This content originally appeared on Level Up Coding - Medium and was authored by Syed Mohsin
With a detailed formula and examples.
Engineers with product knowledge are dangerous.
They often become leaders in an organization. They share ideas about product improvements, understand customer problems, and constantly ask “why.” Product-minded engineers know how to build solutions that generate real revenue.
So how should an engineer start developing product thinking?
Don’t Start By Learning Product Buzzwords
When I first started out as a product/growth engineer, I was hungry to increase my impact by improving my product thinking.
But I became lost in the dizzying stream of buzzwords and concepts related to product development.
Acquisition Channels, Activation, Retention, Ideal Customer Profile (ICP), Total Addressable Market (TAM), Go-To-Market (GTM), Product-Market Fit (PMF).
Just to name a few.
As I transitioned to growing out a team of product engineers, I needed a simple way for every engineer to evaluate product ideas without getting confused by all the jargon.
And then I found it. A first principles formula that cut through all the noise.
It finally made product thinking easy and more quantitative.
The Product Value Equation
Discovering this equation felt like discovering Newton’s laws but for the business world.
The equation comes from Alex Hormozi. He is a brilliant entrepreneur who is obsessed with creating simple, battle tested mental models to help entrepreneurs succeed. He uses these frameworks to help grow his portfolio of companies to $100M+ in revenue.
I now evaluate EVERY product opportunity or idea through Hormozi’s value equation.
The four levers in the equation are as follows:
- Dream Outcome — what is the result that your user desperately wants? Goal: increase ⬆️
- Perceived Likelihood of Achievement — does your user believe that your solution can help them reach their dream outcome? Goal: increase ⬆️
- Time Delay — how long does it take for your user to reach their dream outcome? Goal: decrease ⬇️
- Effort and Sacrifice — how much work does it take to get to the dream outcome? What does your user need to give up? Goal: decrease ⬇️
Giving each of these a score and plugging them into the equation has helped me quantify the value of product opportunities.
Let’s dive deep into each lever!
Lever #1 — Dream Outcome
I interpret dream outcome as the gap between where the user is today and where they want to be.
The goal of your product is to bridge that gap.
If your target users do not want the outcome that you are delivering, then the other levers in the equation don’t matter. The value score will be zero.
What end state does the user want to be in? What problems do they face along the way?
This is the template I use to understand the dream outcome:
- Target user
- Dream outcome
- Problems they face along the way
- Possible solutions
Example 1 — Dream outcome for online readers
Let’s start with an example of a dream outcome for you, a reader of an article like this:
- Target user — online reader
- Dream outcome — to learn something new that can be applied in their life or career
- Problems they face along the way — finding useful content, remembering the information, knowing how to use the information in their life
- Possible solutions — a platform like Medium that aggregates and ranks high-value content by topic. E-learning platforms like Udemy for in-depth courses. A flashcard tool to record learnings and test understanding
Example 2 — Dream outcome for restaurant-goers
Something we can all relate with is the struggle to finding a place to eat out.
- Target user — someone looking for a restaurant
- Dream outcome — To eat something delicious, be satiated, and enjoy the experience
- Problems they face along the way — finding a restaurant, getting to the restaurant, and paying a reasonable price
- Possible solutions — Yelp to filter the best restaurants by reviews and price, OpenTable to place reservations, DoorDash to pickup or deliver food if in a hurry
Example 3 — Dream outcome for construction professionals
This next one is a bit tougher. I’ll use the current B2B startup I work for as an example — HOVER:
- Target user — construction professional
- Dream outcome—win contracts to remodel existing homes or build new homes for homeowners
- Problems they face along the way — finding homeowner clients, getting measurements of the client’s home, deciding the project scope, submitting a proposal to the homeowner, winning the project, ordering building materials, and finally doing the actual construction.
- Possible Solutions — The workflow is complex here. HOVER’s core product improves one aspect of it by making it easy to get measurements of a home. Contractors can ditch the tape measure and instead get measurements automatically from 8 photos taken of a house from a mobile app.
We could get much deeper into each example. But hopefully this illustrates how to determine dream outcomes.
Define The Dream Outcome Before Thinking of a Solution
Notice that in each of these examples, I did not talk about product solutions until after understanding the dream outcome.
Deeply understanding the dream outcome must happen before we start brainstorming about a product offering. If we start with a solution, we limit understanding of the problem space and miss out on identifying even better solutions.
Another common mistake is thinking that the product is the dream outcome. Rather, the product is what leads the user to the dream outcome.
What You Can Do As An Engineer
As an engineer, you can do the following to understand how your company’s product creates the dream outcome:
- Try the above exercise: define the core user(s), dream outcome, and problems that users face along the way.
