The 40% rule: Getting the Product – Market Fit Right

Volume 19 Letter 1

Volume 19 Newsletter 1


A new product launch represents a moment of truth for any enterprise.    Successfully launch and you create new value that propels both the firm and your career into orbit; screw it up and you’ll forever be “that person”.   With so much on the line, why do so many get it wrong and what can be done about it?

New product development teams often get caught up too early in execution mode skipping over the strategy and the importance of getting the product – market fit right.    Giving lip service to strategy, some believe they can simply work hard in a vain hope that everything will “work out”.   It rarely does.

To help us better understand how we can introduce strategy earlier into the product development equation, I started scanning books, podcast and articles to see what advice the gurus offer.

In general, almost all the advice I could find is that hard work is the pixie dust that will make all new product launches successful.  Not to pooh pooh hard work – it’s necessary, but it’s not the sole ingredient for success.  Baking can be hard work too, but hard work alone doesn’t make a cake that people will want to eat.  What are the ingredients and are some more important than others?  Is the batter folded or beaten and what is the desired texture and flavor of the finished product?  Most importantly who will be eating it?    No one, if the taste doesn’t meet expectations; it will be tossed in the waste as will your product if you don’t get the strategy right.

The first part to any strategy is making sure the Product – Market fit is spot on!  Skip over getting the fit right and you miss everything.    So, if getting the Product – Market fit is so critical, let’s go back to the gurus, authors and lecturers and see what they say.   Again, in this area the gurus remain somewhat mute.  All I could find were check lists and methodologies with titles like, “Five Steps to Product Launch”, “Seven steps to Product Launch Success”, eleven steps and one author even had a thirty-seven steps to a successful new product launch.   All will tell you step by step how to bake the new product, but no one tells you how to find those magic ingredients that ensure the Product – Market fit is correct.   One author, Sean Ellis, creator of Drop Box, discussed this challenge.

Sean Ellis devised a test to see if the Product – Market fit is right.   He suggests finding a test group of users and after a few months of letting them put your product through its paces ask them a critical question: “How would you feel if you could no longer use the product?”    Measure the percent who answer “Very disappointed”   By Sean’s estimation if that percent is less than 40%,  more effort is needed on your product / market fit before contemplating your launch.   If 40% or more users would be very disappointed if your product was no longer available, consider it a green light to launch.

What can we learn:

  1. Hard work alone is no guarantee of Product Launch success
  2. The Product – Market Fit is mission critical.
  3. To test the degree of fit between your new product and your market, let users experience your product and then ask them “How would you feel if you could no longer use the product”?   If less than 40% answer “very disappointed” go back to the drawing board.

Ideally, when you use this test, you’ll also combine it with a Customer iSight (conjoint) study so you can fully understand which of your product attributes bring value but that’s another newsletter. For sure burying your team in the development of any new product development is necessary and it’s hard work and it’s where most people are comfortable focusing their efforts.      Building the strategy and ensuring the Product – Market fit is right is a critical part of that hard work.  Get the Product – Market fit right and make your hard work count.

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