What’s the main reason for entrepreneurial success?

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.

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.

Does your company have the most important ingredient?

Does your company have the most important ingredient?

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 – You Tube

91 responses

  1. You nailed it with this one! That is the most important thing before all else. You will not be successful if the market doesn't want / need / or isn't ready for it. Seems to me that doing your research ahead of time is essential. You do not want to invest huge dollars until you know your product has a chance at success. How you test the market for receptiveness to your product is another thing entirely. I think it depends on the product itself – service or goods – as to how you proceed.
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  2. Catarina — such simple advice, yet so essential. I always marvel that until about 20 years ago no one thought to take that ancient invention — the wheel — and attach two of them to the bottom of suitcases. Millions of people struggled to life, much less carry, their suitcases. Then an airline pilot "invented" the suitcase with wheels. To me, that one of the most impressive case studies of product/market fit.
    My recent post Giving Thanks With Jobs for Our Veterans

  3. Hi Catarina,

    It is the simple most basic thing that so many overlook and one of the most important. I don't however think it is the most important as there are a number of other factors. I have done a lot of new product development and like your BBQ example had the right products, however the market wasn't ready. One thing that helped overcome this is a model I developed over many years that shows whether the idea has legs and should be pursued and takes into account all the factors including product-market fit.

    One example I had was a product I had to launch and the market wasn't ready or thought it needed. The message the head office overseas wanted us to promote it was wrong for our market. It would have meant a change in behaviour and was against their attitude of the day. From research we found a message that changed behaviour by building on their current attitudes instead of trying to change them.

    It also comes down to your observation skills and experience, knowing your customers and being able to interpret the information. Too many take what customers say literally and that is often misleading.

    My recent post The Simple Advantages Of Having A Marketing Strategy

  4. Catarina – This is spot on. I am an Ops guy and understand the importance of the service aspect of products sold. Got to make sure the market is satisfied with the customer service aspect of the product and how the organization handles "problems" that may arise.

    Thank you for sharing!
    My recent post Thing 1 and Thing 2

  5. This is such a simple message and it's so true. The fact is, many companies/individuals launch a product because they like it. That very product may not be what the general public sees as something they desire. Keeping our ear to the ground and paying close attention to the ebbs and flows of the public can yields a great deal of intel regarding the current trends, avoiding the "I like it" symdrome. That may be what sparks an idea that could grow into a successful venture or product. It's not an easy thing, matching a product to what the public wants, but when you do it's amazing to see what happens. 🙂
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  6. It is simple advice and very relevant…how to do the research and identifying what is needed is a huge task. I'm not sure I'd even know where to begin.

    By the way, I have nominated you for a Sunshine Award. The link is below 🙂
    My recent post Sunshine Award for Bloggers

  7. Absolutely – there's no point in having a solution for a problem that doesn't exist… Entrepreneurs have to be sure that the market wants what they're offering. Once they have that assurance, then passion is the next most important thing for the entrepreneur.

  8. Catarina, what Andy says seems so obvious, but too often creators of a product get so caught up in the desire to produce and create they have a hard time seeing that the market isn't there. Years ago I worked on a project in which the main creator loved it, but I had my doubts. Sure enough, it fell through the cracks and never went to market. Hard to take those blinders off.

  9. This is so true. His metaphor of if the dogs don't like the dog food is terrific. And as you say in your post, if you product isn't wanted, it will fail.

    Spot on Catarina! Thanks.
    My recent post How government resources assist women owned small businesses

  10. Catarina, finding out the need for a product is very important. Many people start on Etsy to sell handmade stuff and complains about not getting any sales. It is not the marketing, it is the product, that they try to sell is the problem.
    What a person looking to buy handmade is looking for?
    How to find it is the next question.
    Thanks for the thought provoking article.

  11. Nice blog. There is a similar approach to publishing periodicals. The most important thing is if there is an audience for content. Great reminder!
    My recent post 100 Great Memories and More!

  12. I believe the reason for entrepreneurial success is not giving up. A lot of people gives up when things get tough or made a few mistakes. To become successful, i believe one must endure all the hardship and learn from it. My 2 cents =]

  13. I think that genes play a role in entrepreneurial success, but not always. It really makes me sad when I see a business that was built from the hard work of the parents or grandparents fall to pieces when taken over by the next generation. Sometimes, when things are handed to us on a silver platter, we don't appreciate the sweat and toil that went into building that business and think it will just run itself. When the drive has been removed, the enterprise will often fail.
    My recent post tips to make you a better blogger

  14. This makes me think about my struggle with genre as I am making my way back to the world of creative writing. In this case, the dogs don't want to read literary fiction as much as they want to read adventure and romance. Finding the balance between the integrity of executing a written work I can be proud of crafting and yet it remaining a story with broad appeal is indeed a challenge.
    My recent post Book Review: Ava by Ashley Barron

  15. Hi Catarina,

    I understand your post. I have to say something about my distant observation of people of your home land, Sweden. You say that as many as 1/2 fail as those that are successful. I know the Nordic people to be very intelligent. I dated a beautiful Norwegian for a number of years. Wonderful girl…much smarter than me! Wouldn't you rather these ladies and gents try (even if they have work to do) than to be someone that didn't even give it a go? Agreed about the details, but it also takes a bit of real world failure to teach you to become a success,


  16. It it totally key. As the guy said, if the dogs don't like the dog food… Developing a niche is the real kicker, witness the ipod etc. Trying to think up something that people don't even know they want is the ultimate in getting a foothold on commercial success. That said I do think that execution is incredibly important as well. Cash flow is a sure fire way to send a business down the tubes, so there's a lot of aspects that make up the whole picture. As always a good blog Catarina. Thank you.
    My recent post MuseMedium: Books and David Mitchell

  17. planning, organising, directing, co-ordenating with the worker etc are most reasons to be success for the enterprenuer.