- Test your understanding of the dream outcome by running it by a product manager.
- Understand the market: talk to someone in finance or data to see why the dream outcome is worth solving. How many possible customers in the market? What is the revenue potential in this market?
- Spend time listening to customer sales calls. Better yet, talk to customers directly to learn more about what your customers want.
- Think about the features you are currently building. Are they helping your users get closer to their dream outcome? If not, how could you build or prioritize differently?
- Brainstorm other ways you can improve your product to solve customer problems along the way to the dream outcome.
Lever #2 — Perceived Likelihood of Achievement
People pay for certainty.
A user has to believe that your product can help them achieve their dream outcome before they are willing to pay any money to use it.
Arguably, maximizing this lever is the whole point of marketing. Marketers focus on creating awareness about your product and why target users will achieve their dream outcome using it.
Some ways to help a user feel confident about succeeding with your product:
- display reviews or testimonials — social proof is a powerful way to increase certainty that a product works. Think reading reviews before picking a restaurant.
- offer a free trial — what better way to validate a dream outcome than trying it at no cost?
- offer a money back guarantee — has the same effect as a free trial by removing risk.
- Make it easy for users to refer your product — people are more likely to believe a product works when coming from someone they know or trust.
What You Can Do As An Engineer
- Talk to someone in marketing — have them help you understand their strategy for positioning the product the way it is.
- Read the copy on your marketing landing pages, email campaigns, and SMS comms. How do they increase the user’s perceived likelihood of achieving the dream outcome?
- Try re-writing copy to better capture the dream outcome and increase perceived likelihood of achievement.
- There are many in-product ways to do this as well. Try and brainstorm ways to improve the first-time user experience, increase discoverability of important features, and try some of the tactics such as adding a free trial I listed above.
Lever #3 — Time Delay
Your product grows in value as the time delay to dream outcome approaches zero.
Even if no other functionality in your product changes.
How can you engineer your company’s product to deliver results faster? How do you get the dream outcome to happen in one day instead of one week? One hour instead of one day?
Think Amazon two-day -> same-day shipping.
Another example — HOVER’s app typically takes 60 mins or less to deliver a measurement report (the dream outcome) to a construction professional. However, we know that decreasing time delay to 30 mins or less would exponentially increase the value of our product and allow us to charge more.
What You Can Do As An Engineer
- Find opportunities in your product to reduce the time delay to get a user to a critical value milestone.
- Can we automate a slow manual process?
- Can we speed up an API or page load?
- If we can’t reduce time delay, can we give the user something valuable to do while they wait for the dream outcome?
Lever #4 — Effort and Sacrifice
Your product’s value increases when the effort and sacrifice to achieve the dream outcome decreases.
For example — one reason why construction professionals love HOVER is because they get to ditch their tape measure. Instead of putting in physical effort to get on a roof and measure a home, HOVER’s app does all the work to get accurate measurements from photos of the home.
Even if a product offers a better dream outcome than competitors, potential users may not be interested if they have to change their existing habits.
Changing habits is a lot of effort, especially for businesses. So it is usually easier to habit stack — how can you integrate into a customer’s existing workflow so they have to do less work to use your product?
What You Can Do As An Engineer
Reflecting on the following questions can help you find engineering opportunities to reduce the effort to use your product.
- Does the user face unnecessary friction when trying to use your product?
- Can you make it dead simple for a user to pay for your product?
- Can you make the product onboarding really simple and low effort?
- How can you habit-stack your product into a user’s existing workflow?
- If the user has to change their habits, how can you make the transition as low effort as possible?
Conclusion
My goal is to create a “team of missionaries, not mercenaries” as Marty Cagan discusses in his book, Inspired.
Mercenaries do what they are asked. They work through an assigned list of features and don’t look up to see the big picture.
Missionaries understand the larger product vision and own customer problems. They are product-minded. They push back when their work is not creating the right outcomes and offer better solutions.
I believe the value equation can empower engineers to become missionaries. The four levers of the equation to help them get there are:
- Dream outcome
- Perceived likelihood of achievement
- Time delay
- Effort and sacrifice
Studying these levers and applying them constantly has allowed me and other engineers to deeply understand customer problems and think simply about building solutions that drive real business results.
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How Engineers Unlock Product-Mindset Through First Principles Thinking was originally published in Level Up Coding on Medium, where people are continuing the conversation by highlighting and responding to this story.
This content originally appeared on Level Up Coding - Medium and was authored by Syed Mohsin
Syed Mohsin | Sciencx (2023-02-14T15:21:52+00:00) How Engineers Unlock Product-Mindset Through First Principles Thinking. Retrieved from https://www.scien.cx/2023/02/14/how-engineers-unlock-product-mindset-through-first-principles-thinking/
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