Value Engine

Make something people want.

This is the mantra of YC and startups. But what do people want? They want something valuable that solves a problem. In exchange, they pay for a product or service. When it comes to software, a product is something a company creates—the thing they build and sell to create value. Product (with a capital P) is the designated function in charge of creating a valuable product. But if a software company is meant to deliver value to its customers, then why is Product treated as a function, department, and role instead of a system of value creation? A company that builds and sells a product is made up of an entire team of people working with value as the raw material. Each team’s job is to manipulate that value a certain way.

The best product organizations are ones where Product is a system, not a silo; a place where everyone contributes to value—from creating value to connecting value to amplifying value.

As I started a new role leading Product, I had to define Product and my philosophy.

It’s a holistic, collaborative process and system to deliver value. **Product is not one person’s or one team’s job. It is a collective responsibility without limits. It permeates everything a software company does.

Product is the system that connects what you create to the value it delivers.

This idea is called the Value Engine.

The three pillars are:

1. Value Forces: What powers the engine.
2. Value Flow: How value moves.
3. Value Feedback: How the system learns.

(This idea lives in the 🐍 Clarity Current of the Claritorium.)

Value Forces

Product = Design + Engineering + Strategy

This is my basic formula for Product. And it’s the reason I made it to the product roles I’ve been in the past several years. I started my career in design, moved into engineering, and expanded with strategy through:

• Strategic Thinking: Thinking strategically and critically to define and shape work.
• Strategic Management: Managing teams of people through building systems and cultures of creation.
• Strategic Collaboration: Working closely across disciplines with sales, marketing, customer success, finance, and operations.

Strategy is translation work. It’s a way of taking a raw material, reasoning with it, and converting it to the right end product fit to the shape of your objectives. But in order to do this work, you need a deep understanding of distinct disciplines. It’s why I’m such a strong advocate for generalists. The breadth of knowledge lets you draw connections and leverage skills to go deep when necessary.

But strategy is more than an additive property in the Product formula. It’s a multiplier:

Product = ( Design + Engineering ) × Strategy

As a designer, strategy made me a better designer.

As an engineer, strategy made me a better engineer.

As a generalist, strategy helped me work across and understand other disciplines.

Strategy creates coherence between purpose and execution; it’s the multiplier that aligns creation with purpose; it’s the connective tissue that upgrades every other discipline.

Design × Strategy = Design Thinking

Engineering × Strategy = Systems Thinking

Generalist × Strategy = First Principles Thinking

The Value Forces of the Value Engine are:

1. Design as the form.
2. Engineering as the function.
3. Strategy as the meaning.

Designers, engineers, and strategists work together as a cross-functional team to create value in the business. And they do so throughout the entire lifecycle, not in silos of information and communication. Everyone must think strategically and holistically.

For value to be impactful, context must be shared and integrated across the team. Effective decision-making requires context. If you isolate context and strategy to only those deemed worthy, you risk inefficiency and introduce harmful practices in your process:

• Designers create solutions devoid of reality and technical feasibility.
• Engineers build solutions that miss the mark on quality and user experience.
• Information is sliced into fragmented parts to create noise without signal.

When the Value Forces of Design, Engineering, and Strategy work together:

• Design Thinking shapes value through understanding people and problems to translate empathy into possibility.
• Systems Thinking sustains value through understanding the web of interactions between the technical, human, and organizational.
• First Principles Thinking clarifies value through understanding the core essence of the problem.

Each discipline brings its own strength, but rooted in a shared mental model made up of these thinking models. Misalignment shows up early and is addressed rapidly. The team learns to think together to compound clarity and value. One team, not separate teams.

Value Flow

The Value Forces power the engine, but you need to understand how value moves through the engine. That is the Value Flow.

Value Flow is the path that value travels through a product organization—from how it’s created, to how it’s connected, to how it’s amplified. The three movements are:

1. Creation: The making of value.
2. Connection: The translation of value.
3. Amplification: The distribution of value.

Creation

Design and Engineering work in close collaboration to create value. I’ve seen too many organizations draw unnecessary lines between the disciplines. They both inform one another and should be tightly coupled—an integrative, cross-functional effort to build high-quality solutions for real people. If you don’t, you devolve into a waterfall process where design works in a vacuum, creating the illusion of de-risking and progress. Creating a fixed artifact and handing it from design to engineering without context is like ripping a plant out and expecting it to take root in new soil. The plant wilts. Decision-making thrives on context like plants in rich soil. Design and Engineering must share context to work together effectively.

How? Here are some techniques:

1. Shared Artifacts: Create artifacts to share context across the team: user interview snapshots, pitch documents, and Loom-style videos. Shared context is shared ownership.
2. Collaborative Shaping: Bring engineers into the shaping process where design is the focus. Let them consider technical design and early risks and rabbit holes.
3. Rapid Prototyping: Quickly develop working prototypes to explore user flows, interactions, and address technical unknowns and feasibility.

