Reinvent Your Business To Find Market Fit

Originally posted on Forbes.com

It was 2010 when I moved my husband and two babies from Israel to California to start the U.S. branch of an IT automation startup. My team in Israel was sure that our product was the best thing since sliced bread, so all I needed to do was show up and collect the money. It never really works that way, does it?

Meeting after meeting didn’t convert into a deal. I realized our product didn't add enough value to our customers for the price we were charging. Our company was running out of cash. We would need to start laying off employees if we didn’t figure out our market fit fast. We could reduce the price significantly -- making our startup unsustainable -- or change the product. But how?

Market fit is the number-one killer I see of companies today. Startups often create products that no one wants or no one will pay for. Many bigger companies keep selling products that are no longer relevant.

So how do you reinvent your company to find market fit?

1. Industry And Product Debrief

OK, it's time to understand where you really stand. Make a list of companies using your product extensively, those using it only on the side, and those using it on a demo station or pilot. Then list companies that didn’t want your product or are using a competitor’s. Add key folks within your organization who work close to customers. Their experience will be key. Sit with each person on your list and truly understand what value they get out of your product, where they use it daily or what would make them use it more. Where does your product fail?

Analyze all your answers and brainstorm: What is the true value you are providing, or should be providing, to your customers? For example, Amazon’s value in the past wasn’t just selling books online but their convenience and nearly unlimited selection. What’s your true value?

2. Experimentation To Achieve Growth

Decide on some changes you want to try out and some basic success criteria to measure. Avoid endless planning and instead, rapidly build prototypes and test your riskiest assumptions. You can test many elements quickly, like new marketing messages, different ways to get traction or changes to the audience you are targeting. You can create demos, mockups of the new capabilities, simple ads to try different messages or different landing pages to measure your audience's reaction. Test and iterate in the market before scaling.

3. Making Room For A Culture Of Innovation

Experimentation means that sometimes those tests will result in failures, wrong directions and assumptions that didn’t pan out. The organization will have to support this effort for it to be successful and to provide space for individuals to dare to try out new ideas. Innovation culture will have to come from the top.

Netflix's evolution from a company renting DVDs to streaming entertainment and now creating its own content is a great example of continuous reinvention. Apple developed from a computer manufacturer to a music and lifestyle brand through iPhone and iTunes; it reinvented itself even as it continued to build computers. Google went into the smart home space through the acquisition of Nest for $3.2 billion, but it is also extremely well-known for promoting innovation from within. 

Your executive team will need to push for innovation at different levels and different fronts. They will need to clearly decide what kind of return on investment (ROI) they need, expect, and desire and align their innovation accordingly. For example, acquiring a company will usually cost more in dollars but will take less time than developing your own team, technology and market. Investing in startups (like Intel Capital and Google Ventures do) or creating your own startup accelerator programs as some corporations did (like SalesForce and Microsoft) will be longer-term commitments and may not generate revenue for a long time, but these ventures can lead to various gains such as a stronger ecosystem, better usage of tools and of course, insight to what’s coming and how it's doing.

There are countless articles discussing how to create a culture of innovation, from giving employees the freedom to think, brainstorm, and make mistakes to empowering individuals to influence a product or road map. I won’t go into it here, but I’ll only say that innovation isn’t something you just talk about -- it needs to be driven and engraved within the organizational culture and priorities, and you should dedicate specific employees to making it happen.

4. Starting Small

In 2013 Intel created Vaunt smart glasses, poured money into the project, and reportedly had about 200 employees on a project that never took off. It closed in 2018. Webvan was a startup for online grocery shopping founded in the 1990s. Based on an extraordinarily promising business plan, they raised $1.2 billion (yes, with a "b") in startup capital. They were rapidly expanding instead of slowly testing the market and their assumptions. In 2001, they closed.

We now know that starting small with agile experiments and progressing fast is one of the best ways to stay lean and innovative and reinvent your business to stay relevant.

Remember our IT automation startup that I talked about at the beginning that didn’t have market fit in the United States? These are the exact points that saved the business. By working very close to our desired customers, I learned that their automation needs were different from what we originally assumed. The value we provided needed to shift to make us a relevant platform. With an amazing team and very rapid experiments and by working as close as possible to the customers, we changed course and extended our platform. In the next couple of years, we took off.

So, what are some of the experiments you need to run in your organization in order to reinvent your business? Share in the comments what works in your organization