Product/Market Fit is Failing Because of Your Company Structure "Product people - Product managers, product designers, UX designers, UX researchers, Business analysts, developers, makers & entrepreneurs October 10 2020 True Product Development, product management, Product Management Skills, product teams, Product/Market Fit, user priorities, Mind the Product Mind the Product Ltd 787 Product Management 3.148

Product/Market Fit is Failing Because of Your Company Structure

BY and ON

Did you know that 42% of startups fail because no one wants to buy their product? For corporations, nearly 80% of new products fail each year for the exact same reason. So why are we still developing products no one wants?

Product experts have tried to tackle this issue but they gloss over the impact a company’s structure and leadership team have on product/market fit. And variances in industry and company size add complexity to this issue. For many consumer packaged goods (CPG) companies, product teams report to marketing, sales, finance, or strategy leads. Whereas, startups and SMBs (small to medium-sized businesses) frequently position their product teams in their own department.

Who owns Product/Market fit – Marketing, Sales, or Business?

Between us we’ve spent many years at CPG corporations, and we’ve experienced product/market fit owned by sales, business, and marketing leaders. In larger organizations, these three structures have their own issues.

When product/market fit is under sales, there’s a tendency to follow the retail buyer’s agenda because they’re motivated to close the sale (think: Walmart electronics line buyer). If your company has strong buyer relationships, you’re placing a lot of trust in those individuals to do what’s best for your company. If your buyers constantly change – which is normal in retail – it’s very risky to rely on buyers to guide your product development. It can be very hard not to push the buyer’s agenda when developing CPG products because of how challenging it is to even get CPG products to market.

When product/market fit is owned by business leaders, products are judged by how quickly they can turn a profit. When you’re beholden to shareholders, you’re not inclined to incorporate qualitative research or iterative feedback resulting in products that function but don’t delight consumers.

Finally, when product/market fit is owned by marketing, perceived product value frequently drives product development versus research insights. When market and user research isn’t focused on consumer needs, insights can be too broad or irrelevant. Additionally, marketing teams have the tendency to over support existing profitable product lines while new products struggle for research and funding.

Different Teams, Different Priorities. But are Those Your Users’ Priorities?

When product/market fit is owned by sales, business, or marketing leaders, product teams are forced to execute on biased user needs and market research. As most product teams have experienced, the hardest part of building a user-centric product is prioritizing the product’s value and building viable features and experiences.

This sets up product teams as soldiers on an internal battlefield, trying to fight through each cross-functional team’s competing motivations and priorities and how they affect the product value, timing, quality, cost, and market need.

Sales teams will fight to build a product that meets the feature or costing requirements set by the buyers. Walmart may want X while Target wants Y, but who do we build for? Usually, the largest account wins because profit – and sales commission – is king.

What happens if the research shows consumers want a features that decreases the margin? Business leaders might play it safe and recommend a test run (lower volume order). In stores this has its own challenges because lower volumes make it harder for products to stand out.

Finally, timing is a major concern for marketing teams. Consumer engagement and market trends force shorter lead times that can be unrealistic for design and engineering to execute (especially in quickly changing industries like consumer electronics, retail and services).

Structuring Success – Identify a Product Leader to own Product/Market fit

As companies identify these structural issues, it’s no surprise that a Chief Product Officer is joining C-Suite teams in record numbers. Some of the most successful companies, including Google, CNN, Uber, and Forbes, have recently appointed a CPO. While every company doesn’t have the luxury to hire this position, they can make changes or bring on resources to mitigate structural issues:

  • Internally promote or hire a senior-level product person to own your product development strategy and prioritize cross-functional team needs.
  • Partner with a product management consultancy to manage your product/market research and set up repeatable processes to manage the product lifecycle.

Implementing these changes doesn’t mean ignoring product/market fit input from sales, business, or marketing. Rather, it allows those teams to focus on what they do best: sell more products, grow the company, and market the value of your company and products.

If this sounds all too familiar, then it’s time to challenge CEOs to stop building products users don’t want. How? Structure your company with a product leader who owns the product/market fit.