The Product-Led Organization vs. the Engineering-Led Organization
November 29, 2021

The Product-Led Organization vs. the Engineering-Led Organization

by Brian de Haaff

The "value mindset." It is a concept I wrote about earlier this year. At its core, a value mindset is about expanding your perspective of what great product development entails. Instead of seeing product development as a function that ships features, you consider its totality — the process of planning, building, and delivering products that create long-term value for customers and the business. This shift in thinking requires that you integrate two different perspectives on company strategy — what it means to be product-led versus engineering-led.

Product-led organizations and engineering-led organizations represent two approaches to creating value — both are necessary to build products that customers love.

A product-led organization is oriented around product vision, strategy, and how the product will meet a set of customer and business objectives. Product leadership steers the strategy — defining customer challenges to solve that are aligned with the broader company direction. Doing this successfully requires deeply understanding your customers.

An engineering-led organization traditionally takes a different approach. It is rooted in the strength of the development team and what is possible with technology. The priorities in an engineering-led company are solving technical challenges and achieving innovation breakthroughs. The team focuses on solving problems with the least effort in the most scalable way — working quickly, making capacity tradeoffs, and incorporating feedback loops. The greatest threat facing this type of organization is solving a customer problem that does not exist.

If you read software blogs these days, most will say that we are in an era of product-led companies. But I do not think that captures the full story. In fact, I believe that you cannot be truly product-led without strong collaboration from engineering. You need both product and engineering to take the lead at different phases in the product development journey.

This is a bold new way to define a product-led organization — one that includes being engineering-led as a crucial part of achieving product goals.

Imagine you deeply empathize with the customer's pain and are able to clearly describe it and how it could be reduced. Or that you have product/market fit and are expanding a single product into a platform or portfolio. These phases of growth require greater engineering input. You need a robust technical foundation to support the ecosystem and facilitate integration between your products. At the same time, you must be guided by a clear product vision so that the team can prioritize the most impactful features and capabilities.

You simply cannot set a strict rule about which team always takes the lead — but some companies still try. If this is the case for you, it can be helpful to understand how people think of product-led versus engineering-led — so you can begin to have candid conversations about how to find the right balance and when to take a back seat.

Purpose

A product-led organization aims for value and focuses on outcomes. The goal is to create a stronger product and better customer experience. A clear product vision informs prioritization decisions and helps everyone in the company understand the strategy behind their work. Vision, market research, user feedback, and deep empathy for customers inform improvements to the product.

An engineering-led organization aims to deliver new functionality and focuses on output, capacity, and speed. The primary consideration is what is technologically possible and how the team can implement it. As a result, engineering-led organizations often pay more attention to what they are building rather than deepening their understanding of what customers actually need.

Collaboration

A product-led organization values regular cross-functional collaboration. A product manager typically leads the product team, which includes representatives from key functional groups such as product, engineering, marketing, sales, and support. Each team member advocates for users and everyone understands how their specific work contributes to the overall company and product objectives.

An engineering-led organization revolves around the team achieving a cohesive engineering strategy. This can make it difficult to work cross-functionally because other groups have to proactively seek out engineering resources. If there is a lack of overarching vision or direction (or the organization becomes siloed), engineers may build features that are duplicative or unimportant. The impact of the resulting code on customers and the business can be unclear.

Customers

In a product-led organization, each product team focuses on a specific customer need or opportunity to deliver value. The company collects and regularly reviews feedback to increase customer empathy, then incorporates that feedback into the product to drive innovation. A product-led organization also takes a go-to-market approach — iterating on the product often and regularly releasing new functionality to customers.

An engineering-led organization is typically more insular. It looks inward at how quickly the team is delivering new features and functionality. It also identifies where there are opportunities to maximize capacity. Instead of focusing on developing customer empathy, developers are given the space to come up with great ideas to improve the overall user experience.

Metrics

A product-led organization makes data-driven decisions to increase customer delight and business value. Product leaders measure success by tracking metrics such as revenue and churn as well as customer growth, engagement, and retention. They also monitor product-specific indicators such as time in app and number of features used. It is important to analyze how this data changes over time to discover ways to better serve customers.

An engineering-led organization also values data-driven decisions, but the goal is usually to maximize capacity and shorten feedback loops. The CTO or engineering manager measures success by tracking metrics such as app performance data, team capacity, number of features delivered, and velocity.

Putting customer needs first and creating real value is a noble goal for all organizations, product-led and engineering-led alike.

Semantics are less important than outcomes. Whether you call it product-led or engineering-led, what matters is that every group in the organization is centered around a value mindset. When cross-functional teams communicate often and make decisions together, everyone can prioritize customer needs — and the business will be truly well-rounded.

What challenges have you experienced in either a product-led or engineering-led organization?

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Brian de Haaff

Brian seeks business and wilderness adventure. He is the co-founder and CEO of Aha! — the world’s #1 roadmap software — and the author of the bestseller Lovability. Brian writes and speaks about product and company growth and the adventure of living a meaningful life.

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