6a. Product Market Fit Kick-Off

We’ve made some serious progress so far.

We’ve talked about product development methods and what makes good product development good.

We talked about marketing and the four Ps (product, placement, price, promotion)

We talked about strategy (unique activities and trade-offs) and strategic alignment of product development and company objectives.

Now, time to get down with PMF. Product-Market Fit

Product-Market Fit is a popular and trendy term in the Lean Startup world but it applies to most industries.

You can spend a lot of time talking about the finer points of Product-Market Fit, but I’ll distill the concept: when people want your product, you’ve achieved Product-Market Fit, which is important in your product development life cycle.

See all those hearts? The market LOVES that product!

Here’s another way of thinking about it:

The Market has needs. The product is a solution. When the solution fits the needs well, you have Product-Market Fit.

Marc Andreessen coined this term. He’s a pretty big deal in Silicon Valley — he founded Netscape and is now a successful venture capitalist.

Andreessen described Product-Market Fit as: “The degree to which a product satisfies strong market demand.”

He also said, “Product-Market Fit “means being in a good market with a product that can satisfy that market.”

It seems pretty basic, right? It is that simple.

“The main reason products fail is because they don’t meet customer needs in a way that is better than alternatives. This is the essence of Product-Market Fit.” Dan Olsen, The Lean Product Playbook.

Product-Market Fit is the Big Idea

I like the concept of Product-Market Fit because it is essentially the main objective of product development. It’s the whole ballgame. As Paul Graham, a guru in the startup world put it: “Make things people want.”

But It’s Also Not A New Idea

I hope you’re saying to yourself, “Is Product-Market Fit just another way of saying that products should solve problems and meet customer needs?”

If you’re thinking that, you’re right.

Sure, there are nuances to the concept of Product-Market Fit, and you can read all about them if you want, but I think it’s safe to say that the key idea of PMF is the same idea that has been at the heart of product development from the dawn of time: products should meet customer needs.

In the coming days, we’ll talk about how to discover opportunities to make a product, exploring concepts like:

• Customer Needs
• Opportunities
• Product Discovery

6b. Product-Market Fit — Part Deux

We talked about Product-Market fit, but now we will do it again with the aid of a pyramid.

(Pyramids are among the most honored shapes in all technical writing — perhaps at the top of the pyramid when it comes to shapes used to communicate information.)

This diagram is from the book The Lean Product Playbook. It’s a nice graphical way of saying that a product should provide value by connecting with the under-served needs of your target customer.

Problems and Solutions

Another way of thinking about this is by saying, “There are problems out there, and products are the solutions.”

This brings us to three definitions.

Problem Space — Relating to the fundamental issue or challenge to be solved; where the customer’s needs live.

Solution Space — The realm of possible solutions or products which can address the problem space.

Product-Market Fit — (Yeah, I know you already know this one, but I’m adding it again.) “The degree to which a product satisfies a strong market demand” — Marc Andreessen.

I really like the idea of problem space and solution space because it helps me keep product development concepts/terms/processes organized in my brain.

You can surely dive much deeper into each of these topics, but from a Distillery standpoint, just knowing these terms and appreciating what they define is our goal for today.

6c. Opportunities, Discovery, and Discovering Opportunities

We’ve introduced the concept of Product-Market Fit. We’ve also mentioned the terms “Problem Space and Solution Space.”

You’re probably thinking to yourself, “Hell yeah, I’m ready to achieve Product-Market Fit by understanding the Problem Space and exploring the Solution Space until I ultimately design an awesome Product.”

OK, that sounds pretty cool and is actually kind of accurate, but please slow down.

Before you can do any of that, we have to answer the step 1 question: What Should We Build?

The topic of Opportunities addresses this fundamental question.

Opportunities

You can’t go about designing an amazing product if you don’t know what to build. You can’t even improve an existing product without answering the same question — what should I build?

Key Term: Opportunities — Problems waiting to be solved by a product; An opportunity to solve a customer need with a product or product feature. #define_a_word_with_the_word

Think about opportunities as unmined gold.

Opportunities are customer value waiting to be discovered and exploited.

Opportunities are problems that are waiting to be solved.

Opportunities are customer needs that are not being addressed, or needs that are currently being poorly addressed.

