Product-Market Fit is Difficult for New Innovations
Even though I love technology, I always cringe when an entrepreneur starts his pitch by touting his new technology. He has forgotten that new technologies are perceived by most customers as causing more pain than the problems they hope to eliminate. I chastise these startups to highlight the solution created by the technology, rather than highlight the technology itself.
I usually get pushback about the success of all the great technology companies, like Intel and Apple. Let me be clear – technology and market-driven need not be mutually exclusive! The best companies find a way to drive the market with a solution based on their technology, rather than push their new technology as the solution for the marketplace.
Yet we all know that many customers delay their adoption of the latest software platform, and fancy new hardware, for a year or two until all the “kinks” are worked out of them. In reality, new technology alone is often assigned a negative value, as startups push out alpha and beta products earlier and earlier in the competitive rush.
Of course, there are always a few early adopters who love change and need to have the latest technology, but early adopters don’t make the market. Here are a few thoughts on a process that will keep you on the right track for the majority of your real customers:
- Get real customer input. Is your product tempered with actual market and customer feedback? Everyone’s personal perspectives and interests are different, so the key is starting from market problems, and going from there to technology – not vice versa.
- Quantify the pain points. What are the major points of pain experienced by the intended users of your product or service? Users with no pain who say “nice to have” will not likely pay money or endure change for your product.
- Keep it simple and easy to use. Are the user problems being solved in the simplest possible way, with the fewest possible features? Or have many features been thrown in, just because the technology can deliver them?
The easiest way to start this process is by starting from the market drivers and working forwards, not backwards. Don’t make the mistake of looking at market needs or requests as an afterthought to verify what’s already been planned.
Companies that are market-driven are externally focused: they identify opportunities and then capitalize on them. Technology-driven companies are internally focused: they identify what is possible with the technology and then look for customers who might like the results.
Market-driven also means knowing the overall dynamics and forces in the marketplace and understanding how those forces might impact the business – marketing and sales driven. A technology-driven business is driven by engineers. A great company finds a balance between these two forces, but makes the business side the driver.
In fact, technology is neither intrinsically good nor intrinsically bad. We all know that very few customers will buy technology, simply for the sake of technology. Technology tools and platforms are hard to sell, because the people who love and understand them are not usually the decision makers, or the budget owners.
But how do you manage “disruptive” technologies, where people don’t even know they have a need? Many entrepreneurs are convinced that they have the greatest invention ever, and others will believe when they see it. Investors know better, since dramatic changes in technology historically take a long time and lots of money go gain a foothold – with a few rare exceptions.
If you are looking for external investors, my advice is to take a hard look at your business plan and investor presentation. If they highlight your technology first, you will likely be tagged as a solution looking for a problem. Start by quantifying a customer problem, and show how you are using technology innovatively to solve this problem. That’s market-driven technology providing solutions, and every investor and customer will want a piece of that action.
Related Services: Market & Competitor Research & Analysis.
|Author(s)||Marty Zwilling (other articles by Marty Zwilling)|
|Original Publication Date||October 11, 2011|
|Related categories||Business Plans, Market Research & Analysis|
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