Problem-Solution versus Product-Market fit

Problem-Solution versus Product-Market fit

We have long studied the world of business from a corporate lens. But the startup world is making us all dream. How can we be like them? How can we become agile, fast to market and innovative? Lovely question! Now don't mistake taking inspiration from startups from actually running a business like a startup. The former is good, the latter not. But that's another story. Let's today look at how startups measure that what they do is worthwhile.

Going from 0 to 1 to 10 to 100

Let us first draw the entire a picture. As a founder or intrapreneur you have an idea. A hypothesis. Something someone is trying to do today is more cumbersome than it could be. That is the premise. There is already plenty of assumptions in there. Is someone really trying to do something? Is doing this indeed perceived as cumbersome? Are more someone's running into this? That is for you to find out!

It is generally accepted to measure research progress by two measures.

  1. Problem - Solution fit
  2. Product - Market fit

When I coach corporates (or startups) to implement these measures, I notice these measures are ill-defined. They are too conceputal. So let's dig deeper!

Problem - Solution fit

While you move from that first - subjective - identified problem ("it's so painful to find a comfortable cafe to work from!"), you will want to check that others too feel that is a (big) problem (interviews, polling). You will start ideating a solution.

It is super interesting to observe how people from different backgrounds come up with different solutions. It is even more interesting to see how these same people not realize that their education, background and beliefs shape the solution they propose.

As a techie, you are likely to come up with a platform, a marketplace. "I'll be the Airbnb for comfortable workspaces!" And that's cool. We need different people with different views to keep this world exciting.

So then how do you measure whether that validated problem is indeed solved by your unique solution? By measuring Problem - Solution fit. How? I measure that by eliminating all of my riskiest assumptions for both the problem and solution.

Problem assumptions

Revisiting the high over problem statement above, I'm assuming (or: I'm convinced of it with little to no proof to know it is true) that people:

  1. Value comfort most in the cafe they work from (more than location or crowd?)
  2. Feel cafes are generally not comfortable to work from
  3. Have difficulty finding comfortable cafes

Notice how 2 and 3 above build on 1? Super tricky and common of a mistake!

I will need to talk to people to find out that is true. My riskiest assumption here is that comfort is important. If interviews show me it is not, my other assumptions already no longer hold. So map all your assumptions and find the ones riskiest to build your questionaire.

Solution assumptions

Once you are proven correct (for now), you focus on your envisioned solution. An Airbnb like platform to list comfortable cafes to work from. You draw up a landing page or (no code) MVP and broadcast your solution on social media. You invest a few bucks to drive (paid) traffic, see if and how people interact with your proposed solution and track conversion rates.

Are you getting registrations at a good conversion rate? Maybe even an occassional e-mail from a visitor to ask for more details? A first attempted payment? Great! People seem to understand how you propose to solve the problem they encounter.

So now:

  1. You have a good idea who your customer is
  2. You know what is their unfilled need (problem) that you are solving
  3. You confirmed they feel your proposed solution can solve their problem
  4. Have a hunge that your solution is feasible (economical, technical)

Congratulations, you achieved a problem - solution fit!

If you didn't... Excellent! You've prevented wasting time and effort. Plus you most likely learned a lot. Now why not revisit your interview transcripts. Did people maybe mention other concerns? Not comfort but need for community? Or do they dislike platforms but just need an indicator visible from the outside they are welcome with their laptops? Pivot!

Product - Market fit

Excellent. You have put in a lot of effort, maybe pivotted along the way. But now, yes, people are connecting to your cause and are reaching out to you and their networks to get involved. You got yourself early adopters.

Keep talking to them! Involve them, listen to how they envision your solution. The product you are about to develop.

Product fit

Now it's human nature that people tell you anything to be liked by you. So while you move your sketched solution into an actual product, keep an eye out for numbers. What is user engagement? How is stickiness? And is retention high? If these are up, you're keeping your early adopters genuinly happy. And that is likely to attract more of them. Start a Slack channel, a Telegram group and keep asking questions. Choose a KPI (CSAT, CES or PMF) to measure progress over time. Try to link changes in your product to changes in your KPI. It will tell you more than a dozen interviews.

With your early adaptors sticking around and gradually growing, you are ready to look outside of this niche, a larger market.

Market fit

Where your early adopters for your "Airbnb for comfortable workplaces", might be hipster, nomadic digital workers, it is time to see if small tweaks can make your product attractive for a large audience. So here you're back to interviewing your non-customers. What pains are they experiencing? Need for child care? Lack of conferencing options? Dedicated desks?

Find a balance in keeping your early adaptors happy (measure!) while improving the attractiveness for another group of customers. Don't fall into the trap of building everything anyone is asking. Keep your original mindset. Create a landing page, ask for beta users. And instead of building new features, look at partnerships. Keep testing before making huge commitments.

Did you grow your customer base beyond the early adopters and did it not negatively impact stickiness and engagement...?

Congratulations: you have achieved Product - Market fit!