Should Founders Reset or Pivot when Product-Market Fit Falls Flat?

Photo by Brendan Church on Unsplash

Before you bail, here’s what to look at when money runs low and your product hasn’t found the toehold you thought it would.

Product-market fit (PMF) is one of the first, and most important, trials that every young startup must pass successfully to advance out of corporate infancy into what Ichak Adizes calls the “go-go” stage of fast growth. Failing to establish a strong PMF early in your business’s life will make it exceedingly hard to be successful with your project. 

This is because a strong, positive PMF offers proof that your product solves a real problem for a real market comprising real people. It’s proof your concept has legs and, with the proper nourishment from investors, can grow up to be big and strong.

There are many reasons why founders fail to raise their business babies beyond infancy, and failure to establish PMF heads the list of reasons, at least in companies with which I’m familiar. Typically, the company has focused too broadly— e.g. they put all their eggs in a mass retail basket, only to lose that huge investment in time and resources imposed on them as they realize that only one in 10,000 people who walk into Walmart are actually part of their tribe.

Or, they overestimate the size of their market and wind up with a product absolutely beloved by a few but unable to gain a toehold with a larger (critical) mass of customers required even for minimal viability.

The problem is that in today’s business environment, infant companies are afforded fewer opportunities to recover from miscalculating their PMF as investors want to see proof of your product’s viability right off the bat. As funds dry up, companies that are unable to generate revenue, much less profitability, are faced with a hard decision about what to do with their baby.

Do you try to save the baby by going for a “reset” of your strategy—remember, the old strategy hasn’t worked—or do you use what you’ve learned from your reset to make a “pivot.” I would submit that these are your two choices and that each requires a level of absolute and total focused commitment.

Let’s take up these choices one at a time.

The reset

The first thing you do is revisit your playbook and work the process. And then, do it. For example, revisit your target market and ask yourself whether you know your customer as well as you thought you did. There are plenty of tools available to help you learn more about your customer to better understand what makes her tick, her preferences and her hot button issues as they pertain to your product. If you have one or two products that fit her needs and profile, focus on those for the present and really push your message hard.

Resist the temptation, born of the desire to raise cash quickly, of trying to be all things to all people. Are all your products equally appealing (or unappealing) to one market, or should you segment out different markets for different products? The only way to find out is to do the research, ask your current customers and place small bets to test your findings.

Yes, by all means be competitive with price but don’t sacrifice everything to be cheaper through discounts. Rarely is the solution to be found in being less rather than more authentic. Your challenge is to attract customers to your authenticity as well as your product’s usefulness. 

How do you do that? You have to go and “be” where your customer is, which today is almost always online but may also be in smaller retail shops where premium products are sold. Do you have an omni-channel presence built into your strategy? If not, leverage the strengths of omnichannel to reach your customer. If you go in this direction, double check your branding to ensure iron-clad consistency across platforms.

Finally, take a hard look at your company, its talents, expertise and capacity. Have you tapped their fullest potential, or is there something in the way things run that could be tweaked or overhauled completely? Does your company have the human resources needed to effect a dramatic change in direction? Weigh the relative costs and likelihood of success between resetting your strategy on the fly and moving in a new direction you truly believe you can go. 

The pivot 

If your company has revisited its strategic playbook, tightened up, and still has not achieved PMF, it may be time to consider getting up from the Blackjack table with your last fistfull of cash and finding another game. This could involve changing the target market, developing a new product, or exploring new business models.

I work with one founder that was unable to get a toehold in the market for low-sugar products and was doing the hard work of re-setting strategy when they discovered something that changed everything for them: they had a resource within their company—a team member—who had a special expertise in research and development that could allow them to move into a completely new sub-category:  a completely sugarless product that still tasted good!

The company, which had struggled to stand out in the low-sugar market, is beginning to hit it out of the park with its sugarless strategy, one in which they have every reason to believe they can be a dominant player. The difference between their old and new business plan is like night and day, which is one of great (hoped for) results of pivoting: it gives the founder and his team the benefit of hindsight and room not to make the same mistakes.

 Know that if you decide to make the pivot, you should pivot hard and pivot completely. It means pivot, like, you know, we're not shipping the old stuff anymore. Don’t keep throwing nostalgic glances back at the Blackjack table. Focus on roulette! Tell your old customers that you’re sorry, but when the last of the old inventory is sold, that’s all she wrote. 

Do not try to support two babies at once. Make the decision to pivot and literally change direction completely from one day to the next.

 Sometimes the pivot involves a new product; other times it could involve an entirely new type of business. I have known more than one founder whose passion for a cause and/or experience launching a very cool purpose-driven company made them first-rate candidates to become industry influencers or consultants. And I’ve known others whose products may not have proven viable on their own but that could become part of a potentially larger, online retail business focused on the same problem that includes other brands in addition to their own.

In summary, if you’re not achieving product-market fit, revisit your strategic playbook and either reset your market, product, messaging or channels, or seriously consider pivoting into an area that plays to your strengths.

Sincerely,

Rob Craven, scalepassion

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All credit to my ghostwriting partner, Dave Moore, who is instrumental in getting my thoughts out in a coherent manner & into these blogs. Thanks Dave!