Sound familiar? Let’s talk about product market fit.
Your angel investor invested in your idea. Your VC and series A investors gave you money to make the product and bring it to market. You bootstrapped yourself and made a lot of sacrifices to make it happen. Finally, the day has come. Launch.
But then, silence. Or some initial success here and there, but things start to tail out.
Oops, we just built something nobody wants.
As comical as it may seem, it’s a gut wrenching experience for the entrepreneur.
Why does this happen
Conviction is commendable, but if it’s a “we know what the customer wants” leap-of-faith belief, that’s complacency. As I wrote before, we may know something about our customers, but not everything.
Therefore, it’s really important to speak with the customer. The challenge is, what you hear is not definitive. Hearing and understanding are two different things. We still our left with the enormous task of interpreting the real message from the customer. You’ve heard this before, but customers often don’t know what they want. There’s no crystal ball in marketing, so the only way to truly understand what the customer actually wants is to build hypotheses and devise ways to validate them through experiments.
Startup entrepreneurs are understandably under severe pressure to deliver, and shortest distance to product launch is often the singular focus. Time and time again, the “just do it” psyche takes over, and the customer focus mindset vanishes. Just like a safety first sign at a construction site, it’s written on the wall but doesn’t register when people are in haste.
Here’s the product, take it, doesn’t work. Design, UX, CX, user instructions, community support and training (where applicable such as SaaS products); all of these seemingly outside-of-the-core-of-the-product items are equally important product attributes. Customers are surprisingly fickle, increasingly so once you cross the chasm from early adopters to the main-stream mass customer segment. Unsexy product packaging can easily be a turn off.
There’s a reason why I brought this to the last. If you are a science start-up, it’s understandable that the success of your venture is completely dependent on your product technology, i.e. to get to point A to point B, you need the technological breakthrough. But let’s admit it, product development of the vast majority of startups are application of existing technology, and to get to point A to point B, there are many paths you can take. Even for seemingly cutting edge technology startups such as those involved in AI driven decision making support systems, likelihood is that you will be tapping into open source AI and machine learning libraries like TensorFlow, CNTK or Theano, so it’s unlikely that the venture will fail from failing to get the product work.
Okay, I can already hear the backlash so don’t get me wrong, I’m not undermining product development. Countless hours of code writing, a lot of creativity, and a hero job of getting the team work together (there’s a thing called Scrum, btw) will need to go into making the app work and it’s a herculean endeavor. It’s the core activity of the startup, where the bulk of the energy and resources are spent. But what I’m trying to say is that most startups don’t fail up to this point – the professional ethos of delivery is so deeply ingrained in us, we will get to product launch whatsoever.
So the problem is not whether the product works or not – likelihood is that you will get to that point. The question is, whether or not it works for the customer.
How to fix this
First, just because it’s not selling, doesn’t mean the product is completely wrong. It might just be slightly “off”, and the off factors may not be in the product itself (internal factors), but something to do with the customer and the market (external factors) which gives hope for achieving product market fit with just a bit of tweaking and perseverance, rather than a full scale pivoting.
Second, the fact that you have a well beyond MVP (minimum viable product) production grade product out in the market is an advantage. That’s a credibility statement to the market. With a much stronger product base to experiment product market fit, customers will take you more seriously and you will collect more and better quality customer feedback.
It’s important to be a realist and hold no illusions when figuring out product market fit, but that doesn’t contradict with positive psychology. Chin up!
If you haven’t been doing so yet, now is the time to start embracing “user story” writing:
As a [user], I want [what], so that [value].
This is the basis of your hypothesis, which in turn will be used to building your MVP for the build-measure-learn cycle. Since you already have a product up and running, your MVPs will most likely be in the form of tweaks to attributes or functions with your existing product, unless you find the need to build a separate MVP. What’s very important is to define how you are going to measure the effectiveness of the hypothesis, usually with some sort of metrics. It would be a very good idea to engage an Agile expert like us to help you build a good framework for managing this process.
Even with the right bait you can always have a bad day of fishing as fish are not evenly distributed in the ocean. Unless you have the luxury of large samples over prolonged periods, customer experimentation is subject to sample error. Therefore sometimes it’s okay to extend the period and scope of, for example an online ad campaign or landing site A/B testing. After all, you need the data to make your persevere or pivot judgement.
Meanwhile, high frequency and hastily handled pivoting is demoralizing to your people, so careful not to pull the plug too fast.
When you’ve got to do it, do it.
The key is to communicate your pivoting decision with due process and transparency. It should be an informed decision backed by data and presented to all involved parties, including stake holders.
Have courage and don’t hesitate to consider pivoting. Some say pivoting is shameful and it’s just a glorified way of admitting failure. And you only get to do it once because of the credibility damage with your stake holders and the demoralization among your people. I don’t think so. I consider pivoting a natural course in the startup build-measure-learn iteration cycle. Every pivoting decision has an economic impact: sunk cost of ditched efforts and investment into new efforts. But there are many forms of pivoting – Eric Ries lists up 10 types of pivoting in his book Lean Startup – and most pivoting are hardly complete scrap-and-rebuilds. They are built on top of what’s been done. That’s progress, and it’s healthy. If done and communicated well, your stakeholders, team members and your customers will support the pivot.
Keeping the customer focus
So, this article was yet again about practicing Lean and Agile. The last section on how to fix product market misfit largely follows Eric Ries’ approach in Lean Startup. Not that I’m being unoriginal, but it’s simply the case of using what works. Lean and Agile works well with startups – businesses facing a lot of uncertainties.
The cautionary tale is that it’s easy for organizations to go back to old ways after the crisis is averted. Once you get Lean and Agile working in your organization, you should make every effort to keep it working.
After product launch, you realize that there was a product market misfit. You tell your people all hands on deck, and the crisis atmosphere makes everyone think customer. Scrum, or any other Agile project management approach of your choice, is diligently followed, the product development team and marketing team work in sync, and the build-measure-learn cycle works beautifully, eventually circling in to product market fit. Sales metrics start to show the wheel is turning and finally it seems like you have reached altitude.
However, this seemingly lull phase is actually your make it or break it moment. It’s easy for the product manager and the product marketer to drift apart and back to the culture of “it’s marketing’s job” to think of customer. And then the inevitable happens: product market fit drift. For example, the previous product market fit was with the early adopters. Now going into the early majority, their “hot buttons” seem different.
If your organization is still intact with Lean and Agile, then most likely the continuous improvement cycle would have picked up early signals of this shifting customer behavior and by now your team will be full-on working on adapting. But if not, crisis mode again. Keeping up with Lean & Agile is an effort, but management by crisis is exhausting.
My opinion is that setting a goal to make your organization into a permanently strong marketing organization is an effective path for achieving continuous and scaling enterprise success. For that, keeping your customer focus is mission critical. And hence our strong recommendation to embrace Lean & Agile.
Adopting Lean & Agile is no easy feat. The ideology behind Lean & Agile is rational and makes sense to most, but putting that into action requires mindset shifts and a lot of breaking habits. Though if done correctly, Lean & Agile will bring incredible productivity, positivity and break through to organizations. At Lifecycle, we have a good understanding of organizational behavior and a method of hacking to drive a successful Lean & Agile organizational transformation. Contact us to learn our approach.