Wonder how many articles have been written, including by me, explaining what makes a successful entrepreneur? And rarely is the most important aspect of succeeding in business mentioned. Watch Andy Rachleff, lecturer in strategic management at Stanford and experienced venture capitalist, in less than a minute stating what is the most important ingredient for entrepreneurial success.
To have the right product or service for the market is something so fundamental it’s easy to forget to even mention it. Wrote Entrepreneurship – do genes play a part? that has attracted a lot of readers’ comments. But neither I nor any reader thought of mentioning the crucial aspect of product- market fit. We all just overlook it even though it is a do or die issue for success.
Doesn’t matter if you are The Entrepreneur of the Decade, if you are offering the wrong product/service you will fail. Would we even know who Richard Branson is if he had been offering products the market didn’t want?
Why do so many companies fail?
Did you know that in Sweden as many companies go bankrupt every year as there are start-ups? Sure the tax system is one reason but that’s, unfortunately, not the only explanation. Quite a few of them are offering a service or product that the market, for whatever reason, has no interest in. Sometimes they are actually offering something before the market is ready for it.
How do you know if the market wants what you are offering?
It’s easier said than done unless you are offering something that there is always a demand for. Look at how Nokia laughed when Apple came up with the Iphone and regular airlines didn’t take low price airlines, like Ryanair, seriously. They failed to understand what the market wants and are hence having huge problems.
Nokia is actually a great example of a company with a lot of qualified and talented employees that have the characteristics of successful entrepreneurs. But they didn’t understand what the market wants and hence lost out.
Keep your ear to the ground
Determining what the market wants is however not as easy as it sounds. Keep your ear to the ground and do research to test if your idea is a viable one.
Long before disposable barbecues became a hit someone I know had the idea but failed. Why? It simply was too early. But that could have been overcome if the right marketing, communication, branding and promotion had been done. What would have happened to the Iphone if Apple had not been able to promote it to the market in ways that worked? Most likely Blackberry would still be considered the ultimate choice.
Do you agree with Andy Rachleff that product-market fit is the most important ingredient for entrepreneurial success? If not, why? How do you determine what the market wants? Do you keep your ear to the ground? What’s your experience when it comes to determining what product/service the market wants? How do you decide on the right timing for launching it? Are you able to promote it in ways that make consumers desire something they may not yet know that they need or want? What promotional strategies have you found work best?
Video:StanfordBusiness – Picture: VIrgin Money