Empathy and Agility: Keys to Achieving Sustainable Product-Market Fit

How do you gauge if people are drawn to your product or service? How do you ensure there's genuine demand for your idea without spending valuable resources based on a mere hunch?

When I first heard the term 'product-market fit' (PMF), it seemed to be a straightforward concept. I’d interpret it as simply a match between a product and the market, and that means sales. But what exactly could or should PMF look like, apart from 'finding a product that the market wants'? The more I learned about PMF, I realised it's a bit like peeling an onion — complex layers of psychology, culture and market dynamics that make up PMF.

So what lies beneath? By exploring PMF through different lenses, you'll find that it's more than just a business 'jargon' but a world in itself. You'll discover nuances and intricacies that are essential not just for understanding PMF, but also for navigating and thriving in an ever-shifting marketplace.

What is Product-Market Fit According to the Experts?

Andrew Chen, General Partner at 'Andreessen Horowitz' (a16z), a venture capital firm in Silicon Valley, defines PMF as a scenario: 'when people who know they want your product are happy with what you're offering'. His perspective highlights the significance of targeting the right audience who not only recognises the product's value but also feels that the product delivers on its promises to said audience.

Dan Olsen, entrepreneur and the author of 'The Lean Product Playbook’ offers a complementary view. For him, PMF is about how well your product 'satisfies the market'. He further elaborates that to truly achieve product-market fit, 'our product should meet underserved needs better than the competition.' (Olsen, 2015, Ch 1: Achieving Product-Market Fit with the Lean Product Process)

Martina Lauchengco, product marketing partner at Silicon Valley Product Group and author of 'Loved: How to Rethink Marketing for Tech Products' adds another layer to this understanding. According to her, PMF represents a genuine, ongoing demand where customers feel compelled to engage with the product immediately. Elaborating on this, she describes market fit as discovering 'market pull': 'What makes a customer need or want your product enough that they take action to learn more, try, or buy. And what makes this pattern repeatable.' (Lauchengco, 2022, Ch: The Market Side of Product/Market Fit)

Investor and start-up coach Marc Andreessen of 'Andreesen Horowitz' states that 'Product-market fit means being in a good market with a product that can satisfy that market'. He goes on to say: 'You can always feel when product/market fit isn’t happening. 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.' But also: 'And you can always feel product/market fit when it’s happening.'

However, there are also voices in the industry that offer a less ‘conventional’ notion of PMF. One such voice is April Dunford, product positioning expert and author of 'Obviously Awesome: How to Nail Product Positioning so Customers Get it, Buy it, Love it'. In this podcast episode, she mentioned that PMF wasn't a tangible thing to work towards, mainly due to the lack of clarity on when it’s been achieved and how to measure it. According to Dunford, the essence of PMF seems 'superstitious' - not many could concretely define or measure it - 'it's like love or something'.

But underneath these varied interpretations of PMF, there's a common theme: understanding the customer. It's about creating a product that deeply resonates with their needs, desires and pain points. It’s truly grasping and connecting with your customers' emotions and needs - empathy - which can be the defining factor in finding that ‘elusive’ fit.   

Why Deep Empathy Matters in Achieving PMF

Similar to the principles of Game Theory, which emphasise the importance of understanding others’ motives, strategies and decisions to predict and respond to the ‘moves’ of other players in the game, businesses can adopt a game theory mindset. This approach creates and fosters an empathetic understanding of customer needs and reactions which in turn helps with developing (and positioning) a product that truly connects with the market. A win-win situation for all ‘players’ involved when it comes to product-market fit.

Understand People’s Motivations and Context to Find PMF

Entrepreneurs and organisations who don't deeply connect with their audience's desires and context might end up with a product or service that's off-target. This can mean missing that sweet spot of product-market fit. Some may have an intuitive sense of this. But often, there’s a belief of ‘we think we know,’ which leads to overlooking the need for genuine understanding and deep empathy towards our target audience. This oversight can result in challenges later on —like declining user engagement or increasing churn rates.

Thus failing product-market fit.

'Hiring' a Milkshake

In this [video], Clayton Christensen, the late professor at Harvard Business School, shares a story about him and his team working with a famous fast food chain.  

To enhance their milkshake sales, the restaurant began offering new and ‘improved’ versions, created based on customer feedback. However, that didn’t make any difference to sales numbers. So Christensen and his team were asked for help. 

They observed milkshake buyers, trying to figure out the question: 'What job was the milkshake being 'hired' to do?' 

It turned out that people were 'hiring' a milkshake to keep them occupied on their long and boring drive to work. One hand was on the steering wheel, and the other was holding the milkshake. It also fitted perfectly in their cupholder. The milkshake's thick consistency meant it lasted the whole commute and filled the commuters up - ergo no annoying mid-morning stomach growling. 