  18. A market orientated company puts the customer at the “heart” of the business; all activities in the organisation are based around the customer. The customer is truly king!. A market orientated organisation endeavours to understand customer needs and wants, then implements marketing strategy based on their market research; from product development through to product sales. Once sales have begun further research will be conducted to find out what consumers think about the product and whether product improvements are required. As markets continuously change, market research and product development is an ongoing process for a market orientation company.

  19. Wow! Way to bring the most basic thing to the forefront! I completely agree that customer/product fit is has to come first, yet it is often the most overlooked. Entrepreneurial success depends first on this, even before execution. Good one!

  20. Andy Rachleff said it succinctly. I have an internet business, but just putting up the website and praying is not how you succeed. I have spent thousands of dollars on the site. My goal that I have been working on is finding will my products will work. Getting a better understanding of my customers. Simple advice but woth taking note
    My recent post How to Stimulate Creativity

  21. "If the dogs don't want to eat the dog food," I love that. Perfect metaphor which should lead those of us in business to find out what the dogs DO want to eat.

    You mentioned the entrepreneurial failure rate in Sweden, I think in the USA start up failure is somewhere around 80%.

    I usually tend to be too early, unlike the indisputable fact with Apple being always on time. I cannot think of a time when they have failed.

    As always, insightful Catarina.
    My recent post Introvert Friendly Guide to Holiday Exercise

  22. Absolutely! I read a supreme article about blogging which can be linked to this entrepreneurial concept. You might write wonderful articles but unless you target the market who will read them and keep coming back to your blog, you won’t get traffic.

  23. The product/market fit is so basic that I can fully understand people overlooking it. When going into business you do all the necessary things like make up a business plan, how to market the product, etc. but you seldom start with Is this something the market wants. I guess what I’m trying to say is that we expect to mold the market to our product rather than give the market a product it wants or needs. Really something to think about.

  24. Hello Catarina

    Another great post. This message is right. There are many companies that come on surface offering some product but public sometimes do not need that product and they have to go in back ground again.
    Its nice to keep ear to the ground, it can help understand what is needed at a particular time. Entrepreneurs can be successful if they can understand it well what the market is demanding.
    I am not into any type of business but your blog can help many to boost their business.

  25. Totally makes sense. You can go on and on about execution, financing, leadership, etc., but if no one wants what you've got, none of it mattes. One of the reasons why it isn't that easy to find out what the market wants is that the market may not know. Consumers only know the products that they have seen and used so far, not what they might see or use in the future. Having that vision is a key to success.

  26. Simple but true. Unfortunately people or companies launch products just because they like them without determining if that is what the general public desires. They could avoid the “I Like It” syndrome by paying close attention to trends and the ebbs and flows of the public demand. Matching your product to public demand isn’t easy but that may be what sparks an idea that could grow into huge success.

  27. Very true what you say in this post. Many people I know import great ideas overseas and experience big FAIL in our local markets because either the market is not ready for it or they fail to come in as game changers. Not all markets are the same and it is key to know your market and maybe work on getting on board opinion leaders to make the product a must have.

  28. Great post. I was just explaining this to my son who is taking a business course. The example I used was the Swiss and the introduction of the digital watch. Though they invented it, they did not appreciate that the market wanted it, so allowed Seiko to release the watch and with it, the hold the Swiss had on the market place.

  29. I completely agree. If you don’t have a product that the market needs and wants, it doesn’t matter how brilliant your marketing plan may be. It’s so simple, but so fundamental. The hard part is knowing what the market will want!

  30. Having the right product to market and then settling on the best marketing strategy for it are key. If you don’t have the right product at the right time, it will be an uphill and probably losing battle.

  31. I agree that market-fit is important. Whether it is the most important thing to entrepreneurial success I'm not sure. Marketing and cost-effective production, among other things, figure into success. I do feel that determining what the market wants or what it is ready for, even if it doesn't know it yet, is not an easy thing to do.

  32. I agree with the product market fit. I also think this limits ingenuity. The Stone Age did not end because we were running out of stone, or that our ancestors were tired of using rock clubs. Sometimes, you have to look at that market and decide if it needs something new, or changed completely.

  33. This is so true. Having a product that the market needs product branding are key. So many business fail and it is sad. Being a entrepreneur is not easy.

  34. When I first read this post I thought, “product fit doesn’t really apply to me I don't sell anything”, then it hit me; I’m my product. I’m in the entertainment business, which is all about convincing casting, “why you need me”. Now I have a new approach thanks to this post at auditions I can start thinking “What need is this piece of commercial copy addressing.” Thank you for information!

  35. Excellent points Catarina!

    It’s sort of like the saying, putting the cart before the horse! If we’re not pro-actively listening to our target audience, we often try and market what we think they want or need instead of what they actually desire!

    Very sound advice indeed! Thanks fo sharing it!

  36. I agree with the product market fit. I also think this limits ingenuity. The Stone Age did not end because we were running out of stone, or that our ancestors were tired of using rock clubs. Sometimes, you have to look at that market and decide if it needs something new, or changed completely.

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