Design Thinking and Product-Market Fit
Written by Karine Sarkissian
A question we often get asked at Tamar Ventures is: What is Design Thinking (DT) and why is it so important? A short answer would be a process that is firstly focused on user perspective. In fact, this ‘user perspective’ is what makes the success of your company. At Tamar Ventures , we believe that Design Thinking remains essential to achieving success, with a direct correlation to a startup’s ability to achieve Product-Market Fit (PMF).
We hear about Design Thinking all the time, what does it actually mean?
Design Thinking is a process of creative problem solving. It is based on Human Centered Design, an approach to designing solutions developed by IDEO (a Bay Area based Design firm). It allows for a change in perspective when solution planning-
coming from the viewpoint of what is desirable by the user with what is technologically feasible and economically viable.
The main essence of this framing puts the users first by encouraging the research and development team to observe user behavior, conduct interviews for optimal feedback and continuously iterate and adapt changes to the product/solution accordingly. This ensures full satisfaction and optimal results for customers and users.
In Silicon Valley, success is measured by the ability for startups to achieve Product-Market Fit. This concept was first coined by entrepreneur and investor Marc Andreesen. As per the diagram, it represents the direct connection between creating a product that is viable and effective in satisfying the market it has targeted. The connection lies between having a unique value proposition and meeting an underserved need for its envisioned target customer.
Why is achieving Product Market Fit so crucial?
The answer is simple: without officially reaching “Product Market Fit” status, you are making an assumption that the product or service you are developing will reach an audience that is willing to pay for it. The success of your company is directly tied to its monetary value: essentially, that customers or target audiences will want to spend money on it. Without this initial connection point, a company cannot justify spending more of their resources on developing a product further, and even more so, cannot plan for the future of the company. The success of a product and in turn, of the company, is directly related to the possibility to sustain itself financially.
What is the connection between PMF and DT?
Now that we’ve understood the importance of PMF, how do we get there? Achieving Product-Market Fit is a shared responsibility across the company. Using Design Thinking as a methodology throughout the lifecycle of the product will yield most results. During product development phase, the correlation between these two concepts comes through in the following stages of user testing:
1. Product research and development: Design thinking encourages the team to come up with a solution from a ‘problem first’ approach. At this stage, the team is focused on conducting user research, observing users in different scenarios: pre and post product. Through these observations and research frameworks, they are able to understand needs of users and what would encourage or prevent a user from adopting the product, and as such, paying for it. Of course, this means the team is targeting the correct user, and research might help with this as well.
2. Minimum Viable Product (MVP): Before launching the initial beta versions, teams are eager to test user and customer feedback. They need to do so most efficiently in terms of time and cost. Design Thinking encourages the concept of the MVP: Product teams will hypothesize on one concept at a time and will use Design Thinking strategies to isolate the part they are testing. These ‘isolated’ tests will save time and money and move the product closer to customer satisfaction and financial gains.
3. Beta launching and product growth: User testing remains at the core here. Product management teams will be looking at customer/user satisfaction. What is the user responding to most successfully? What do they turn away from? This phase allows the team to iterate continuously to reach their defined value proposition.
Competitive landscape analysis: A product needs to be the strongest against its competitors to survive and ensure that customers are paying for it. By conducting a detailed competitive landscape (another Design Thinking tool), and understanding how one product stands out against the rest can this ensure its success. Achieving Product-Market Fit focuses on a unique value proposition which sets the product apart from its competition.
Product-Market Fit and Design Thinking come hand in hand. While one is an achievement and point of success, the latter is the method proven to be most effective and most viable to get you there.
Without this lean method of continuous testing and evaluating, you cannot ensure the success of your product in reaching its target audience and the right market size and satisfaction.
Learn more at tamar.vc as our methodologies primarily focus on Design Thinking in ensuring your product reaches Market Fit as quickly and effectively as possible!