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I break Startups down into their component parts and show you how to build for success.  


product market fit

 

When you're thinking about how to grow your business, do you think first about Product or about Strategy & Operations?


You'd be forgiven for thinking first about Product, a lot of Founders I speak to do. Your product is what you're selling so that's obviously where you start, right?


Unfortunately, no. In fact, you should never, ever start with the product.


Keep reading to learn why and avoid the one mistake that breaks 35% of businesses.


 

Did you know that a Chief Operating Officer can run most business functions, making them the most efficient and effective tool for any growing business with a limited budget?


An early-stage COO is, on average, responsible for about 7 different business functions.


From the anecdotal experience of my peers and me, this usually covers HR, Legal, Finance, Fundraising, Sales & Marketing, Product, and Engineering.


A COO can be responsible for such a broad range of disciplines because they're also responsible for the business's Strategy - aka the thing that ties everything together and keeps the business pointing in the right direction. (If you'd like to learn more about how a Strategy ties everything together and how you can easily write yours, check out my best-selling book How To Write Your Strategy via the link below).


How to write your Strategy



In this new series of posts, I'll break down the relationship between Strategy & Operations and each of these 7 functions and show you why a COO should be the first hire on every aspiring Founder's list.


This time, we're looking at Product.

 

The Link Between Strategy & Operations And Product


Why should you think about Strategy & Operations before you think about Product?


35% of businesses that fail fail because they don't find Product-Market Fit. There are about 800,000 businesses started in the UK each year. 62% of those will fail really quickly.


So we're talking here about around 175,000 Founders (who will have a lot of the same dreams and goals for their entrepreneurial life as you) starting a business this year that will fail because it doesn't find Product-Market Fit.


There's one simple thing that a good Strategy can lend to your quest to find Product-Market Fit. And that's your Problem Statement.


What actually is Product-Market Fit?


Let’s start with a little background.


Like most great concepts, the debate over who created the idea of Product-Market Fit is ongoing.


Some credit Don Valentine, founder of Sequoia Capital (early investors in Apple, Instagram, LinkedIn among others), with its creation, and Mark Andreessen of Andreessen Horowitz (Skype, Twitter, Airbnb) with bringing it to popular use.


I’ll leave the full debate to the business historians; wherever it came from, as a concept it’s here and it’s something you need to be on top of if you want to build a successful business. 


In a nutshell, Product-Market Fit is exactly what its name suggests - it’s a measure of the ‘fit’ between your product and its market, of how suitable the solution you’ve built is for the people for whom you’re aiming to solve a problem. 


Build a solution that satisfies a need and finds a demand for itself amongst customers and you’ve got Product-Market Fit.


Build a solution that’s misaligned with customer need or want and you’ll find yourself struggling to generate demand - you won’t have Product-Market Fit because your product doesn’t fit in with the market’s needs and wants.


product-market fit

Why doesn't the product come first in Product-Market Fit?


Because the problem has to.


To even be a product (and not just a project that's, very often, a drain on your business's two most precious resources - your time and your bank account), the thing that you're building (and this applies to both product and services businesses, to B2B and B2C markets, to tangible and digital items) needs to be solving a problem for the customer - and for enough of those customers for the cost of building it to be less than the revenue that can be generated from it.


Put simply: Build Cost x Projected Supply < Price x Market Demand For A Solution

I believe that any part of building a business can be easily broken down into the lowest common denominator, into its most basic component parts. 


From these basic parts, one can build, step-by-step, a robust and successful business.


For Product-Market Fit, the most basic component parts are the problem that you’re trying to solve and the potential for demand for that solution.


The most basic and simple thing that you can do to find Product-Market Fit is find a problem that exists in the market, understand that problem from all angles and across all dimensions (very specifically including the fact that enough people care about the problem and want a solution), build a solution that really works, and bingo, you have it - your product fits the market and you have a clear path to Product-Market Fit.


What could possibly go wrong? If finding product-market fit really is as simple as it sounds (you just build a product that’s right for the market) then surely it’s hard to go wrong?


Unfortunately not. Lots of companies start with a solution, become so passionate about the solution after months of work that they forget about the market need, and then have to try to find a problem and market that fit it retrospectively. 


This is very very rarely successful. You are so much more likely to find success by identifying a problem and building a solution to fix it than you are if you have a solution and you try to convince yourself that there’s a problem it’s perfect for.


If you were building a piece of furniture you’d want the screws and nails to be designed to exactly fit the places where they needed to go, you wouldn’t just shove any old screws into the joints and expect it to hold up.


The same would be true if you were putting a jigsaw together - sure, a piece may be the right shape to fit in your jigsaw even if it comes from another puzzle, but the completed jigsaw’s image would be wrong - it wouldn’t fit and people wouldn’t want it. 


To find Product-Market Fit, you have to start with the problem that you’re solving.


I've written a whole book on how to find Product-Market Fit. Get that in the link below, or get the first chapter for free here.


how to find product-market fit



So why does this mean I should wait to hire my first Product person?


Product people want to work on products. Their outputs are things built, features enabled, tasks completed. A good Product person (and there are lots of great ones out there) will start with the customer need before building anything.


Unfortunately, in the earliest stages of your company's life, it's unlikely you'll be able to afford a really good Product leader and you thus run the risk of prioritising features and releases that are interesting to work on, but that don't actually contribute to the long-term vision of your company.


By hiring, first, an Operator and Strategist for your company, you can ensure that any decisions that are made about what to build and what not to build are tied really closely to the overall goals of the business.


In short, start with the strategy and build a product that really fits customer need.


If you'd like to talk more about how a focus on Strategy & Operations can help your business grow, feel free to book a free Discovery Call via the link below.








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