In our previous posts, we’ve explored the evolution of product engineering, its core principles, and the mindset that defines successful product engineers. Now, let’s dive into the specific skills that product engineers need to thrive in their roles. This post, the first of two parts, will focus on four essential non-technical skills: goal setting and value targeting, decision making and risk assessment, understanding business models, and design thinking and empathy.

Goal Setting and Value Targeting

One of the most crucial skills for product engineers is the ability to set clear, meaningful goals and target value creation. This skill goes beyond simply meeting technical specifications or delivering features on time.

One of the hardest things about goal setting, is once you set a goal you set your conditions for failure, and no one like to fail, but this is part of the mindset we spoke about before, you need to be ok with failure, its a learning experience, you need to be ok with setting moonshot goals occasionally too.

Effective goal setting involves:

1. Alignment with business objectives: Goals should directly contribute to the company’s overall strategy and key performance indicators (KPIs).
2. User-centric focus: Goals should reflect improvements in user experience or solve specific user problems.
3. Measurability: Goals need to be quantifiable, allowing for clear evaluation of success.
4. Timebound nature: Setting realistic timelines helps maintain focus and urgency, and also set increments for fast feedback cycles

For example, instead of setting a goal like “Implement a new recommendation system,” an engineering team might frame it as “Increase user engagement by 20% within three months by implementing a personalized recommendation system.”

Value targeting involves identifying and prioritizing the work that will deliver the most significant impact. This requires a deep understanding of both user needs and business priorities. Engineering Teams must constantly ask themselves: “Is this the most valuable thing I could be working on right now?”

Decision Making and Risk Assessment

Product engineers often find themselves at the intersection of technical possibilities, user needs, and business constraints. In this complex environment, the ability to make effective decisions becomes a critical skill. It’s not just about choosing the best technical solution, but about finding the optimal balance between various competing factors.

One of the key aspects of decision making for engineers is adopting a data-driven approach. This involves utilizing both quantitative and qualitative data to inform decisions. Quantitative data might include metrics from A/B tests, performance benchmarks, or usage statistics. This hard data provides concrete evidence of how different options perform. However, it’s equally important to consider qualitative data, such as user feedback or expert opinions. These insights can provide context and nuance that numbers alone might miss. By combining both types of data, Engineers can make more holistic, well-informed decisions.

Another crucial aspect of decision making is the consideration of trade-offs. In the real world, there’s rarely a perfect solution that optimizes for everything. Instead, Engineers must navigate complex trade-offs. For example, they might need to balance the speed of development against the quality of the end product, or weigh short-term gains against long-term sustainability. The skill lies not just in recognizing these trade-offs, but in being able to evaluate them effectively. This often involves quantifying the potential impacts of different choices and making judgment calls based on the specific context of the project and the company’s overall strategy.

Reid Hoffman reflecting on his time at startups once said “Sometimes it’s not about deciding which fire you put out, its about deciding which ones you can let burn”, making trade offs can involve hard choices.

Stakeholder management is another key component of effective decision making. Engineers need to consider how their decisions will impact various stakeholders, from end-users to business teams to other engineering teams. This involves not just making the right decision, but also being able to communicate the rationale effectively. Engineers must be able to explain technical concepts to non-technical stakeholders, articulate the business impact of technical decisions, and build consensus around their chosen approach.

In traditional software development companies, they hire BAs to deal with the business and try to “shield” the engineers or Scrum masters to “keep the wolves at bay”, Product Engineering is about removing these layers, the engineers themselves have enough understanding that they can deal with the stakeholders and this make communication and decision making more effective.

Alongside decision making, risk assessment. In any project or initiative, there are always potential risks that could derail success. The ability to identify these risks, evaluate their potential impact, and develop mitigation strategies is vital.

Engineers need to be able to look at different technical approaches and understand their potential pitfalls. This might involve considering factors like scalability, maintainability, or compatibility with existing systems. It’s about looking beyond the immediate implementation and considering how a technical choice might play out in the long term.

Engineers also need to be able to assess business risks. This involves evaluating how technical decisions might impact business metrics or user satisfaction. For example, a technically elegant solution might be risky if it requires a steep learning curve for users, potentially impacting adoption rates.

Another important aspect of risk assessment is opportunity cost consideration. In the world of product development, choosing one path often means not pursuing others. Engineers need to recognize this and factor it into their decision making. This might involve considering not just the risks of a chosen approach, but also the potential missed opportunities from alternatives not pursued.

