Finding Product Market Fit Before you Run Out of Resources: The Hero’s Journey of Founding a New Company

It’s always energizing to work with company founders, and a recent gathering of Clean Tech Midwest firms was no exception.  I was invited to participate in the event, which hosted more than 20 firms from the Midwest who are in the process of preparing their business plans for both regional and national competition. I shared my work around the Hero’s Journey with them, and as usual, their runway-level questions during our dialogue reminded us all of the need for getting together face-to-face and hashing things out.

The material I shared had two objectives:

• The first was to help the teams consider whether they had chosen to deploy their hard won IP in the best market landing zone to achieve their goals.  
• The second was to encourage them to become experts in both the full scope of the market and product fit balance – not just one half of the equation.

Understanding the Path to Growth

I use the acronym STRIDE to label the path from founding to profitable growth:

• ST stands for Strategy and Tactics.  This is the early work that the initiating team does that becomes the originating work of the proposed business.  This phase includes creating the idea, and then building on the idea with tools like the Business Model Canvas and Value Proposition Canvas.
• R stands for the reality part of the curve and is where the real IP gets built.  Every firm does its planning based on the best available insights before it departs on the discovery journey.  
• I is for the integration of rich insights that are developed in the reality phase.
• D is for deployment, when you have solved the first leg of developing a high-performing delivery system.
• E is for extend, when the hard work of optimization is done, and the new product or service is fully integrated into the firm’s P&L’s.

To use a real-world example, let’s think about the path of today’s highly-refined mini vans.  Per this New York Times article, Chrysler had been thinking about the idea from the mid-1970’s (Strategy and Tactics).  When the chips were down, Lee Iacocca decided it was time to try and enter the reality phase by commissioning a unit based on a dated car chassis that was very underpowered and had soft suspension.  Once they had found a niche, they quickly took the feedback into the development team (see history here), and developed versions with more room, more power and better suspension.  By 1990, they had a refined Town and Country model (The E portion of the curve), where they had commanding market share that would power the P&L statement for decades.

Getting Much Deeper on the Product

For this group of entrepreneurs, the first piece will be to find a repeatable and sustainable solution to a market and not just an isolated customer.

The journey starts with true empathy for the client’s “jobs to be done.” The jobs to be done framework was pioneered by Clayton Christensen’s team at Strategyn (see link here).  The principle here is that client value is built in layers very similar to Maslow’s triangle, and once these true value elements are identified, they can be built into a foundation of true value for the client, versus the projected value that often conflates competitive elements into the mix and over complicates the solution.  

The Business Model is the Product

Founders are unique in so many regards.  They usually have a successful career in their chosen field, yet are driven by a need to be independent and do it better.  This drive to do it better gets them up early and into the office on weekends to pencil out new methods, products and services even though their friends and family can’t understand it.  Their drive is both a blessing and a curse, as they have an insatiable need to create, as well as business model patterns born from current experience.

This hard won intuition that every founder has from the successes they’ve experienced in the field prior to founding this new venture needs to broken through a platform of learning: every founder has to push themselves beyond the boundaries of their current industry business model.

The key to this journey lies in becoming a “good enough” practitioner on the opposite side of the business model from where their expertise lies.  Every firm I work with is either an expert on the product side of the curve or the market side, but almost no one does the work they need to on the portion of the curve that is not their expertise.  For a great primer on “lean canvas,” check out this link here.

Find the Narrowest Road to a Real Market

The last leg of the founding journey is to choose the width of your path very carefully.  I advise taking the narrowest cash positive path you can find.  Once you have worked up a lean canvas, you can then take time to detail out the risks in each box and assign a red, yellow and green level to each one.  By going to work on the reds and making sure you are focusing there, your path to market will become achievable.

As an example, I had a client that had developed a unique approach to handling waste for those municipalities that were too small to have dedicated processing plants.  Their original approach was a direct sale of units to these municipalities.  Needless to say, they ran headlong into risk averse leaders and a passel of regulatory barriers.  The solution?  Counterintuitively, the client went international first, where they found a white hot need that could be satisfied under local regulatory control.  These successful installations then allowed the firm to build true pilot units that assured others that the technology could deliver. Now the firm is on a strong growth path.

Pulling it all together:

• Find the underlying, specific white hot problem
• Seek the sustainable repeatable market
• Know the market is a living, breathing, moving target
• Stay on the the narrowest workable [cash positive] path
• Choose your battles and solve the riskiest portions of the model first
• Become proficient in the other half of the model and metrics

If you recognize yourself on the STRIDE journey and would like to continue the conversation, please click on this link and set up a 20 minute, “roll up your sleeves” call with me, or call my direct line at 847-651-1014.

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