Product Manager Lens
A lens to find a right product for the right customers.
Problem/Solution Fit
Majority of the products that are built now a days are centered around 1 or few core problems. If you think through, you will find out easily what problem a given product solves. For example, Uber is built around a problem where finding a cab was inconvinient and expensive, Google provides the entire web information in a single click, Netflix brings an entertainment system to your home, and even games are developed to satisfy a problem of short boredom. Thats said, if a product does not satisfy a core problem in first place, it won’t scale. Entrepreneurs often developed products based on the problems experienced or observed in day-today life. Even then 9 out of 10 products developed does not scale and are sunset within 6–12 months.
This means either they are not solving a real problem or even if the problem is real, its not common among their target audience. When asked, entrepreneurs usually say that “we run out of money as there isn't any customer demand” or they say that “competition outrun their products” or the timing of the product launch is either too early or too late. Whatever the reason is; the outcome is product failure results in wasting resources, time, money.
So, the fix is “Before building a product, first find out whether its worth building it or not”. As Eric Ries, a great entrepreneur and author of lean startup recommended to run lean experiments while building a product. I will go over on lean experiments in Product/Market fit section. Finding a right problem is a first thing before you start thinking about building a product and once you find a right problem then it requires validation among your target audience. This is the problem validation step. Here are some of the ways to validate if the problem you are solving is a real problem or not among your target audience:
- Online Surveys — This is crude way to find out if problem exist among your potential customers. Surveys are not that accurate as you cannot gauge customer reaction to set of questions asked online but it provides some high level insights if the problem actually exist or not
- Customer interviews — This is quite powerful way of finding out what people think about the problems you are trying to tackle. The interviews are quite exploratory where you try to understand the type of users experiencing the problem, how deep is the problem and what alternatives do they use. Downside of interview process is that you can only run up to n number of interviews. The data collected is not that enough to see if the problem really exist among your projected user base
- Google searches — Try to search similar problems in Google to find out how many people have already searched about it or number of people wrote about it. It will tell you if the problem is common among your target audience
- Social Media — Search on Facebook, Twitter and other social media site to find out how many people are talking about the problem or something similar
- Competitors study — Try to find out competitors who are in similar space and see hows their product are solving the problem
Once you find out if the problem is worth solving then the next step is to build a simple solution or MVP.
MVP( Minimum Viable Product) —The acronym is heavily used among entrepreneurs and PMs in Silicon valley. As most of you know about MVP but I bet 90% of the PMs has misunderstood MVP. They usually think MVP is a basic version or first version of the product. Wrong! Even I thought the same for almost an year after becoming PM. So, MVP is an experiment you run to validates your riskiest hypothesis. It can be just an email to potential customers or simple landing page with call to action button or in some cases even basic version of product. The whole point is to develop it in shortest amount of time and provide maximum validated learning. I once heard MVP is maximum valuable product developed in shortest amount of time and resources.
Once you have developed your MVP, it requires validation among your potential customers. The solution can be validated in following ways:
Qualitatively — Here you present your solution to group of potential customers whom you have talked in problem finding phase. You can provide some details about the solution, the problem its solving and the value its providing. You can see their reaction and see how ur solution is perceived among your target audience.
Quantitatively — You can collect data from the MVP you published to the set of users. With data, you can see how many users are actively using it, average time spent by user in your product and hows ur KPI performing.
By validating qualitatively and quantitatively, you can find out hows your initial MVP is performing among your target audience. The next step is to move toward product-market fit.
Product/Market Fit
Product Market Fit is a concept quite common in startup world. We should start with the definition from Marc Andreesen, who originally coined ‘Product/Market Fit’ in his post “The Only Thing That Matters”:
Product/market fit means being in a good market with a product that can satisfy that market.
You can always feel when product/market fit isn’t happening. The customers aren’t quite getting value out of the product, word of mouth isn’t spreading, usage isn’t growing that fast, press reviews are kind of “blah”, the sales cycle takes too long, and lots of deals never close.
And you can always feel product/market fit when it’s happening. The customers are buying the product just as fast as you can make it — or usage is growing just as fast as you can add more servers. Money from customers is piling up in your company checking account. You’re hiring sales and customer support staff as fast as you can. Reporters are calling because they’ve heard about your hot new thing and they want to talk to you about it.
Another great defintion of PMF A complementary definition was found in Principles of Product Design, by Josh Porter, suggested by Tim Harsch.
Product/market fit is when people sell for you
A product is said to achieve PMF when it resonates strong enough among your customers, they become your sales people.
Since you have validated your riskiest assumption in Problem-Solution phase, now its time to build actual product focussed on key problems. Again you have to gradually build a product by validating your hypothesis among your potential customers. To achieve PMF, the first hypothesis to test is value hypothesis.
Value Hypothesis is an attempt to articulate the key assumption that underlies why customer is likely to use the product. Identifying a compelling hypothesis is what I call finding a product/market fit
After you validated your value hypothesis, then you have to scale your product by testing growth hypothesis
Growth Hypothesis represents the way to scale the number of customers attracted to your product or service. The cost-effective way to acquire customers.
How to achieve Product-Market Fit?
As Eric Ries mentioned in his book Lean Startup, the way to achieve product-market fit is develop a product by running experiments continuously. Each experiment is run using Build-Measure-Learn loop. The goal of Build-Measure-Learn is not to build a final product to ship or even to build a prototype of a product, but to maximize learning through incremental and iterative. There are 3 steps of experiment as mentioned in below diagram.
Build — In this step, you test your assumptions or hypothesis as quickly as possible by building a minimum viable product/feature.
Measure — Here you learn qualitiative & quantitatively from the customers response about your product. This tells you whether your product/feature met your assumptions or hypothesis you made
Learn— This is where the startup will have to make a decision based on the measurements accumulated: should it “persevere”, or should it “pivot”? Persevere, in this context, means carrying on with the same goals, while pivot entails changing or shifting some, or all, of the aspects of the product strategy.
You continuously iterate on Build-Measure-Learn cycle until you achieve product-market fit. Once you build a product which is accepted by your customers, the next step is to grow and test your growth hypothesis.
