The Product Model in Outsourcing

Marty Cagan and Josh Kerievsky argue that outsourcing agencies can apply the product model to custom solution work, even though clients often arrive with a fixed solution in mind and fixed-price contracts. The core obstacles are trust, the client's assumption that they know the answer, the missing empowered product manager and product designer roles, and project-based funding. The authors propose shorter discovery engagements, time-and-materials relationships framed around outcomes, high-fidelity prototypes updated constantly, and reframing projects into rapid discovery and delivery iterations. They also stress continually evangelizing outcomes so clients keep investing. The piece matters for agencies and for any team that must deliver custom work for a client.

01Key takeaways

• Frame client work as a collaboration to discover and deliver an outcome, not a fixed specification to build.
• Start with a one-week discovery sprint with the client embedded to lower risk and build the working relationship.
• Use high-fidelity prototypes, updated often, as the main communication tool instead of decks or long documents.
• Ensure a true empowered product manager and a professional product designer are included, even when the client claims to have them.
• Break project-based funding into frequent discovery and delivery iterations tied to outcomes.
• Keep evangelizing outcomes so the client continues investing, since strong products usually need years of ongoing work.

02Key sections

Why outsourcing agencies exist

Many companies need technology they cannot build in-house, so they hire outside firms, and some agencies consider moving toward commercial products. The article focuses on helping agencies serve clients better, not on becoming product companies.

Core challenges

Clients often specify a solution in a statement of work and expect delivery at a fixed price, which breaks down when the solution does not achieve the intended outcome. The product manager and product designer roles are frequently missing, and project-based funding and team turnover erode knowledge over time.

Reframing the engagement

Shifting from fixed specifications to a collaboration built around discovering and delivering an outcome requires trust and a time-and-materials style arrangement where clients judge progress each period.

Techniques for success

Discovery sprints and short 3-6 month engagements build trust, while high-fidelity prototypes serve as the main communication tool. Projects are reframed as rapid, repeated discovery and delivery iterations.

Sustaining the relationship

Agencies should keep evangelizing achieved outcomes so clients continue investing, since successful products typically take years rather than a single project.

03From the post

“A partnership dedicated to teaching best practices to product teams and product leaders”

04Frameworks mentioned

Summary and takeaways written by PM Atlas; quotes are short excerpts. © the original author.