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When do we need this distinction versus having a single PO for smaller product teams?

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Any time we have more than one PO assigned to a Scrum Product Team.

In some cases, the RPO may also act as team PO for one of the Scrum Teams with assistance from additional team PO’s on other Scrum Teams.

Note that we recognize there is overhead incurred by introducing a layer with a Release PO as well as the team POs but have found it is worth it to avoid spreading a PO too thin across more than two Scrum Teams.