These important insights were missed despite extensive market research and focus groups. It wasn't about the taste and varieties of the milkshake.

The milkshake story highlights how easy it is for businesses to overlook deeper reasons behind the choices a customer makes but it also serves as a cautionary tale about the dangers of overlooking genuine user understanding. You might waste resources in ‘fixing’ something that doesn’t need fixing. This oversight can turn into an uphill battle to achieve product-market fit.

The Consequences of Overlooking Deep User Insights in PMF

When businesses fail to prioritise genuine user understanding, they often are tempted by 'superficial' solutions. This can lead to a variety of missteps:

1. Chasing vanity metrics: Without a clear understanding of user needs, companies might not focus on the metrics that truly matter.
2. Increased customer churn: Not truly addressing user needs and wants, customers are quick to move (on). Not understanding the root causes of their pain points can lead to superficial solutions that don't retain users in the long term.
3. Difficulty in Scaling: A product without a genuine product-market fit will find it hard to scale without a base of loyal core users.

Businesses need a framework to help pinpoint what their potential users truly want to create a product built on deep empathy. The milkshake story mentioned earlier is all about understanding 'the job' the milkshake was hired to do. This concept is central to the Jobs-To-Be-Done (JTBD) framework, offering a perspective that goes beyond creating traditional personas. JTBD goes beyond traditional persona creation and can help uncover needs buried in 'deep culture' — which is critical for strategic planning and truly resonating with the market. 

Using JTBD to Understand People’s Context and Motivation

It's often challenging for potential users to describe what they want from a product (requirements) that doesn't yet exist. And traditional market research doesn't always successfully uncover underlying motivations and contexts, as seen with the milkshake story earlier. This is where the Jobs-To-Be-Done (JTBD) framework shines, providing businesses with a tool to grasp user motivations and contexts. 

Software company Intercom started as a simple tool for businesses to communicate with their users but evolved into a versatile customer communications platform. The company applied the JTBD framework to discover the specific 'jobs' for which customers were hiring their platform. 

As Des Traylor, Intercom's Co-Founder, said in 'Intercom on Jobs-to-be-Done': 'When you’re solving needs that already exist, you don’t need to convince people they need your product. It’s easier to make things people want than it is to make people want things. The challenge for any company is to understand what products are currently serving those needs, and improve upon that.'

Intercom's story illustrates the power of the JTBD framework in aligning product development with genuine customer needs. By applying JTBD, businesses can identify various market opportunities based on actual 'jobs' that people want to complete. These jobs are consistent over time in comparison to the (fleeting) solutions themselves.   

A clear understanding of customer desires evolves when JTBD comes before product development. This clarity minimises the need for drastic changes later, saving both time and resources. 

Companies like Uber and Netflix identified established needs in existing markets (TV audience/movie watchers and people needing transportation respectively) and tapped into these 'jobs' by introducing disruptive solutions. Creating a product with a JTBD mindset ensures that it meets genuine needs and businesses focus on what customers are already trying to accomplish. This in turn secures a product-market fit that strongly resonates with the target audience. 

It's all too tempting to churn out features like on a conveyor belt, but it's designing for motivation that clicks with users. 

While JTBD helps businesses understand user motivations, it's equally important to acknowledge that product success isn't solely determined by aligning with user jobs. To truly grasp the nuances of achieving product-market fit involves understanding not only user needs but also the broader context. This includes cultural influences, systematic behaviours, and insights from market theories such as prospect theory and diffusion theory. Together, these elements contribute to a holistic approach to understanding how in a market products are adopted and engaged with.

The Interaction of Culture, Behaviour, and Market Dynamics in Shaping Product Success

Building on the idea that understanding user motivation via Jobs-To-Be-Done is just one piece of the puzzle that influences product-market fit, it's crucial also to consider other factors such as cultural influences, behavioural economics and market dynamics that affect the broader context in which users make decisions. 

One such element is Hofstede's 'Uncertainty Avoidance'.

Hofstede's Insights: Cultural Impact on Innovation and PMF

Hofstede's Cultural Dimension Framework (Hofstede et al, 2010) can provide a roadmap for understanding cultural influences on innovation and Product-Market Fit. It categorises cultures based on six key dimensions, with 'Uncertainty Avoidance' being one of them. It measures a society's tolerance for the unknown — how does it perceive and handle the unfamiliar and unpredictable of the ever-changing nature of technology? (The other five dimensions are 'Power Distance', 'Individualism vs. Collectivism', 'Masculinity vs. Femininity', 'Long-term vs. Short-term Orientation', and 'Indulgence vs. Restraint'.) 

