How to achieve product-market fit.

As I was brushing off my skills, I have come across a video of Dan Olsen which he delivered on Productized back in Mar 2018. After watching the videos, I have recognized that on a daily routine, how much we lack applying lean production techniques to our products.

I take the liberty of writing this post to share some of that knowledge from his presentation.

Let’s start with, what is product-market fit?

It is stated by Eric Ries on the book The Lean Startup for the first time.

I have recommended every product manger to read at once. If make a google search it will tell you that;

Product/market fit is the degree to which a product satisfies strong market demand.

So it exactly is, without product-market fit, we can easily say you are dead in the water. The first thing you need to do is to find it or anything you do won’t go beyond wasting your valuable resources.

According to the lean product framework, there is this triangle of hierarchy on the product-market fit. It starts with the target customer moves to the underserved needs of that particular customer and that defines the market.

After the market, there goes the product which starts with the value proposition, feature set, and user experiance.

Determine your target customer

The simple question to define this is;

• who’s life are we trying to change?
• Who’s pain points we are trying to address?

The general mistake that is done while answering the above-given questions is selecting a persona so generally, that creates diverse needs.

Let me give you an example of it.

Let us say that our answer to “who’s life are we trying to change? “ Millenial, just think of the differences between this vast group. Some millennials are into video games, some Millenials are into anime or any other hobby or need. Making a selection this broad makes it hard to distinguish immediate needs for this group and as a product manager, it makes it hard to come up with solutions that move the needle.

In upcoming paragraphs, I will share a more dramatic example of this, for now, let’s move on.

Let’s say that our high-level need is; “transportation 100 miles of my house” just by analyzing below given matrix you can see that soccer mum’s needs are much more different than the speed demon’s.

So it is very important to select a group that has similar needs and small enough so that we can address their needs.

Identify underserved needs

What lean management proses for this step are to create a matrix that consists of problem space and solution space. I have created one for demonstration purposes that I will discuss the key point about this.

In problem space, we need to define A customer need, problem, or benefit that the product should address. Simply a product requirement.

In solution space, we need to create a specific implementation to address the customer need or equivalent.

One crucial point about this practice is not the mixed solution with the problem. There is this great example of mixing solution with the problem that I want to share with you. During the space race in the 20th century between the United States and the Soviet Union, one of the problems to solve is to take notes in space. Regular pens do not work at space because they need gravity to work. So the Fisher pen company takes this problem and spends $1 M in the R&D budget and build one that can write-in space. But the Soviet Union just gave pencils to their astronauts rather that pen.

What we can see is While the Soviel Union defines the problem as

“I want to have the ability to take notes in space”, Fisher pen company defines the problem as “I want to have the ability to take notes in space by a pen” which polluted the problem with the solution.

This kind of pollution can be mitigated by using the 5 Why technique founded by Sakichi Toyoda. I have found a great post about the “5 Why technique” which you can go in detail and learn more about it.

By looking at the example of the space race we can see it is wise to spend some time in problem space before getting into the solution space.

Define your value proposition

This part is all about what is the added value that you are creating. We found the persona, we define the underserved needs and now we will create a value proposition for the problem we are solving.

Wikipedia defines the value proposition as “A value proposition is a promise of value to be delivered, communicated, and acknowledged. It is also a belief from the customer about how value will be delivered, experienced, and acquired.”

I would like to share AirBnB’s value proposition and go over the way they share it with their customers.

As you see their message is clear, “Live There” a stong communication of their value proposition, followed by an elaboration of the details “Book homes from local hosts and experience a place as you live there”. This shares the value that Airbnb is proposing to its customers and addresses a certain need.

The value proposition that Airbnb uses differentiates them from other online travel agencies like booking.com. It clearly states what they are providing something different than hotel booking.

I would like to share one more example where the product is solving the same problem as the competitors. The below-given table where all of the products are solving the same problem. Their value proposition is the same, what differentiates one another is the features they provide to solve the problem. Now it comes to the detailed features.

Let’s assume that we have selected the list of below-given features as a differentiator.

