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.
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?
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About Catarina AlexonNär Europa och USA brottas med ekonomiska problem kanske det är dags att fundera på nya marknader? Eller en omprioritering?
Har ett stort nätverk världen över och är skicklig på att utveckla och genomföra marknads och kommunikationsstrategier för olika typer av organisationer, målgrupper, länder och syften.
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Tags: Andy Rachleff, Apple, Blackberry, branding, communication, Iphone, marketing, Nokia, product-market fit, promotion, Ryanair, Stanford University, Sweden
November 25th, 2012 at 15:33
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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November 25th, 2012 at 15:45
Many thanks. Glad we agree, Cheryl!
November 25th, 2012 at 18:15
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.
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November 25th, 2012 at 18:25
Glad you agree, Jeannette. It's not for nothing it was an airline pilot who came up with the product-market fit you describe. He really had his ear on the ground.
November 25th, 2012 at 23:13
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.
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November 26th, 2012 at 05:09
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!
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November 26th, 2012 at 05:30
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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November 26th, 2012 at 06:15
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
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November 26th, 2012 at 11:36
We actually do agree Susan. Good example that shows how something that is too early can succeed if it is promoted and marketed the right way.
November 26th, 2012 at 11:37
Glad you agree Mark.
November 26th, 2012 at 11:37
Great points Susan. Glad we agree.
November 26th, 2012 at 11:38
Glad you agree with this simple, and frequently overlooked, fact, Becc.
November 26th, 2012 at 12:04
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.
November 26th, 2012 at 12:22
Good point Guy.
November 26th, 2012 at 14:44
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.
November 26th, 2012 at 14:47
Yes, we often forget the obvious, Leora.
November 26th, 2012 at 16:29
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.
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November 26th, 2012 at 16:32
Glad we agree Pat.
November 26th, 2012 at 16:36
When it comes to market fit, do you think focus groups still play an important role? Or have the entrepreneurs moved on from focus group to some other mechanism or several other mechanisms to gauge the market fit?
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November 26th, 2012 at 16:41
There are many ways to find out if the market wants a product/service. Focus groups is one option. Don't think there is one answer to how to best find out if the market wants what you have to offer. Most likely the answer is whatever works is fine:-)
November 26th, 2012 at 19:20
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.
November 26th, 2012 at 20:17
Nice blog. There is a similar approach to publishing periodicals. The most important thing is if there is an audience for content. Great reminder!
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November 26th, 2012 at 20:29
Good example, Bindhurani.
November 26th, 2012 at 21:55
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 =]
November 27th, 2012 at 12:43
True Edward.
November 27th, 2012 at 12:45
In other words Tommy, you don't agree that the most important thing is product-market fit. Not giving up is crucial if you have product-market fit. If you keep on working for succeeding with something the market doesn't want however, you will just lose money.
November 27th, 2012 at 17:06
Matching product to market is one piece of the puzzle, but I wouldn't focus on it as the whole thing. One thing entrepreneurs who succeed learn early on is you have to do a lot of different things right to succeed.
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November 27th, 2012 at 18:24
Scott, if you don't have the right product/service-market fit it is the basic thing. Then comes being an entrepreneur which partly comes from genes:-)
November 27th, 2012 at 18:56
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.
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November 27th, 2012 at 19:14
True Doreen, when we are lucky to have entrepreneurial genes it makes a difference. But even then it can be difficult if you decide to build up a company based on a product or service the market doesn't want.
November 28th, 2012 at 00:38
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.
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November 28th, 2012 at 11:45
Good example Jeri.
December 1st, 2012 at 05:48
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,
Bryan
December 1st, 2012 at 12:15
True Brian. However, do you know that if you fail in Sweden and owe money to your creditors you are finished since you cannot even get a mobile phone account? You are blocked from doing anything and will have to live on a bit more than $1,000 until your debts have been paid off. If you owe a lot your life will be ruined. It's easy to do what you suggest in the United States but not in Sweden. In your country it doesn't matter if you have gone bancrupt here it is shameful.
December 1st, 2012 at 13:02
Wow Catarina, I did not know that. That is a scary concept, and yes, one I am not familiar with. The problem it creates for the US is that we let it go (debt), and we are in debt to the entire world, especially China while we place band-aids on our economy along the way. Thanks for the information,
Bryan
December 1st, 2012 at 13:07
Yes Brian, but you are talking about sovereign debt:-)
If an American goes bankrupt he is regarded as someone who tried and it's almost positive. In Sweden he becomes persona non grata.
December 1st, 2012 at 13:26
Somewhat agree with the generalization. However, also in America, if you have concrete evidence of bad business dealings, especially in our local markets and counties, of a company, it's owners or group of owners and they have pulled some really bad moves, those people may declare bankruptcy, but they would certainly have to relocate to start-up again. I live in one of the most conservative States in the USA, and if that happens around here, you are finished. Best move to California!
Bryan
December 1st, 2012 at 14:26
Brian, what I described happens to all owners of businesses that fail. Not just the bad apples. It's enough that you have a client that doesn't pay:-) There is no comparison between the US and Sweden when it comes to this. Keep in mind that as many businesses go bancrupt as there are start-ups and you will understand how many people's lives are ruined. However, I don't think it's possible for an American to understand how bad it is here. It's simply incomprehensible, even to me because I have lived most of my life abroad.
December 2nd, 2012 at 08:41
True you have to have a product people will want to buy. You also sometimes have to ignore nay sayers not everyone will understand what you are trying to do if you are an entrepreneur.
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December 2nd, 2012 at 12:14
Yes Mompreneurmogul. True that you will have to ignore the people who tell you it will not work. But that will not be enough if the market does not want you product or service:-)
December 3rd, 2012 at 12:22
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.
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December 3rd, 2012 at 15:38
Glad we agree AK.
January 12th, 2013 at 15:01
planning, organising, directing, co-ordenating with the worker etc are most reasons to be success for the enterprenuer.
January 12th, 2013 at 16:12
In other words Waseem, you disagree with Andy Rachleff.
January 19th, 2013 at 16:37
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.
January 20th, 2013 at 14:17
Good and true points Kerry. But first you have to have a product or service that the market wants:-)