tl:dr: It’s so easy to lose sight of the customer needs, particularly when confronted with the seemingly endless possibilities of new tech. A daily practice of thinking about the nature of the problem may help.
At the earliest stage of innovation, one of the most difficult challenges is to find “product-market” fit.
You have a product, but it’s not clear which market will find it useful, if any.
eBay famously started off in the Pez dispenser collection market. Amazon, of course, started in books.
Others struggle for a long time before finding it. Some never do.
The challenge with finding product-market fit comes from having a clear understanding of the make-up of the market you are trying to serve (things like demographics and psychographics), but also from a deeper issue. Namely, you have to have a really, really clear understanding of the problem you are trying to solve.
And, perhaps equally challenging, an understanding of whether or not the customer believes it is a problem as well. And, if so, how big of a problem it is for them.
My kids and I love watching Shark Tank. What makes it so powerful is that it’s an MBA-level education in business in sound-bites. Often times, they are asking about product-market fit.
It’s illuminating because it forces the entrepreneurs on the show to think more deeply about their offering.
If someone ever says to you, “our product is really for everyone,” then, by definition, they have no idea who their customer is and what problem they are solving.
How Product-Market Fit Starts
The reason that I bring this up is that it has been front and center for me for two reasons.
The first is because there are many technological innovations that are not possible, which were previously impossible. However, just because something CAN be invented doesn’t meed it SHOULD be invented.
It may not meet anybody’s need, leaving aside the fact that the failure could be a marketing one.
As some people say, “it’s a solution in search of a problem.”
The second reason is that the team from GenesisDAO that is working with me on the DMO concept is confronted with this issue.
We have a rough idea of what we are trying to do and the fact that we can do something that was previously impossible. At the same time, if we don’t solve a real problem for real users, it will not matter.
It is hard work going through this process, challenging your assumptions, and thinking as broadly and deeply as you can about the needs of the market you *think* you are trying to help.
But it is uber-critical.
Rushing past it, as I (and many others) are wont to do in the enthusiastic pursuit of “building the thing” can prove fatal down the road, or at least cause a lot of delays and wasted effort.
Thinking about Problems First
I’ve been reading a book recently that is written for investment managers but applies to many fields in general. It’s called AlphaBrain: How a Group of Iconoclasts Are Using Cognitive Science to Advance the Business of Alpha Generation.
Falling generally in the category of “think about how you think” books, it’s been very helpful for me in understanding how heuristics (mental short-cuts) blind us and the various biases we all have.
Confirmation bias, for example, is where we only “see” or look for data that supports our original worldview. If you’ve decided you hate Trump, you’re going to look for more evidence of your decision and there’s probably nothing out there that will change your mind.
The authors talk a lot about problems and solutions and provide a format they recommend for attacking them.
First, define the problem as clearly as you can. It should be something an 11-year-old can understand.
Second, articulate the desired outcome. What does the end state look like?
Finally, determine the criteria you will use to assess success and failure afterward.
- I’m out of shape and can’t walk up hills without stopping
- I’d like to be in better shape by this time next year and be able to walk hills without stopping.
- Lose 15 pounds and 2 inches off my waist so that I am carrying less weight up those hills
Or something like that, but you see what I mean.
I almost feel like it should be a daily exercise “what problem are we solving for the end-user/customer? How do we know it’s a problem?”
I know I get very excited about all of the possibilities of using new technology to do new things and offer new capabilities and experiences. Staying focused on the problem (and it’s ok if the customer doesn’t yet realize it’s a problem yet) forces you to think more critically about what you are doing and how you are going about doing it.
What is the problem? Looking for product-market fit was originally published in Data Driven Investor on Medium, where people are continuing the conversation by highlighting and responding to this story.