The case for shifting to a product operating model in digital health

Why leading organizations are replacing fragmented functional structures with cross-functional product and platform operating models

For many organizations, digital work is carried out across multiple departments (marketing, technology, strategy) each with its own leadership chain, priorities, and definitions of success. The result is a structure that may look comprehensive on paper but that functions, in practice, as a series of disconnected efforts. Strategic ownership becomes fractured, coordination costs accumulate, and decisions are delayed. Worse, accountability is diffused, risking that “if everyone is responsible, no one is responsible.”

Addressing these structural challenges requires more than process improvements or communication protocols. It requires rethinking the operating model itself. An increasing body of research from McKinsey & Company, Bain & Company, and Gartner suggests that the product and platform operating model, long associated with software companies, delivers measurable performance advantages for organizations across industries that are willing to adopt it.

The problem with functional silos

Traditional functional structures organize people by discipline: designers report to design leaders, engineers to engineering leaders, strategists to strategy leaders. Each group may perform its work competently, but without a shared product mission, alignment requires constant negotiation among leaders who each have their own priorities.

The downstream effects are predictable. When ownership is unclear, decisions stall. When teams are measured on outputs rather than outcomes, coordination becomes a cost center rather than a competitive advantage. And when no single team is accountable for an end-to-end experience, patients suffer most.

How the research favors the product operating model

The product and platform operating model addresses these structural weaknesses by aligning cross-functional team members around a product mission and audience, rather than around job function. The evidence in favor of this approach is compelling and consistent across multiple sources.

McKinsey’s Operating Model Index research found that a mature product and platform operating model is strongly correlated with business performance outcomes, including 38 percent higher customer engagement and 37 percent higher brand awareness. The same research notes that organizations with high product operating model maturity have 60 percent higher returns to shareholders and 16 percent higher operating margins than bottom-half performers.

Bain & Company’s analysis of companies that have implemented the product model points to similarly striking operational gains. Companies using the product operating model have achieved up to a 60 percent reduction in product development time and a 36 percent reduction in development costs, while also delivering better customer experiences and generating greater business value from technology investments.

Gartner’s research reinforces the organizational dimension of these gains: the top 20 percent most effective organizations are 3.2 times more likely to use product teams measured on business outcomes compared to those that do not.

The shift is already underway

The product operating model is no longer an experiment confined to technology companies. McKinsey has analyzed more than 50 organizations across industries undergoing product and platform operating model transformations, and the pattern of results is consistent: organizations that execute the transition well outperform peers on nearly every meaningful business metric. The question is no longer whether the product model works; it’ it’s whether healthcare organizations can transform to implement it.