My last blog covered product-market fit, and why it is The Essential Key to Rapid Company Growth. But many companies fail to achieve good product-market fit, which prevents them from taking off. This post will cover the common pitfalls companies fall into that result in product-market disconnects that prevent rapid growth. Common pitfalls (Part 1) include:
The Steve Jobs Syndrome
Steve Jobs is probably the most brilliant technology innovator in history. He single-handedly conceived of some of the most innovative technology products of our generation, including the Macintosh, iPod, iPhone, and iTunes to name a few. In many cases, Steve Jobs went against conventional thinking and often ignored customer feedback saying, “Customers don’t know what they want until you show it to them.” Meaning his vision for the future would not come from customer input or market research, but from his own creative instincts. He knew what the market wanted before customers could articulate it. This is indeed a rare gift. He wasn’t always right. In fact, the Lisa, NeXT and Apple TV were expensive failures. But when he was right, he transformed industries.
Unfortunately, there was only one Steve Jobs. Although plenty of tech founders and product leaders act like they are the second coming of Steve Jobs, and their vision for the future is immune to customer feedback. I can’t count the number of meetings I have been in where technical founders and product leaders argue with a customer over what the customer’s needs are. As if they know the customer’s needs better because the customers needs are not consistent with their vision of what customers should be doing. Unfortunately, this is often after they have already spent significant time and money building a product, and now they are in sell-mode rather than listen mode.
Your product leader is not likely the 2nd coming of Steve Jobs and shouldn’t act like it. Their vision for how the market will unfold can’t be in conflict with what customers want to buy. Don’t get me wrong, vision is a good thing for product leaders, but only if it is rooted in reality and validated by target market and customer research. You should start with a vision or hypothesis of where the market opportunity will be. But that is just the beginning. Test the hypothesis. Get feedback. Talk to customers. Research the market and validate your assumptions before you start building product. It may require a prototype to show customers what you are talking about to get more informed feedback. Either way, understand the market need and alter your vision where necessary if you want to nail product-market fit and achieve high growth.
Technology Will Not Sell Itself
Technology innovations have created many multi-billion dollar markets. The ironic thing is that the technology itself, although critical to enable new capabilities, is secondary to the capabilities that it provides. In other words, people and companies don’t buy technology; they buy capabilities, functionality and solutions to their problems. This may seem obvious, but you’d be surprised how many tech companies lose sight of this fundamental concept.
Often highly technical founders or product leaders will build an amazing piece of technology – a true technological wonder. But as brilliant a technical achievement as it may be, if it doesn’t solve a customer’s problem, then they really don’t care. Cool and innovative technology does not sell itself in great quantities. It must solve a core need for the market to broadly adopt it. Technologists often find this frustrating that customers can’t seem to appreciate the shear technical brilliance of the product, but it’s not enough. They often blame Sales and Marketing for not adequately explaining and promoting the technical brilliance of the product, but it’s about the solution and problems solved, not the technology.
Some examples of really cool technology that didn’t solve very many people’s problems are the Newton, Segway, and more recently Google Glass and Snapchat’s Spectacles. Each of them unique and innovative in their own way, but all failed to capture significant market share. It you want to nail product-market fit, make sure you are not selling technology. Ideally, solve a key customer problem via cool technology for better product-market fit.
Settling for a Niche
When evaluating product-market fit, it’s important to make sure you are addressing the needs of a large and un-crowded market segment. Sometimes, you’ll have good product-market fit with a small segment, which is good for a start. But then you’ll need to figure out how big this segment can get and if it can take over the larger segments that comprise the bulk of the market opportunity. If it can, they you are in a perfect position to wait for the market to come to you and ride the next wave. But if not, then you are in a niche segment, which is not where you want to be if you want to grow fast. It can be tempting because you have a good fit with some customers who love your product, but they don’t represent the broader market. Don’t settle for the niche! It’s a tough place to live as your growth will be capped by the size of the niche. And unfortunately, you’ll have a front-row seat to watch others ride the larger wave of the bigger segment to much higher growth.
You can get stuck in a niche if you didn’t get feedback from enough customers representing the broader market opportunity. Understand the key differences between the needs of the niche and the needs of the larger market opportunity. It might not be a huge investment, but it could pay off in spades when you address the needs of a larger market to drive faster growth.
In my next blog, Part 2 of the Top Reasons Product-Market Fit fails, I’ll chronicle more common pitfalls that hold companies back from meteoric growth.