Share context, align on direction, and validate early and often. Creation is collaborative.

Connection

Close collaboration means nothing if you aren’t working on the right thing. Make something people want, remember? That’s where strategy comes in. While it’s integrated into both design and engineering, it requires a dedicated focus through continuous discovery.

A good strategist has a deep understanding of each discipline. You can’t translate from one language to another if you don’t speak each language fluently. That’s the work of strategy.

Proper strategy cultivates shared context.

• Engineers don’t experience customer problems through a user story; they sit in interviews and see it firsthand.
• Designers don’t “throw” a mockup over the wall to engineers; they collaborate on constraints early in the process and when the work is in development.
• Issues aren’t written as isolated problems; they include the rich context to inform better understanding and decisions.

I’m explicitly not referring to product and project managers as the sole representatives of strategy. It’s not that I don’t believe in the roles or see their value—I absolutely do! When the crafts are done well, they’re transformative for the team, the work, and the product. Like Product and its loaded definition, the management roles in Product are bloated and treated different in every organization. The spectrum of product management is so vast it’s almost hard to describe the role anymore.

I believe that anyone managing work needs to deeply understand the work they’re managing—not to do the work, but to assist with the contextual translation of the work and value. If you manage designers, you need to understand the craft of design. Same with engineers. And if you’re managing the product, then you need to understand design, engineering, and strategy. That’s a big ask.

In a previous role, I was training a highly skilled project manager to become a product manager. They had the foundational skills within the craft of project management, but they needed to understand the Value Forces of Design, Engineering, and Strategy. You must understand the crafts to translate them. If not, you live in a game of telephone that leads to missed context, miscommunication, and misunderstanding.

Product management is the operational expression of Connection. The role is to keep value flowing through the system without distortion. It’s orchestration, not ownership.

• Instead of the PM sitting between design and engineering, they work through design and engineering.
• Instead of the PM writing tickets, they ensure clarity, timing, and alignment so the team can make decisions.
• Instead of the PM owning the roadmap, they make sure it reflects reality, aligns purpose, and maps to org expectations.

A good PM knows how to manage the rhythm of creation, not chasing designers and engineers asking, “What’s the status?” They protect space for design, make sure engineering has clarity and focus, and continually feed the context machine with continuous discovery work.

When you have healthy product management roles, they connect design to engineering to strategy. The role should be translator, not traffic controller. Product management requires the rigor of project management with fluency of the Value Forces. When PMs master the Forces, they become multipliers. The purpose of translation is to create alignment. With alignment, you create forward progress, build momentum, and deliver impactful work.

Amplification

A product is nothing without distribution. If you can’t get enough people to experience and realize the value of your product, it dies.

You need Amplification:

Amplification = Growth + Retention + Resilience

Breaking the formula down further:

1. Growth = Sales + Marketing
2. Retention = Customer Success + Support
3. Resilience = Finance + Operations

Growth

If a PM’s role is about translation to drive alignment, then the elements of Amplification extend the translation outward.

Ask yourself:

How do we communicate the value of the product to everyone?

Everyone may be too optimistic. But that’s the mindset. Identifying the value of your product and figuring out how to communicate the value to more people— to generate growth. As you grow your user base, Product focuses on increasing its understanding of the ideal customers to assist Marketing in continued growth efforts.

Marketing focuses on the funnel to take potential customers from awareness to activation, moving them through the product’s value chain. Product should be involved in this process to make sure Marketing is communicating the value effectively (and understanding the ideal customer profile). This is another situation where context matters. If Product doesn’t share context in the form of demos and working software, then Marketing can’t translate the value broadly.

Sales, on the other hand, is focused on specific leads. They are trying to move them from a lead (cold or warm) to a signed customer. Marketing helps generate leads, and then Sales works with those leads to understand their problems and how the product can help.

Product should work closely with Marketing and Sales to translate the value of the product to connect with customers at different points in their journey. They should share context that informs the product to refine its value. Software is never done. And you never know where the next great idea will come from. But the closer you are to customers, the better.

Retention

All SaaS products suffer the same problem: churn. Users pay a monthly or annual subscription cost, and then cancel their subscription instead of keeping it. When more users are leaving than sticking around, you have a problem. In startups, it’s a massive cash-flow issue. And, depending on how much money you spend to acquire users, you can get into a bad spot.

Retention is how you keep users in your product.

We’re in an Age of Subscriptions. Most people pay for streaming services and countless products that require a recurring fee. I think we’re reaching a tipping point. That means retaining users is harder than ever. And your product value matters more than ever. The competition is stiff because you’re not just competing with your direct competitors—you’re competing with the general cost of subscription software.