In markets where 'Uncertainty Avoidance' is low, companies might find an audience, more adventurous and receptive to trying new products despite the potential risks. They might be more forgiving when it comes to product hiccups. This can be a good thing for businesses introducing innovative solutions. Similarly, organisational and industry cultures, too, play important roles in how quickly innovations are adopted. On the flip side, markets and cultures with higher levels of Uncertainty Avoidance exhibit different patterns.

They tend to be more cautious of the unfamiliar and this sentiment could be slowing down the adoption process and making the journey to PMF more challenging. Individuals and B2B clients in a risk-averse culture might be slower in their decision-making process when considering buying a new solution and need a more measured approach, offering more 'hand-holding' to customers wary of change.

Cultural dynamics can be a powerful predictor of how markets will evolve and respond to innovations. They provide valuable insights for businesses looking to enter new markets or tailor their products/services to a specific audience. How might they shape your strategy in new markets? If your technology stumbles out of the gate, will your market be forgiving or less so?

However, it's also necessary to consider the quick-changing nature of the tech industry. The market is influenced by global trends and innovations, making it one big interconnected digital ecosystem. And so while cultural factors play a role, the global nature of technology can reshape cultural behaviours.

Just as cultural dynamics shape a market's openness to new products and innovations, inherent biases also play a crucial role. One such bias, one that's linked to 'Uncertainty avoidance' is the 'status quo bias'.

The Status Quo — Better the Devil You Know

According to Samuelson and Zeckhauser (1988) in 'Status Quo Bias in Decision-Making', individuals, when given a choice, prefer the current state of affairs and, so tend to remain in the status quo rather than making a change. Even if the said change brings positives. They'd rather not deal with a change because they prefer stability and predictability of the known versus the risk and uncertainty of the new or unknown.

So even if individuals are unhappy with a situation, it might be accepted and preferred, rather than running the risk of being exposed to something new. It's difficult to quieten the inner voice that whispers that things might not work out or get worse. Because as the saying goes, better the devil you know. It's more than just about wanting things to stay the same but more about that or how things could go wrong.

'Fearing' change can be a significant barrier in markets where you introduce a new product, even if your product might be objectively better. The status quo bias isn't always rational — the current situation is simply being perceived as 'better'. For your audience, factors like switching costs, the paralysis of too many choices and fear of the unknown can prevent a switch to your (superior) solution. Existing market leaders are often viewed as the 'safer' options. Or existing routines - they work, so why go through the hassle of changing them? This bias often results in inaction. A study has found that around 20% of deals in B2B are lost due to 'no decision' being made. Ignoring the current state of affairs could lead businesses to misunderstand what customers are truly thinking and feeling. This may be why positioning expert April Dunford remarked 'The first thing you're competing with is status quo'.

How might this bias affect your audience’s decision-making when introducing your new product? To motivate customers to switch and get on board with something new, it's important to understand the status quo of your target audience first and address these factors in your product and marketing strategies. How can your approach help guide customers past their reluctance and embrace the solution that you offer?

From Awareness to Adoption: A Product’s Journey

The 'Diffusion of Innovations Theory', developed by Everett Rogers in 1962, is a framework to understand how, why, and at what rate new ideas and technology spread through cultures. Essentially, the diffusion model is like a roadmap showing how new ideas catch on in society: from people finding out about a product (awareness) to how they come to love and use it (adoption). Along the way, it also shows the barriers and motivators at each stage. And, while originally intended to explain the adoption process, the different stages of the user journey also significantly influence how we can understand, refine and achieve Product-Market Fit (PMF). 

How the five stages of adopting an innovation relate to PMF:

1. Knowledge: As potential users become aware of your new product, you can gauge the market's reaction and get some early market feedback.
2. Persuasion: Users are curious and want more details about your product. Continuous feedback during this stage can help you refine product features and product positioning.
3. Decision: Users weigh up your product's pros and cons against what they need and want. Do they see the benefits? Or are there any deal-breakers? Negative feedback can indicate a mismatch between product and user needs, while a positive response signals a better fit. Feedback from this stage can be gold for refining PMF. 
4. Implementation: Users try the product on a limited scale. How do they interact with the product? Their experiences can give you insights on how to further improve PMF. 
5. Confirmation: Are users sticking with your product ('confirmed')? This suggests that it satisfies a significant need. However, if users abandon it, it's important to ask why. This stage represents a critical crossroads.

By watching how your product travels through these stages, you can gather important insights about cultural trends, customer behaviour and market conditions.  These invaluable insights help determine whether your product is a good fit for your target audience and guide you to make the changes necessary to achieve a resonant PMF.

How quickly innovations are adopted varies across societies.  Similarly, within B2B settings, the pace at which new ideas are embraced relies on how well they match the current ideals, experiences and values. The product’s perceived benefits, its complexity and its compatibility are key factors affecting this adoption.

Recognising and understanding the culture and values of the target audience can help guide your product's journey to PMF and shape the overall adoption strategy when introducing a new product or service to the market.