This is a huge list to build an MVP. We need to refine and select the features that we will use in our MVP and create the value proposition out of it. To be able to identify the list, the best approach is to ask our customers then we can use the below-given graph to determine the feature set.

As a product manager, we are looking for the most under satisfying needs with maximum importance to the user. This hits to the top left corner of the graph. The low-low and low-high do not make sense to follow, because if we are following an opportunity that has low importance to the user we are never gonna be making a huge effect on the market. In addition to this, if we are looking for a competitive market which highly satisfies user, we need to be at least 10x better than the competitors to survive.

In addition to this, we also can use the same graph to estimate the customer value created and the opportunity to create customer value.

So how can we use this graph when communicating with our user. The simplest way is to create a survey and ask customers to fill it. There is a wide variety of tools out there that you can do this online. [Hotjar, Usertesting, etc…]. So using these tools we can create a survey and ask our user or a specific demographic to vote for the specific features and after that, we can just lay the results on top of this chart. It might look something like the below-given graph.

This chart gives us a very good understanding of what to do first and what to leave for later phases.

There are several different techniques that one can employ in such needs as like, MoSCoW method.

Define your MVP

MVP is an acronym for a minimum viable product. Where you employ the minimum set of features that satisfies the user needs. The reasons you choose to have the minimum set of features are;

• Prototype fast and easy
• Get to the market fast to gain more insights
• Not to waste resources for something that is going to fail.

The saying “Fail fast” is coming from the above-given reasons. If you fail fast with a product that is not going to fit the market, you will save your valuable resources.

One of the best ways to define the MVP feature set is the KANO model. Kano model is a theory for product development and customer satisfaction developed in the 1980s by Professor Noriaki Kano, which classifies customer preferences into five categories.

• Must-be Quality
• One-dimensional Quality
• Attractive Quality
• Indifferent Quality
• Reverse Quality

It is mostly presented using the below-given graph.

Basic attributes

Basic attributes represent the features that customers just expect them to be available and work. For example, expecting a mail service to be working close to 100% time [up time ratio]. Customers rarely look into these features or notice them in detail.

Performance attributes

Performance attributes are the features that have a direct correlation with customer satisfaction. As a product manager, your job is to spend more time on completing these features if your competition does not have it.

If we need to give an example of this we can say when Gmail launched it is the only mail service that provides 2 GB of free space. Because of this feature, it acquired lots of users in a short amount of time. So we can still clearly say more free space more customer satisfaction. In most cases there a direct cost tied on performance features and it makes performance attributes perfect candidate for competition.

Delight attributes

These are the features where your product delights your user by overdelivering. A good example can be Gmail’s main tabs that label and differentiate content and sort the mails for you.

The complex situation about delight features is it is not expected by the user so there is no direct connection between the amount of these features and customer satisfaction. These features can increase the speed of adaptation. Keep in mind that these features can turn into performance and basic [must-have] features over time.

One way to use this to decide our MVP features is by creating a competitive analysis matrix.

If we take the above-given matrix as an example we can clearly say that our product must-have feature “Y” and also we can invest most of our time in performance feature 3 because competitor A/B does not have the best performance. Also, we can invest some more time on performance feature 1 to make it the best in the competitor set. Lastly spending some time on delighter 2 can create a wow factor on the customer.

Since we define the MVP by selecting features that will both delight the user and also deliver performance now it is time to move to the next phase.

Specify MVP feature set

In every company, I have been there been always a debate about what features included in the MVP. Some stakeholders define the full list of features to be included in the MVP phase, some insist on delivering the fundamentals. The correct way is to create a mixture of a functional, reliable, usable, and delightful set of features that will fill the underserved need of the user.

Aaron Walter transforms Maslow’s model of human needs into the needs of our users.

In contrast with the belief of setting bare minimum as an MVP feature set, the correct way is to create a mixture of all these emotions to your MVP.

Once you decide what’s in and what’s out, you need to move on creating the prototype and start testing and learning.

Testing your MVP

I think the most important phase is testing and where you connect with your customers/ users and there are some techniques on how to approach testing. One of the most common ones is A/B testing and determining the changes within the user behavior. I will create a separate post in which I go through the best practices of A/B testing and user testing practices.