Google’s approach to “Moonshot Thinking” in their X development lab provides a great example of how to balance ambitious goals with thoughtful risk assessment. Engineers in this lab are encouraged to tackle huge problems and propose radical solutions – true “moonshots” that could revolutionize entire industries. However, this ambition is tempered with a pragmatic approach to identifying and mitigating risks. Engineers are expected to critically evaluate their ideas, identifying potential failure points and developing strategies to address them. This approach allows for bold innovation while still maintaining a realistic perspective on the challenges involved.

By developing strong skills in decision making and risk assessment, engineers can make choices that balance technical excellence with business needs and user expectations, while also managing potential risks and trade-offs. These skills are what separate great engineers from merely good ones, enabling them to drive real impact and innovation in their organizations.

Understanding Business Models

While product engineers are primarily focused on technical challenges, a solid understanding of business models has become increasingly important in today’s tech landscape. This knowledge isn’t about turning engineers into business experts, but rather about equipping them with the context they need to make decisions that align with the company’s strategy and contribute to its overall success. By understanding the business side of things, engineers can better prioritize their work, make more informed technical decisions on the spot with out escalating to get direction.

One of the key aspects of understanding business models is grasping how the company generates revenue. Revenue streams can vary widely depending on the nature of the business. Some companies rely on subscription models, where users pay a recurring fee for access to a product or service. Others may generate revenue through advertising, leveraging user attention to sell ad space. Transaction fees are another common revenue stream, particularly for e-commerce or financial technology companies. Some businesses may use a combination of these or have more unique revenue models. For engineers, understanding these revenue streams is crucial because it can inform decisions about feature development, user experience design, and system architecture. Especially around immediate systems they work on, they are able to easily related back work they are doing to impact on company bottom line.

Equally important is an understanding of cost structures. Every business has costs associated with delivering its product or service, and these can significantly impact the viability of different technical approaches. Common costs might include server infrastructure, data storage, customer support, etc. Product engineers need to be aware of how their technical decisions might impact these costs. For example, choosing a more complex architecture might increase development and maintenance costs, while optimizing for performance could reduce infrastructure costs, and conversely a negative performance impact or bug could lead to a escalation in support calls. By understanding the cost implications of their decisions, engineers can make choices that balance technical excellence with business sustainability.

Another crucial aspect of business models is understanding customer segments. Most products don’t serve a single, homogeneous user base, but rather cater to different groups of users with varying needs and behaviors. Engineers need to be aware of these different segments and how they interact with the product. This understanding can inform decisions about feature prioritization, user interface design, and even technical architecture. For instance, if a significant customer segment primarily uses the product on mobile devices, that might influence decisions about mobile optimization or the development of mobile-specific features.

Perhaps the most important element of a business model is the value proposition – the unique value that the company offers to its customers. This is what sets the company apart from its competitors and drives customer acquisition and retention. Engineers play a crucial role in delivering and enhancing this value proposition through the technical solutions they develop.

Let’s consider a concrete example to illustrate these concepts. Imagine you’re an engineer working at Spotify. Understanding Spotify’s business model would be crucial to your work. You’d need to know that Spotify operates on a freemium model, with both ad-supported free users and subscription-based premium users. This dual revenue stream (advertising and subscriptions) would inform many of your decisions.

For instance, when developing new features, you’d need to consider how they might impact the conversion rate from free to premium users. A feature that significantly enhances the listening experience might be reserved for premium users to drive subscriptions. On the other hand, a feature that increases engagement might be made available to all users to increase ad revenue from free users and make the platform more attractive to advertisers.

You’d also need to understand Spotify’s cost structure, particularly the significant costs associated with royalty payments to music rights holders. This might influence decisions about caching and data delivery to optimize streaming and reduce costs.

Understanding Spotify’s customer segments would be crucial too. You might need to consider the different needs of casual listeners, music enthusiasts, and artists using the platform. Each of these segments might require different features or optimizations.

Finally, you’d need to keep in mind Spotify’s value proposition of providing easy access to a vast library of music, personalized to each user’s tastes. Your technical decisions would need to support this, perhaps by focusing on recommendation algorithms, seamless playback, or features that enhance music discovery.

By understanding these aspects of Spotify’s business model, you as a engineer would be better equipped to make decisions that not only solve technical challenges but also drive the company’s success in a highly competitive market.

