Beyond Product-Market Fit

Beyond Product-Market Fit

February 11, 2022

Product-Market Fit is about as foundational for business start-ups as orange juice is for breakfast. But as GTM evolves to GoToEcosystem, Product-Market Fit must also evolve. A new paradigm oriented around Solution-Ecosystem Fit will give teams developing new market offerings an approach to market entry that leverages the GoToEcosystem Framework.

The essence of Product-Market Fit (PMF) comes down to isolating and uniquely solving a customer problem. As Marc Andreessen stated 15 years ago, PMF success is evidenced when “customers are buying the product just as fast as you can make it…money from customers is piling up in your company checking account…you’re hiring sales and customer support staff as fast as you can.”

Today, however, the relevance of PMF is negatively impacted by its failure to leverage the emergent power of the ecosystem:

-PMF myopically focuses on the ICP (Ideal Customer Profile), but ignores the Sphere of Influence surrounding the ICP.

-PMF is based on stand-alone products rather than a combination of products and networks (aka ecosystems).

-PMF suggests that FIT is achieved when the product and the customer alone are fully engaged without considering ecosystem impacts.

Given the importance of ecosystems in today’s market, it is important that we not only consider the product-customer relationship, but also the product-ecosystem relationship.

Solution-Ecosystem Fit updates and modernizes PMF, adding three key dimensions and a new approach to evaluating fit:

-ICP Sphere of Influence – Taking into account the importance of ecosystem influence.

-Product to Platform – Adopting a solutions approach based on business model transition from product to platform.

-Ecosystem Before RTM – Introducing the idea of Ecosystem early in the process of evaluating fit.

ICP Sphere of Influence

One of the foundations of a GoToEcosystem approach is that the ICP is surrounded by what we call the ICP Sphere of Influence. This is the ecosystem of potential partners that are already trusted advisors and solution providers to your ICP.

Anyone developing an offering in 2022 must consider influence as part of their Solution-Ecosystem Fit evaluation, and:

-Identify the companies in your ICP’s Sphere of influence.

-Understand which companies have a high overlap with your MVP offering.

-Determine how your offering and your GoToEcosystem strategy can leverage the Sphere of Influence.

Product to Platform

An additional GoToEcosystem foundation is the importance of transforming products into platforms and orchestrating the co-innovation ecosystem around that platform. Market data shows that companies that evolve from product to platform and orchestrate ecosystem co-innovation generate 200% greater growth and valuation with only 50% of the employees (Source: MIT Sloan).

Solution-Ecosystem Fit requires us to consider how offerings can evolve from product to platform and the importance of orchestrating co-innovation.

Ecosystem Before RTM

Conventional PMF thinking is that once we understand the customer problem and have evidence that customers highly value our MVP, we can turn on the gas and ramp product development, sales, consider partnerships, and grow channels, etc.

While it is VITAL that new products prove that they can uniquely solve a customer problem, GoToEcosystem best practices strongly encourage new product teams to design the ecosystem into their business model out of the gate. The sooner the ecosystem is influencing all aspects of the product/innovation roadmap and Go-to-Market strategy, the faster the path to high and sustainable growth and valuation.

That’s what Solution-Ecosystem Fit and GoToEcosystem are all about.