metrics which allow you to quantify and track the progress of the plan. Also, having a visual representation of the metrics allows you to make better interpretations and display your progress visually.
Adjusting and/or pivoting course
Product metrics let you determine whether a product operates to plan or not. When your team performs as planned, there’s no need for further adjustment.
However, when the team misses, or finds themselves falling short of the agreed upon target, you need to take corrective action and pivot course.
Here, corrective action could come from aligning or augmenting resources, changing the budget allocation, or moving around the tasks based on the dependencies in the plan.
Keeping stakeholders aligned
Because the operating plan has many moving parts and stakeholders involved, you need to ensure that you have the buy-in from all the stakeholders involved.
The best practices for ensuring stakeholder buy-in include:
- Communication — Constant and consistent communication with all stakeholders will allow all everyone to be on board and aligned with the operating plan
- Transparency — Being transparent with all stakeholders in terms of progress updates and any challenges/roadblocks that crop up during the course of executing the operating plan will ensure all stakeholders are are able to provide their full support
- Status updates — Providing status updates to leadership and obtaining regular status communication from other stakeholder teams will ensure everyone remains aware of the state of your product
Common challenges and how to overcome them
As with anything, challenges will arise while working with a product operating plan. Rather than allowing these to grow into a bigger problem, you should work to mitigate following issues before they impact the health of your product:
Lack of authority
Similar to the product manager role, the product operations or operating plan team has to work without direct authority, or people management responsibilities. You should be aware of this while trying to push the team towards your deliverables and use the operating plan as an influencing tool.
Communication challenges
Communication is key to maintaining the flow of delivery across the product lifecycle. Insufficient communication or communication gaps can result in teams and stakeholders missing out on necessary changes or tasks. These knowledge gaps could result in misalignment, which impacts the product delivery timelines, as well as the scope.
Visibility restraints
Since the product operations team is a level above the product management, the product operations team may have limited visibility of the roadmap, customer needs, or the technical architecture/design information.
Operating plan example
Below is an example of an operating plan that provides an illustration of what the process might look like for you. The operating plan focuses on two main steps:
Product vision and strategy
To provide a mobile based shopping experience for a retail grocery store shopper (in addition to in store shopping which is currently available)
Product goal(s):
- Complete an end-to-end customer journey on a mobile app (viewing inventory by categories, adding to cart or wish list, checkout, and completing payment)
- Seamless experience in terms of navigation on the site, as well as understanding the pricing and assortment to the mobile platform users
- Additional benefits of the mobile shopping experience in terms of reordering items, mobile based return/refund for eligible items
Product operating plan components
- Discuss the scope of work needed to deliver complete functionality in terms of the mobile shopping experience to the mobile platform users
- Create the plan for delivering the identified scope (e.g., to have the first version of the mobile grocery shopping platform released to customer within the next six months)
- Identify the data engineering needs to provide a seamless mobile platform experience for grocery shopping (e.g., identify what categories of products will be available for user selection in the first version of mobile application and how many concurrent users can shop on the platform)
- Determine the structure of the team and resourcing needs to deliver to scope and planned timelines (e.g., scrum team would develop the mobile platform in terms of frontend and backend and user experience engineers)
- Identify the success metrics for the product (e.g., how many users were activated on the mobile platform, how many users could complete one successful workflow of the mobile grocery shopping experience, or the time taken to complete a checkout in store checkout)
Operating plan template
To help you get started on your own operating plan, use this template. The template includes all the key parameters that need to be tracked and mobilized in order to make the product operating plan successful.
Conclusion
The product operating plan is a key component of the product development and delivery lifecycle. Having a product operating plan allows you to outline the tactical steps and ensure successful product delivery and tracking of your product.
The product operating plan also fosters alignment with the vision, stakeholder buy-in, and sets the product and the product organization up for success.
Featured image source: IconScout
The post How to create an operating plan: Examples with template appeared first on LogRocket Blog.
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