Across the insurance market, there is no shortage of organisations investing in Product-led operating model transformation. Over recent years, insurers have developed increasingly sophisticated target operating models as part of wider platform modernisation, digital transformation and organisational change initiatives.

On paper, these models often make complete sense. The vision is clear, the organisational structure is logical and leadership is aligned around the intended outcomes. The challenge tends to come when organisations move beyond the design and start trying to make the model work across complex transformation programmes.

In our experience supporting transformation across the insurance market at RedRock, this is where things can start to become more difficult. Multiple programmes are moving at different speeds, technology and business teams have competing priorities and delivery decisions need to be made quickly. Over time, there is a risk that the way the organisation is actually operating starts to move away from the model it originally designed.

Whether an insurer is implementing Guidewire, modernising its policy administration landscape, transforming claims operations or delivering wider digital change, the challenge is often similar: how do you make sure the operating model continues to influence decision making once delivery becomes more complex?

Why Product-led Operating Models Lose Alignment

The issue is rarely one major decision that suddenly takes a programme away from its intended operating model. More often, it happens through a series of perfectly understandable delivery decisions. Teams make local decisions to keep programmes moving, platforms evolve at different speeds and immediate delivery priorities start to take precedence. Governance can gradually become more reactive and, over time, the target operating model can drift away from how the organisation is actually operating.

Ownership is often part of the challenge, as responsibilities across Product, Technology and Operations can look clear at an organisational level but become less clear when difficult delivery decisions need to be made. If decision rights aren’t properly understood, accountability becomes blurred, priorities compete and decisions take longer.

Design governance can also become harder to maintain as programmes mature. It is usually well established at the beginning of a transformation, but once multiple workstreams are progressing in parallel, individual teams naturally focus on their own delivery objectives. Without the right governance around them, this can lead to inconsistent decisions and a gradual loss of alignment with the wider transformation.

The Tension Between Project and Product

Another challenge we see is organisations introducing Product-led structures while continuing to fund and govern delivery largely through traditional project and programme models. There is nothing inherently wrong with project governance, particularly across major transformation. The difficulty comes when teams are expected to behave like long-term Product teams while the structures around them continue to prioritise project milestones, temporary funding and individual programme objectives.

This can create some obvious tensions, as product owners may be accountable for outcomes without having the authority to make the decisions needed to deliver them. Programme priorities can override Product priorities and technology teams can find themselves optimising around individual delivery commitments rather than the wider Product or customer outcome.

Changing job titles and organisational structures alone won’t create a Product-led organisation. The governance, decision rights, funding and measures surrounding those teams also need to support the behaviours the organisation is trying to introduce.

What We See Working

The organisations we’ve seen make this work well tend to get some fairly fundamental things right. Product ownership and decision-making responsibilities are clear, particularly across Product, Technology and Operations. That means teams understand not only who is accountable, but who actually has the authority to make decisions when priorities compete.

There is also alignment across Product, platform, architecture and operational change. Rather than allowing those areas to operate through completely separate governance structures, there is enough oversight to make sure individual decisions continue to support the wider transformation.

Design assurance also continues throughout delivery rather than stopping once the Target Operating Model has been agreed. This is important because no transformation follows exactly the path originally planned. New requirements emerge, priorities change and delivery constraints inevitably appear. The operating model needs to provide a framework for making those decisions rather than becoming a document that is gradually left behind.

Transition states are equally important. Organisations rarely move directly from their current operating model to the target state, particularly across large insurance transformations. Having clear transition points, governance checkpoints and measurable outcomes gives leadership a much better view of whether the organisation is genuinely moving towards the intended model.

How Do You Know If the Model Is Starting to Drift?

There are some fairly practical warning signs we’ve noticed:

• Product owners may be accountable for outcomes but still have limited authority over the decisions that affect them.
• Programme governance may increasingly determine priorities that should sit within Product governance.
• Platforms or value streams may be delivering successfully in isolation but becoming less aligned with each other.
• Architecture and design assurance may start happening after delivery decisions have already been made rather than helping to shape them.

Additionally, leadership may have very good visibility of milestones, budgets and programme status, but much less visibility of whether the transformation is actually changing operational performance, customer outcomes or organisational capability.

If several of those things are happening, the issue may not be that the operating model itself is wrong, it may be that the mechanisms for implementing and governing it aren’t strong enough.

Closing the Gap Between Strategy and Execution

One of the biggest lessons we’ve seen is that successful Product-led operating models depend just as much on execution discipline as they do on strategic design. An operating model shouldn’t simply describe how an organisation intends to work in the future. It needs to continue guiding delivery decisions, priorities and behaviours throughout the transformation.

At RedRock Consulting, a lot of our work sits in this space between operating model design and execution. That doesn’t necessarily mean redesigning the operating model. Often the requirement is to provide the governance, independent challenge and delivery assurance needed to make sure a well-designed model isn’t gradually diluted as transformation progresses. This can involve operating model assurance, Product and platform alignment, decision-making and accountability frameworks, transition-state planning, roadmap governance and benefits realisation.

Ultimately, the test of a Product-led operating model isn’t how good it looks at the beginning of a transformation, it’s whether, as delivery becomes more complex, it is still influencing the decisions being made across the organisation. The insurers that get the most value from Product-led transformation aren’t necessarily those that design the most sophisticated model, they are the ones that continue to govern, challenge and evolve it as delivery progresses.