Real talk here for a second. The term opportunity is a bit stilted. I don’t know a lot of product developers who use the term casually. ‘Well, let’s go about identifying some opportunities here people so we can figure out what to build.’ Reckon you would get your ass kicked for saying that.

Most people will just say something like, “What improvement to our product would have the biggest effect on our users?” Or maybe “What is the biggest customer need not being addressed by current products in this space?”

Those questions get to the heart of finding opportunities.

Discovery

How do we find opportunities?

The same way people find gold mines — they go out and explore and then discover them! (I don’t know much about mining gold, but that seems right.)

Key Term: Discovery — Figuring out what product to build; or, finding opportunities.

A lot of product development textbooks start with a chapter on Opportunities. Newer books, like those on Lean Startups, talk about “Product Discovery” and the “Problem Space.” Don’t be confused — these things are very similar.

Discovery and Opportunities Distilled: Discovery describes the system or activities used to identify good opportunities to build a product or product feature.

And now, to say that sentence again, using our fancy new terms

To find opportunities for a new product, we have to embark on discovery activities. These discovery activities will help us better understand the problem space and the customer’s needs, so that we can then build a product that addresses those needs, thus achieving Product-Market Fit.

6d. Finding Opportunities and Discovery Activities

You: OK, an opportunity is a problem waiting to be solved. So, how do we find opportunities?

Me: Discovery.

You: OK, what is discovery, really? What are these discovery activities that you speak of? Do I just walk outside and start looking around for opportunities?

Me: Well, sort of.

Discovery activities come in two types. Maybe there are more, but let’s keep it simple right now. I call these two types of Discovery Strategic Activities and Voice of the Customer Activities.

Discovery Type 1: Strategic Activities

Very few people in the real world just wander around, looking for opportunities. You don’t just look at someone struggling with their phone and think, “Oh, I’ll invent the iPhone now.”

Most product development efforts take place within the context of a corporate initiative, one that is hopefully aligned with the strategy of the company.

Strategic discovery is when you look at the market and your business and your strategy, and you start planning what products to make.

• “What are our competitors doing, and we do we beat them?”
• “What other products could we sell to people already on our site?”
• “Can we leverage our technology into another product?”

Strategic discovery is focused on the customer’s needs, but it’s firstly concerned with strategic issues like competitor comparisons, market expansion, differentiation, and strategic things like that.

Discovery Type 2: Voice of the Customer (VoC) Activities

This activity is more open-ended, bottom-up discovery, and it’s called Voice of the Customer.

VOC activities are when we get out of the building and seek to better understand customer needs.

Design Thinking, Market research, Focus groups, Ethnography — these are all voice of the customer activities that help us organically discover opportunities in the market. (If you’re not familiar with these things, you will be, stay tuned.)

Voice of the Customer activities helps us better understand and define the Problem Space.

Side note: When you read about product development, you will see that “understanding customer needs” gets thrown around a lot. It comes up early in the process (how you identify new product opportunities), but also later on as you design the product. It’s not relevant in product development (#doublenegative), so expect to see more about it.

Which method is better — Strategic of Voice of the Customer?

I think the better question is, “why wouldn’t I use elements of both methods to discover opportunities?” Yes, you should do that.

We’ll wrap up Opportunities and discovery in the next section.

6e. Jobs are Opportunities and a Recap of Opportunities and Discovery

This final piece about opportunities will introduce one last concept and then connect it with what we’ve discussed in the last few posts.

Jobs To Be Done

There is a school of thought that advocates another way to approach opportunities. This approach is called Jobs to be Done or JTBD.

The philosophy of JTBD is simple: customers “hire” products in order to do a job.

The job could be simple (keep me entertained while I wait in line) or complex (help me feel like I’m a good parent), but the key idea is that people “hire” products.

Whereas up until now, we’ve been saying that an Opportunity is a “customer need waiting to be filled,” the JTBD school of thought would define an Opportunity as a “job someone needs to be done.”

The distinction may seem subtle, but it unlocks several new insights. We’ll get more into this JTBD topic in future sections.

Connecting all the Dots

We talked about “Opportunities” and “Discovery” and “Product Market Fit” and “Voice of the consumer.”

In plain English, these concepts can really be distilled into a series of questions related to your product:

• Who is this for?
• What is the problem or need?
• What should we build?

Opportunities and Discovery are not all that much more complicated than that.