That’s why Customer Success and Support functions are vital. Customer Success works directly with new and existing customers to make sure their experience with the product is smooth. It’s a common approach in business-to-business (B2B) products. And Support is focused on assisting all customers, from B2B to the individual users (B2C).

Before I migrate to a new product, I test its customer support for:

1. Responsiveness: How quickly do they respond?
2. Knowledge: How helpful are they?
3. Thoroughness: Do they follow through?

Leading Product, I look at these same measures for our support team. Great customer support contributes substantially to retention. Product should be directly involved here, too. This is the direct line to active customers using your product. Don’t over-index on acquiring new users when you have a customer base you can nurture. It’s not just about maintaining retention. Your active user base can market and sell your product for you.

Make a high-quality product that solves a real problem, listen to your users, and continue to deliver value for them. That’s the recipe for growth and retention.

Resilience

A healthy product organization creates resilience through Finance and Operations. Finance focuses on key metrics to maintain the financial health of the business: cash flow, expenses, customer lifetime value (LTV), user growth rates.

Finance answers: Is the business healthy and scalable?

Technology changes rapidly. ChatGPT came out in 2021 and changed the landscape of software with the proliferation of AI in consumer technology. AI will continue its rapid growth, while even newer technologies and market shifts alter the landscape.

Resilience is how a product company maintains stability with these variables.

It’s necessary for Product to understand financial variables, constraints, and projections when considering what value to create. More context! And when it comes to Operations, I use this to classify any work that creates, manages, and refines internal processes that help the business run smoothly. If Product is holistic, integrative, and connected to all facets of the organization, then Product and Operations overlap and should work closely together.

Value Feedback

Feedback is the fuel of great products. Without feedback, you’re flying blind; you’re steering a ship without a map; you’re walking without a direction. Feedback is fuel and direction. It fills up the engine and points you where to go. But only when you engage with it directly.

Feedback drives value creation internally and externally. Internally with the organization and externally with the created product.

Here are three ways to approach it:

1. Bright Spots show you what to scale.
2. Pain Points show you what to solve.
3. Tiny Tests show you how to improve.

Bright Spots

In the book Switch by Dan and Chip Heath, they refer to “bright spots” as elements of change that are working. These are the positive moments. Instead of focusing on what’s not working, you highlight the positives and double down on what is working. It’s easy to get lost in the sea of problems. Users more readily share what’s broken or frustrating than they do what they like or appreciate. When you go on a site to look at reviews of a physical product, the chorus skews negative. And it may not be the true consensus. It’s just the vocal minority sharing negative feedback.

Bright Spots are the signals in the noise. They sustain products. They show you where real value is and how you can multiply it.

Use them to improve your product, the process, and the value you create.

Pain Points

It would be great to only focus on the positives and ignore the negatives. But, unfortunately, that’s not how it works. You have to also lean into the challenges, problems, and frustrations. You have to wade through the reviews and direct (and often unfiltered) feedback to uncover the Pain Points.

One thing I’ve found useful is reframing problems as opportunities. They are. When something isn’t working for someone, there’s an opportunity to solve a problem for them. That is the opportunity. The Pain Point can turn into a Bright Spot. Once converted, you multiply and compound its effect.

Tiny Tests

I love experiments. Any chance I get, I test out new ideas. My newsletter is an experiment! I had an idea to create a dedicated space to write, share my thinking, and formalize my ideas into clear concepts.

A test is successful regardless of outcome. Whether it validates or invalidates your hypothesis, it’s learning. The newsletter validated my hypothesis, but if it didn’t, then I would’ve tried something else.

To run a test:

1. Identify your hypothesis.
2. Run a simple test for the hypothesis.
3. Write down observations and learnings.

Example:

1. Hypothesis: If I write a weekly newsletter, then I’ll generate more ideas and formalize more named concepts.
2. Test: Publish four consecutive newsletters and track idea and concept creation.
3. Learnings: The routine of regular writing helped me generate more ideas and formalize more named concepts.

Working Together

Product is about working together to make something people want. The more you isolate the functions in and surrounding Product, the more you limit your ability to create value.

Start with the Value Forces of Design, Engineering, and Strategy as the unique energies of Product. Share context and move value through each discipline. And use Strategy as the multiplier to elevate each one.

Value Flow is the motion of value creation. If everyone on the team is manipulating value, then the flow is how the value moves. Design and Engineering create value, Strategy connects the value, and additional teams amplify the value to scale the product through growth, retention, and resilience.

No system can function without feedback. Value Feedback is how you learn what’s valuable, what’s not, and what tests you can run to make improvements in the product.

The Value Engine is the mechanism that helps you make something people want.

And to do so in a repeatable, scalable way.

It all starts with value.