Many Engineers wonder if they should pursue an MBA after their Engineering studies. There can be several reasons, such as a change in priorities mid-career, a desire to climb up the corporate ladder and so on. However, pursuing a degree in management takes time and effort. It might not be suitable for everybody. In fact, it might not even be worth the effort if you lack the fundamental skills required for the role you are aiming for. Regardless, you can certainly make use of some important skills from management courses in your daily workflow. Here are some MBA skills which engineers can make use of. We will also look at some knowledge and other frameworks that will be useful.

1. Skills to make the right decisions

The first set of skills are the skills to make the right decisions. It is important for engineers to have the power to negotiate and coordinate. Especially so if they want to create what customers really want.

1-1. “ZOPA” and “BATNA” for negotiations

These are two concepts called ZOPA and BATNA. ZOPA stands for Zone Of Possible Agreement. It indicates the range in which negotiations can be concluded with each other. BATNA stands for Best Alternative To Negotiated Agreement. It is an indication of the limit point where both parties can make compromises.

If you are developing under contract, etc., you tend to only think about the given requirements. However, it is important to actively negotiate and interview them. The fact is often hidden in the opinion. We need to communicate firmly based on facts, search for hidden needs in the background of our opinions, and expand ZOPA. Basically, there is an information gap between the engineer and the business side. In order to create what the customer really wants, it is effective to search for a compromise. At the same time, you should expand the area of ​​agreement with a flexible mind.

1-2. Anchoring and framing

Anchoring and framing are what influences the subsequent decision making by giving impressive information first.

Especially for man-months, you should put an anchor of appropriate information. There are many stakeholders who do not know how much it will cost for system development that takes 10 man-months. Business side members may not be aware of the cost per person-month. So you should convert appropriately to cost so that they can be compared by amount. Make sure you compare with Apples with Apples (use the same units).

The important thing in the negotiations is that you don’t go to the fight in an orthodox manner. Let’s move things in a direction that improves mobility by putting anchors in various situations.

1-3. Decision matrix

As project stakeholders increase in number, clear decision making becomes difficult at the same time. A decision matrix is ​​a framework that allows you to decide which project you want to prioritize quantitatively and objectively.

Arrange the ideas and decide the evaluation axis (select the profitability, future potential, and cost below). In addition, also consider the importance of the items placed on the evaluation axis. Here, importance is placed on future outcomes, which are evaluated twice. Finally, the combined sum is taken to determine the priority as a comprehensive evaluation.

	Profitability  (x1)	Future  (x2)	Cost  (x1)	Comprehensive evaluation
Idea A	5	2	-1	8
Idea B	3	5	-2	11
Idea C	4	4	-3	9

There will be a clash of opinions if you discuss directly whether A plan is good or B plan is good. Opinion exchanges generally do not produce good results. It is important to make judgments based on facts on a value basis.

1-4. Urgency and Importance Matrix

In development, there might be cases where you have several tasks. However, they have differing priorities. In such cases, it may be useful to plot them on a matrix as below.

	High Urgency	Low Urgency
High Importance	MUST ↑	Value ↑
Low Severity	Illusion ↓	Stop ↓

In this way, there is no need to worry about things that have a high degree of urgency or importance. Since they MUST be implemented.

You also need to be careful of tasks with high urgency and low importance. They are just illusions with a high priority. So it is better to lower their priority. Those with high importance and low urgency are measures which will add value. So their priority should be increased.

1-5. Logical Thinking and Critical Thinking

Let us have a look at logical thinking and critical thinking as thinking methods.

Logical Thinking is the ability to differentiate between opinions and facts. In fact, there are many cases where the logic is unusual, or when you have to compare different things (= Apples to Oranges). Logic thinking is important to be able to solve problems efficiently and quickly.

What is critical thinking? This question is asked often. Think of it as a way of thinking that is critical to the bonds of one’s own thinking. This is in contrast to being critical to others. Naturally, critical thinking is also a very important skill to have for solving problems fast and efficiently.

Is your opinion logically correct? How will you weigh your own opinion against facts? What is your thought process?

2. Skills for developing an awareness about the right costs

Next, we will understand the idea of ​​cost and look at the skills to make the right decisions.

2-1. Assets and expenses

Are you spending on software development and operations as an asset? Does it cost?

Spending on the development of software that is run over the long term is recorded as an asset. Whereas, spending on server operation such as AWS is often recorded as an expense. For old on-premises, the server price purchased was recorded as an asset and depreciated in many cases. However, such things have also decreased considerably.

