There are several reasons why it is critical to organize around the products and services, or more simply offerings, that we provide to our customers. What we mean by this is that we don’t organize around job function, such as having a sales group, a data analytics group, a vendor management group, a project management group, and so on. The problem with doing so is the overhead and time required to manage the work across these disparate teams and aligning the differing priorities of these teams. Instead, we build dedicated teams focused on delivering an offering for one or more customers. These teams will be cross-functional in that they include people with sales skills, data skills, management skills, and so on.
Organizing around products/services enables us to identify and optimize the flows that count, which are value streams. We will find that a collection of related offerings will define a value stream that we provide to our customers, and this value stream will be implemented by the collection of teams for those offerings.
Organizing around products/services enables us to be laser-focused on delighting customers. Stephen Denning calls this the Law of the Customer, that everyone needs to be passionate about and focused on adding value to their customers. Ideally, these are external customers, the people or organizations that our organization exists to serve. But sometimes these are also internal customers as well, other groups or people whom we are collaborating with so as to enable them to serve their customers more effectively.
Within a value stream the industry has found that dedicated cross-functional product teams that stay together over time are the most effective in practice. Having said that, there will always be project-based work as well. This is why Disciplined Agile (DA) supports life cycles that are suited for project teams as well as dedicated long-standing teams. Always remember, choice is good.