Product Org v/s Service Org: Is work culture the only difference?

Having been an entrepreneur and having worked for 3 product organizations in the last few years, I am tempted to write this post trying to look a little deeper into the cultural aspects of product organizations v/s the service organizations. Is there really a huge difference? 

Let me add the caveat upfront that I have had more opportunities in career to work with product companies than the service organizations in my recent past. But, I did get a chance to work with many senior engineers, managers, product specialists and senior executives from service company background that helped me understand the mindset and working styles of service organizations. Most of the examples and instances are from an IT organization perspective.

Here are few strikingly different cultural aspects between the two that I have observed in my opinion.

Hierarchical structure v/s flat structure.

There is more importance to the career ladder, designations and the reporting structure in a service organization compared to the value based, value added individual contributor roles that product organizations look for. For an employee, designations or titles such as ‘Engineer’ itself is good enough as long as you get the quality work that he/she was seeking in a product organization. But in service organizations, levels and titles become as important or more than the work itself. Getting things done via a defined protocol or a process is more important in a service organization. Reporting structure and hierarchy takes more precedence specially in an Indian set up among the service organizations. I could see this clearly among few employees I worked with in the past where they were waiting for orders, directions from their managers or leads to do things. Reaching out to any skip levels once in a while is not seen as an escalation in a product organization to get day-to-day work done. Conversely, experienced folks joining a product organizations occasionally find themselves working with younger experienced folks who are seen as senior or SMEs for the product organization. Which means the mindset of joining a product organization while you are transitioning from a service org is that you need to have the ‘fresher’ mindset and learn new ways of doing things and unlearn your old ways. Those with prior experience working in startups or product firms tend to take initiatives to get work done. Of course, some organizations are an exception where their culture includes intrapreneurship, thus fostering a different attitudes. Product organizations thus tend to focus on getting things done and not the means of how it gets done. Which may not be an ideal way of getting things done by the way. However, mature product organizations focus equally on the process as well as the end result.

Freedom v/s Limitations

Size of product organization is mostly limited to maximize return on investment. This gives the much needed freedom to the engineers and architects to innovate, choose the technical stack that is buzzing as well as makes business sense. Customer dictated tech-stack is what service organization engineers have to be contend with. Any suggestion to refactor, redesign only means more fat bills to its customers, which is not that easy to convince them. The best way to relate this is to compare the product development life cycle (PDLC) v/s the software development life cycle (SDLC). Both have tight timelines to compete against but PDLC does give the engineers more empowerment and SDLC is perceived as something where engineers are spending more time on documenting the processes followed. Services orgs are process / metrics driven. Folks moving from a services org to a product org take a while to come to terms that they don’t need to fill timesheets, it’s okay not to swipe in/out every door they navigate in the office, working from home is not a crime and will not be looked down upon. While I was chatting with one of the mid-level experienced engineer, she gave me an interesting perspective of product v/s service org advantages and disadvantages. She says – “Service orgs provide you variety of technical/domain related challenges by having your survive different projects/customers and have you prove yourself at the end of each of these projects. Which means you learn quick on-the-job and produce results even quicker. While in a product organization, you have time to reach maturity on the product and technology and get better it as time passes. But it also at times make your complaisant as you realize you are an indispensable resource in the team”. These is  an opportunity for pure tech enthusiasts, to get deeper on the technology aspect and become an expert in a product organization as there is no timeline pressure to learn a new technology and deliver quickly before moving on to another project which is totally on another tech stack. However, service organizations do sometime have long running projects but may be limited to tech stacks that are dictated by their customers.

Individual contributor v/s Manager

Product organizations mostly believe in everyone contributing towards the product development literally. The approach that the product organizations have is to hire the right set of engineers who are self managed, self driven and need least of hand-holding to get them started on their work. Managers are mostly hands-on and lead by example. However, in a service organization, the manager happens to (or supposed to) plays a key role in ramping-up the new joiners in the team. Most of the key communication to the key stakeholders flows through the manager or the lead. This also gives some room to play with when it comes to hiring. The service orgs may tend to hire mostly doers who may not be polished in their soft skills as they are mostly shielded by their leads/managers while interacting with the other stakeholders/customers. With the advent of Agile team and a new-age work culture, everyone interacts with every other person in the team that is spread globally thus making it impossible to have this protective layer for the doers with lesser soft skills. The layering of hierarchy is seen as an impediment to getting things done faster in a product company. It only slows the process some feel. How much does it help an engineer in the services org to hone his/her skills on the management part is left to the employees capabilities. This is where I see the trend among engineers to get a management degree under their belt to have a easier growth path into management positions.

Ownership and a sense of belonging.

Product organizations have a common minimum purpose to create a unique product or a solution that will minimize or remove certain problem statements their customers have or the domains have. This objective of the product organization gives the employees a rally cry to be seen as part of that one goal everyone is striving for. However with multiple projects that services companies take on, the only common areas for the employees to be on the same page are the processes, policies and the protocols that the company has defined. Since the numbers matter for service organization in terms of growth and revenue, the sense of belongingness slowly evaporates which results in showing more loyalty to the customers you are working for or the projects you are assigned to not matching your aspiration. Conversely, in a product organization, employees are well informed about what kind of technology, work that they are getting into and what kind of domain and area they will have to work for. Mostly this does not change for the foreseeable future. Should you show more initiative, risk taking abilities and enterprising attitude, product organizations see that as you belong to this organization and you are taking ownership. This becomes your stepping stone to success. Those who wait for others to show the way are left behind and cry sour grapes. That begs the question – does a one-time entrepreneur have an edge over the others in a product company to succeed faster than others? I always felt yes there is a chance.

Change makers and trendsetters 

What is it that makes a person in the service org to shine, succeed and make an impact? The qualities in him/her to be a change maker, question the status quo and show that you are ready to take risk. You may not succeed at once, but being persistent and being the change you want to see will pay off in the long run. Product organization produces more trendsetters who are constantly on the look out for enhanced features in the product, newer plug-ins, apps that go viral and set a trend. Then there is this desire to contribute to the open source pool among the product org engineers which is not that easy in a service organization as they are bound by multiple non-disclosure agreements with their clients.

Long term view

Product organizations need to have the perseverance to sustain environmental changes, competition, disruptive technologies etc. They also are focused on one product or goal, thus limiting revenue generation capabilities to very few variations with product development sphere such as professional services, implementation services, managed services and the like. Also, the product organizations are more dependent on the funds to sustain operations during initial inception stage. If the vision and the determination of the founding members of the product company is not that of ‘we are in this for a long haul’ then we have obvious problems in the days to come. Services companies however have multiple streams of revenue generation capabilities. This is by design. They diversify their business units into areas that generate constant revenues. There is some kind of safety net that sustains the operation in the long run. Allowing them to decide on what needs to be turned off and what needs to be enhanced to get a higher margin of profit. However, the product companies are limited with the product pricing model to increase their revenue. If you are too focused on how you would like to shape your career, here is a quick advice. If you are a self-managed person to figure out what you want out of this career, product organization may suite you better, where as you are not as independent on this aspect, then you will get a feeling that your manager in a service org is managing your career growth. That is when I hear the classic answer to my question during the interview process – “Why are you looking for a change?”. Answer – “There is no career growth I see in my current organization” 🙂