The way accounting is done has also changed. So, the big difference is that the assets are the expenditure to create future value. On the other hand, the expenses are the expenditure that is consumed at that time. So, here, you should not compares as Apples to Apples even if they are the same type of expenditure on the surface.

2-2. Temporal discount rate

It relates to the above-mentioned story a little. Still, it is also necessary to be aware that getting 100k USD this year is one thing. Whereas, getting 100k USD next year is a different thing in value.

Think of it intuitively, the money that you can get now is more valuable than the money you can receive next year. In finance, the concept of a temporal discount rate is used to discount future expected returns by the discount rate and return it to the present value.

For example, suppose that the discount rate is 10%. So the present value of the event that you get 100k USD next year will be 90909 USD (100k / (1 + 10%).

So, it is not appropriate to invest 100k USD in a business that generates 10k USD of cash over 10 years. We want to use the concept of temporal discount rates to estimate the correct future value.

2-3. Sunk cost

The sunk cost is the idea that the amount of money paid in the past has nothing to do with the current decision.

For example, it does not matter if you have invested a certain amount last year. You should discard the past investment if the future value is higher if you invest in another project this year.

You might think “I’ve invested heavily” and “I’ve developed so much”. However, what should really matter here is the present. In other words, you should decide exactly what to invest now.

2-4. “Real Options” can be used for MVP development

There is a theory of real options in finance. Briefly, instead of making all investment decisions at this point, start small and make additional investments if you like. For example, with projects that have decision options over the future. It is one of the evaluation methods which are compatible with the agile methodology.

Usually, for high-risk projects, the temporal discount rate written above is high and the present value is low. Therefore new projects with high risk are disliked. On the other hand, you can introduce the concept of real options by high-risk projects. This way, you can evaluate the project value by selecting an option to start small. Then you can make a large investment if the prototype is successful.

You try using the concept of real options even in projects with high uncertainty.

2-5. “Debt” expressed in the term of technical debt

It’s a term that says engineering debt that engineers love, but debt is not a bad thing in finance in general.

If you can borrow a debt of 900,000 USD even if you have only 100,000 of your own funds, you can do business with high leverage with 10 times more funds. Interest expense also lowers profits, and tax benefits such as tax reductions can be expected.

The bad thing is not returning the debt. If you do not return the debt, the annual interest expense will increase, and in the worst case, you will go into bankruptcy.

As an engineer, there is also an aspect obtained by borrowing technical debt. Let’s not have to be considered generally bad, but be aware of issues that technical debt will not be repaid.

3. Skills for becoming an engineer to product manager

There are many engineers and product managers. Here are some of the skills needed to get your product in the right direction.

3-1. Winning without fighting the best strategy

Since competing services include this feature, have you made a decision to include the same feature? The logic that competitive services have to be created because they have features that we do not have is very dangerous.

There is no doubt that we will go head-to-head with the competition. However we will gradually fall into cost competition, become more commoditizing. As a result, be exhausted as a team. It is necessary to understand strategy theory properly and analyze and understand the external environment and industry situation.

Although understanding these terms might be conventional/normal PEST, 5F, 3C, STP, 4P. it is necessary to draw the way for products to go in competitive environments. It is important that the ideal state derived from the external environment and the current gap be filled.

The best strategy is to win without fighting. Do you have a strategy for that development?

3-2. Density, range, size, network economy

The business should go ahead to build a competitive edge. More importantly, you should understand it in terms of density economy, range economy, scale economy, and network economy.

For example, economies of scale mean that the costs of fixed costs can be decentralized when carrying out large-scale activities. Consequently, the cost benefits can be exploited. Say that you use AI to improve operations. Even then, you cannot recover the cost of installing AI if you cannot make use of the scale. Be aware that the cost associated with system development can be reduced only by doing things on a large scale.

The economics of each of these are important to secure entry barriers. Without fighting, build up entry barriers. Let’s make good use of such a strategy.

3-3. Product life cycle

We want to develop a completely new service and expand our users. So, let’s hear what users are dissatisfied with. What is that the right action to take?

Perhaps we should be more focussed in such a phase about “Why not use” rather than “Why use”. Products have a life cycle, and it changes in the “introduction period”, “growth period”, “mature period”, and “decay period”. At each stage, the competition situation and the customer base also change. So, what is important for product development is also changing.

	Introduction period	Growth period	Maturity	Declined period
Sales	Low	Soars	Peaks	Decline
Profit	Negative	Increases	Peaks	Decline
Conflicts	Few	Increase	Stable	Decline
Client	Innovator	Early adapter	Majority	Lags behind

Maybe you’re probably marketing to a customer that you like new things right after you’ve developed a new service. So why bother with customer voices? Keep reading.

