Gabriel Burrill

Finding Product Market Fit - The Lean Product Process

Gabriel Burrill -

The Lean Product Process is a method of applying lean product principles to achieve a product market fit. This information is summarised from The Lean Product Playbook.

This post goes into detail defining the steps of the lean product process. Future posts will go into the implementation of the lean product process steps.

What is a Product Market Fit (PMF)

Some interpret it more as a valid revenue model, a cost effective customer acquisition model or having a profitable business. This book argues that using a definition as simple as something that is profitable glosses over some of the initial aspects of the idea. PMF encapsulates everything that goes into product success.

The Product Market Fit Pyramid

Now that we have defined a PMF, here is the guidance on how to execute it. Below is a picture of the product market fit pyramid, which consists of five layers. Just like Maslow's hierarchy of needs, each layer of the pyramid relies on the one below it.

As you can see, the PMF fits between the market and product sections of the pyramid.

The market consists of of all potential customers who have a set of needs. For example, all the people who need to prepare taxes are in the tax preparation market.

You can describe the size of the market by finding out the number of customers and the revenue generation produced by them. This can also be used to predict potential future size of the market.

It is important to bear in mind that different customers will use different solutions to meet their particular needs. Using the US tax example, some customers will use:

  • Professional Service (H&R Block)
  • Do it themselves by hand
  • Using software like TurboTax

Within a given market, you can analyse the market share, which is what percentage of the market each product/service has.

There are many different categories of market and the lifecycles can vary, for example, in markets like milk or eggs, there is little innovation.

You can also create an entirely new market. An example of this is Febreze, which created a product to remove odours without washing.

The underserved needs category is put in above target customers as you will need to have both. It is not useful to create a new product for your target customers if they are completely satisfied with the current solutions. Your product will be compared to the alternatives already on the market.

In technology products, the line between product and service is blurred, so the book defines a product as a specific offering intending to meet a set of customer needs.

The top layer is UX which brings the product's functionality to life for the user. It consists of multiple features, which are specifically built to meet a customer's needs. Together, these make up the feature set. You first need to define the customer needs to know what feature set to build. You will also need to determine how your feature set will be better than what's already on the market.

Taken together, the three layers of UX, feature set and value proposition define your product and your goal in creating customer value is making all of these fit nicely together.

Finding PMF is all about how well your top three layers (the product) address the bottom two layers (the market).

Example - Quicken

Quicken is a personal finance software product. It is a great example of finding product market fit in an already crowded market. There were already 46 personal finance products in the market, but after conducting customer research, they found none of the existing products had actually found a PMF as they were difficult to use and didn't meet customer needs.

The cofounders of Quicken had a hypothesis that a chequebook style design would be easy to use, which was proven correct from user testing. As a result Quicken rapidly became the leading personal finance software. They applied a lot of the lean principles when it comes to usability testing and would even wait at stores to follow people home after they bought the software to see how they use it.

Assessed in the PMF pyramid:

  • Many customers in this market
  • It addressed needs relating to people balancing their cheque book
  • Software was good at solving this problem but current solutions were bad at addressing these needs
  • Design insights led to an innovative UX that was way easier to use, this became a main differentiator in the market

The Lean Product Process

Now that we have defined the model for a product market fit, here are the six steps of the lean product process

  • Determine target customers
  • Identify underserved customer needs
  • Define value proposition
  • Specify your MVP feature set
  • Create MVP prototype
  • Test your MVP prototype

The MVP should be the minimum amount of functionality that your customer considers viable. It is important to avoid building more than what is necessary to test a hypothesis.

If you are working on improving an existing an existing product, the lean principle also applies. You can think of your MVP as a minimum viable feature.

Once you have built your first MVP, then you would loop through the last three steps.

Prototype refers to many ways of testing your hypothesis, it can be with or without a product. This way you get faster learning before building the actual product. This gives us a higher change of product success.

There will always be rework as we are constantly reviewing, which leads to modifying it, but this way we can minimise how much rework is required.

Finally, as Bruce Lee says, obey the principles but don't be bound by them. Adapt what is useful, reject what is not and add what is specifically your own.