PMF isn't Fixed

Is product-market fit an 'actual' thing? There are different interpretations and/or versions of what PMF looks, or maybe even 'feels' like. Then, is it simply an elusive concept that product leaders are chasing but difficult to pinpoint in metrics?

What's apparent, however, is the importance of understanding a market's needs to create, tailor and position a product that can satisfy these needs to get people to adopt and achieve product success.

And as societies and individuals change, so do their motivations. To truly empathise and understand these, it's important to pinpoint the 'jobs' that individuals are trying to get done. While these jobs remain relatively stable over time, the solutions and products 'hired' to fulfil them evolve with changes in society, technology and personal preferences. And so, as societies change and individual motivations adapt, does Product-Market Fit. For example, the core job of 'staying connected' has remained but the products hired to do that job have evolved from writing letters to using WhatsApp. Recognising this dynamic is important for businesses to stay relevant and to offer a product that meets market needs.

Hence, the journey to achieve PMF isn't static but it's deeply impacted by changes in cultural norms and behaviour.  Societies that used to be wary of adopting new technologies due to high uncertainty avoidance (Hofstede) might have become more open to new ideas as views of the general public change and it's easier to communicate with the rest of the world.  

And with societies becoming more informed and aware, similarly, inherent biases like the 'status quo bias' won't remain static. By becoming better informed, people's resistance to change may lessen with time, which means a more open attitude towards new things. 

When Uber first launched, it disrupted the traditional taxi industry by addressing a clear 'job to be done' - a convenient, on-demand mode of transport, getting the customer from A to B. Its PMF was closely tied to the rise of smartphones (technological advancement), an openness to share resources - 'sharing rides' (cultural behavioural shift) and addressing existing pain points that came with hailing a cab in less busy areas and doing away with the need of carrying cash tapping credit cards. 

However, as the market evolved, new players entered the ridesharing market. Bolt has now become Uber's biggest competitor in the UK. The very same technological advances that gave Uber a competitive advantage over the traditional taxi industry also levelled the field for newcomers. And, as the ridesharing market evolves, factors like user experience, customer service, and even ethical considerations have become more important factors for customers when they make the decision about which app to use. At the same time, the market's perceptions and biases continue to change. By now, people have gotten used to ‘hailing’ a cab via their smartphones and being driven by someone who is not a taxi driver by trade. And with this 'status quo bias', Uber has become the new norm.

Uber's example shows that despite achieving PMF, businesses must remain alert and responsive to their customers' evolving contexts. Achieving PMF isn't a one-time milestone but an ongoing journey. A previously 'perfect' PMF might need some refinement as cultural norms shift and individuals' expectations change alongside trends and global influences. Believing that PMF is static is ignoring that market dynamics, technological trends, and user behaviours are never at a standstill. Ongoing research and continuous feedback loops are essential to stay aware of changes in the market and with your customers. While PMF may initially seem elusive, it has revealed itself rather as a tangible and yet evolving concept. One that demands continuous adaptation to changing market dynamics and customer needs.

It’s not enough for businesses to simply achieve PMF; they must also actively nurture and adapt it, staying in tune with changes in the market and evolving customer expectations.

What fits today might need some tweaking tomorrow. 

Final Thoughts: Keeping Up with PMF

It's important to view Product-Market Fit not just through a product or business lens but as the interdependence of psychology, culture and market dynamics. At the heart of achieving and maintaining PMF is the ability to understand and empathise with customers deeply. To do so, businesses mustn't depend on solely traditional market research methods - these aren't enough to get to the bottom of what makes up customer motivation and context. As PMF is an ongoing journey, it's essential to stay on top of changing market conditions, influenced by cultural shifts and behavioural changes. 

Understanding PMF in this detailed and interconnected manner also provides insights into the varied layers of human psychology, sociology and economics. Why a certain product becomes successful in one region and not in another can often be traced back to cultural norms, historical context or societal values. For example, while Airbnb achieved significant success in various parts of the world, the company faced significant challenges in China. One important issue was not being integrated with Alipay from the outset, a popular local digital payment platform. Once this was resolved, Airbnb saw a remarkable 15% increase in business overnight, highlighting the critical importance of adapting to local market needs for successful PMF. Still, they exited the Chinese market in 2022,  and it shows that the factors that determine PMF in one region can be starkly different in another. 

The pursuit of PMF seems never-ending and is more than a business challenge. It's a reflection of the ever-evolving relationship between product and market. To remain successful, businesses must not only have the ability to adapt but to be curious and empathetic. As markets and societies transform, only businesses that truly engage with, understand and evolve with their customers will succeed.

In this ever-changing environment, how effectively can we navigate these changes to maintain a resonant connection with customers and continuously redefine PMF?