3-4. PPM (Product Portfolio Management)

The concept of PPM is that you can introduce the concept of the portfolio into the product life cycle. If the products in the introductory stage are all over the product life cycle, the cost will increase for marketing and the funds will be exhausted. On the other hand, if it is only mature products, there is no new sprout when entering a decline period and I can not feel it.

	High market share	Low market share
High market growth potential	Star Product	Problem child
Low market growth potential	Money tree	Loser

PPM analyzes the business in the four quadrants of “problem children,” “star products,” “money trees”, and “losers“. In the product cycle, the introductory period is the problem child, the growth period is the star product, the mature period is the money tree, and the decline period is the loser.

Software development also invests the money from the money-tree-like businesses that generate cash into the business of the new problem child. Therefore, the aim should be to form a portfolio well so that the business of which is problem child can be converted into star products.

3-5. Product out and market in

Product development can be divided into two methods, sending products out to make good developers and, working on trending ones to meet the needs of the market.

Earlier, product-out was the mainstream. However, in recent years it is necessary to make something to meet the needs of the market. So the concept of market-in is the mainstream now. Even so, the iPhone and iPad were also able to secure great profits from the concept of product out.

In the modern day when needs are saturated and technology is developed, product-out and market-in are both applicable concepts. On the other hand, it is important to be aware that the development methods and marketing will greatly change depending on which stance you are going to do business with.

3-6. Agile development and lean development

I will also touch on the differences between agile and lean.

Agile is speed-oriented in the sense that it is quick. Lean emphasizes efficiency in the sense that it is lean. It responds quickly to flexible requirements changes by dividing the development process into smaller ones, even for large software developments. On the other hand, we try to eliminate waste as much as possible. So we will gradually clarify our customer image through MVP.

As a result, high-speed product development is possible. So it is often said in the same context, but it is better to understand the difference in definition. Think about how it should be incorporated in developing the organization.

4. Skills for nurturing leadership

The careers of engineers include Tech Lead, Engineer Manager, CTO, and VPoE. Let us look at the leadership needed for each.

4-1. Leadership and Management

There are various arrangements for leadership and management. Here is an easy-to-understand definition: leadership is doing the right things. Management is doing things right.

… Is it hard to understand? In other words, the leader will focus on Why and What. If you show why you do it, the members will follow you. Managers, on the other hand, focus on How and When. 

4-2. Leadership and followership

Good followers are also important for good organizational operations. As a follower, how you commit to and promote your organization’s goals. Your ability to act autonomously is also an important indicator.

Even CTO and VPoE people are followers of someone (though CEOs and CTOs seem to be free). It is very important in career development to foster good followership.

4-3. Maslow’s five stages of desire

When acting as a leader, it is important to understand human needs. Maslow has defined five stages of this desire. They are as follows.

Desire	Contents
Self-realization	I want to demonstrate my abilities and do what I need to do
Validation	I want to be recognized by others
Affiliation and desire for love	Belong to an organization and want to engage with others
Safety desire	I want to protect my safety
Physiological desire	I want to maintain my life

Control to avoid excessive working hours to meet physiological needs and prepare healthy desks and chairs to meet safety needs. We value teamwork to meet the needs of affiliation and love. Then, building an evaluation system to meet the need for approval. Up to here, it can be relatively realized even in organizational management.

On the other hand, fulfilling the desire for self-fulfillment in organizational management becomes quite difficult. There are a wide variety of personalizations and personalizations. What do you think about yourself? What do you think it’s fun when you’re doing? When is it possible to write code in the flow state? What do you want to do if you know you’re going to die? It is necessary to have a high level of coaching ability and a trusting relationship with the members.

4-4. Johari window

The framework of the window of Johari is effective in establishing communication and trust relationships within the team. It is divided into four areas: open windows, secret windows, blind spots windows, unknown windows. There are four quadrants on the basis of whether you know or do not know.

	I know	I do not know
The other party knows	Open window	Blind spot window
The other party does not know	Secret window	Unknown window

The more you know each other, the more active the communication, the more naturally teamwork will be created. Therefore the leader will no longer have to do micromanagement.

As a leader, you need to be conscious of creating a place for the entire team, not directly managing it.

Finally

MBA takes considerable time and effort and is not recommended for engineers who want to specialize in technology. It is better to spend time firmly in the direction of developing specialized skills. On the other hand, if you are aiming for a career such as an engineer manager, CTO or VPoE. Then you will find that the skills and the connections can give you a great value.