While engineers don’t need to become business experts, a solid grasp of business models is an increasingly valuable skill. It provides crucial context for technical decisions, helps in prioritizing work, and enables more effective collaboration with business stakeholders.

Design Thinking and Empathy

In the realm of product engineering, technical expertise alone is no longer sufficient to create truly impactful solutions. Enter design thinking: a problem-solving approach that places user needs and experiences at the center of the development process. For engineers, incorporating design thinking principles can lead to more innovative, user-friendly, and ultimately successful products.

Design thinking is not a linear process, but rather an iterative approach that encourages continuous learning and refinement. It typically involves five key elements, each of which plays a crucial role in developing user-centered solutions:

The first step is to Empathize. This involves deeply understanding the user’s needs, wants, and pain points. It’s about stepping into the user’s shoes, observing their behaviors, and listening to their experiences. For engineers, this might involve conducting user interviews, analyzing user data, or even spending time using the product as a user would. The goal is to uncover insights that may not be immediately apparent from technical specifications or feature requests.

Next comes the Define stage. Here, the insights gathered during the empathy stage are synthesized to clearly articulate the problem that needs to be solved. This is not about jumping to solutions, but about framing the problem in a way that opens up possibilities for innovative approaches. For engineers, this might involve reframing technical challenges in terms of user needs or business objectives.

The third stage is Ideation. This is where creativity comes to the forefront. The goal is to generate a wide range of possible solutions, without judgment or constraint. Techniques like brainstorming, mind mapping, or even role-playing can be used to spark new ideas. For engineers, this stage is an opportunity to think beyond conventional technical solutions and consider novel approaches that might better serve user needs.

Following ideation comes Prototyping. This involves creating quick, low-fidelity versions of potential solutions. The key here is speed and simplicity – the goal is not to build a perfect product, but to create something tangible that can be tested and refined. For engineers, this might involve creating basic wireframes, simple mock-ups, or even paper prototypes. The focus is on making ideas concrete enough to gather meaningful feedback.

The final stage is Testing. This is where prototypes are put in front of real users to gather feedback. It’s a critical stage that often leads back to earlier stages as new insights emerge. For engineers, this might involve conducting user testing sessions, analyzing usage data from beta releases, or going to a coffee shop and conducting guerilla testing session on patrons in exchange for buying them a coffee. The key is to approach this stage with an open mind, ready to learn and iterate based on user responses.

While all stages of design thinking are important, empathy deserves special attention as it forms the foundation of this approach. For engineers, developing empathy is about more than just understanding user requirements – it’s about truly connecting with the user’s experience.

User perspective is a crucial aspect of empathy. This involves the ability to see the product from the user’s point of view, understanding their context, motivations, and frustrations. It’s about asking questions like: What is the user trying to achieve? What obstacles do they face? How does our product fit into their broader life or work? By adopting the user’s perspective, engineers can make design and technical decisions that truly serve user needs, rather than just meeting specifications.

Diverse user consideration is another key aspect of empathy in product engineering. Users are not a monolithic group – they have diverse needs, abilities, and contexts. Some users might be tech-savvy early adopters, while others might be less comfortable with technology like your Aunty perhaps. Some might be using the product in resource-constrained environments, like low bandwidth internet in remote areas. Recognizing and considering this diversity in product development is crucial for creating truly inclusive and accessible products.

IDEO, the design company that popularized design thinking, emphasizes “human-centered design” as a cornerstone of their approach. Their methodology involves immersing themselves in the user’s world to gain deep, empathetic insights that drive innovation. This might involve spending time in users’ homes or workplaces, observing their behaviors and interactions with products in their natural environment. For engineers, adopting a similar approach – even if less intensive – can yield valuable insights that inform technical decisions and lead to more user-friendly solutions.

Design thinking can help engineers navigate the increasing complexity of modern product development. In a world where technical possibilities are vast and user expectations are high, design thinking provides a framework for focusing on what truly matters – creating solutions that make a meaningful difference in users’ lives.

Conclusion

These skills – goal setting and value targeting, decision making and risk assessment, understanding business models, and design thinking and empathy – form the foundation of a product engineer’s non-technical toolkit. They enable engineers to not just build products, but to create solutions that genuinely meet user needs and drive business success.

In our next post, we’ll explore the second set of essential skills for product engineers, including data analysis, A/B testing, and more. Stay tuned!

What’s your experience with these skills in your engineering work? How have you seen them impact product development? Share your thoughts and experiences in the comments below!