Treat your product and engineering teams as stewards of the company's most precious capital: their time. A capital allocation framework forces leadership to ask if this "investment" is being spent on the initiatives with the highest strategic return, not just fulfilling requests.
Related Insights
There's often a massive gap between a company's strategic goals and where development teams actually spend time. In one case, only 2% of capacity was spent on the top strategic goal because teams are "magnets for requests" that derail progress on the big picture.
In ROI-focused cultures like financial services, protect innovation by dedicating a formal budget (e.g., 20% of team bandwidth) to experiments. These initiatives are explicitly exempt from the rigorous ROI calculations applied to the rest of the roadmap, which fosters necessary risk-taking.
Capital allocation isn't just about multi-million dollar acquisitions. Hiring a single employee is also a major investment; a $100k salary represents a discounted million-dollar commitment over time. Applying the same rigor to hiring decisions as you would to CapEx ensures you're investing your human capital wisely.
Engineering often defaults to a 'project mindset,' focusing on churning out features and measuring velocity. True alignment with product requires a 'product mindset,' which prioritizes understanding the customer and tracking the value being delivered, not just the output.
The tension between growth and profitability is best resolved by understanding your product's "runway" (be it 6 months or 6 years). This single piece of information, often misaligned between teams and leadership, should dictate your strategic focus. The key task is to uncover this true runway.
To get product management buy-in for technical initiatives like refactoring or scaling, engineering leadership is responsible for translating the work into clear business or customer value. Instead of just stating the technical need, explain how it enables faster feature development or access to a larger customer base.
Don't just tweak last year's product plan. Start from a blank slate by defining business goals first, then allocate resources to the value propositions needed to win. This avoids getting stuck in maintenance mode and forces a focus on strategic priorities.
A product leader should actively manage development by allocating effort into three buckets: future big bets, core foundation (stability/tech debt), and growth/optimization. The resource allocation isn't fixed; it must dynamically shift based on the product's maturity and immediate business goals.
When pursuing a long-term strategic solution, dedicate product management time to high-level discovery and partner alignment first. This doesn't consume engineering resources, allowing the dev team to remain focused on mitigating the immediate, more visceral aspects of the problem.
A simple but powerful framework for any product initiative requires answering four questions: 1) What is it? 2) Why does it matter (financially)? 3) How much will it cost (including hiring and ops)? 4) When do I get it? This forces teams to think through the full business impact, not just the user value.
