Why do established software companies stop growing? Most startups fail because they don’t find a strong product/market fit. Marc Andreessen describes this as when “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.” Do established companies fall prey to the same problem? Is your company’s product/market fit strong enough to generate growth?
Product/Market fit isn’t binary, you can have enough to be viable but not enough to grow. When companies start selling they assume they have it. They become busy supporting their customers and strive to sell more. But landing your first few sales doesn’t guarantee you’ve achieved a fit that will generate growth. If you move out of discovery mode and into delivery mode growth will stall. To find a fit that generates strong growth you must discover and deliver continually.
So what are we looking for? Andreessen says “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.”
What can you do to generate the fit that Andreessen describes? Startups search for product/market fit through a continuous discovery cycle. Their chances of success are low because they’re poking around in the dark. In an established company, you might have better odds. You already have some product/market fit to test against and with a little effort, you can refine that fit and escape the low growth swamp. There is no magical Yoda to lift your company out so let’s get digging.
Start by talking to your customers and users. From your usage data, identify groups of people who engage in different ways with your product. Now go and get to know them better (there is always a way). Who are they? Develop a deeper understanding of the problems you are trying to solve for them. It’s time to fall in love with the problem again, it’s so easy to get absorbed by your solution.
Now let’s reflect on your market. Are your disengaged users really part of your market or do you need to tighten the criteria? Are you trying to sell to people for whom the problem you solve isn’t important enough? From what you’ve learnt do you now have a better definition of your true market? Is it an attractive one that gives you room to grow? If not, is there another market you could experiment on?
Once you have an attractive market defined it’s time to refine your product’s fit. Keep learning from your customers and users and try to chat with different ones for a few hours every week. How is your product impacting their world? Does it relieve pain or create joy? Does it make their life easier or more stressful? Is it becoming obvious how it could be even better?
Visualise your finding with tools like personas and value proposition canvass. Use the techniques the lean product world has created to test your assumptions about the problem you solve, they’re not just for startups. With a deep understanding of the problem and the people, it’s time to say ‘no’ to all the items on your backlog that don’t improve your fit. Replace them with ideas that might and test those ideas before you commit.
Your understanding of your market should influence everything you do. Share the stories you hear in your research across the company. Solving the customer problem is your companies mission, something that everyone understands and engages with every day. Use every opportunity and channel available to communicate this to your teams
And finally, remember that product/market fit is fussy. Yours must be stronger than the competition. A near miss will waste investment in product development and sales. Markets change, so this process is continual. Get the fit right and profitable growth will come. Build discovery and delivery into your company culture and you’ll rise clear of the low growth swamp.
LeanTomato helps software companies grow. Find out more at leantomato.com.