A naukri.com initiative
Medium
3w
26
Image Credit: Medium
Product-Market-Value Fit: The Missing Link
- Product-market-value fit is crucial for sustainable growth, however, choosing the wrong path to market can limit this. Companies must focus on creating value for the customer who is paying for it, whilst also creating value for those who control the budget when selling to larger organisations.
- Reading the fundamentals of the target market and the customer's buying behaviours can help in finding the best product-market-value fit and ensures that pivots are executed in profitable opportunities rather than 'blind alleys'. Siemens Energy decided to build a team incorporating data scientists and software developers along with maintenance program managers and salespeople and their data-driven software was a key factor in delivering more flexibility and less risk to customers whilst also providing increased margins.
- Arm failed to develop a bespoke licensing model that rewarded them for their critical contribution to the device’s value and had they considered the customer value perspective, they would have abandoned the flat-fee license modeldecades ago.
- Making early assumptions can create future constraints which can only become visible as the business grows and fails to capture the majority of the market value.
- Despite having sorted product-market fit and having great IP, companies like Rambus also need to provide surplus value for the memory and system vendors who paid their license fees.
- Trying to size the overall target market can seem like an impossible task given the uncertainty of both future economy and future product/service portfolio. However, putting oneself in the shoes of future customers often results in a more accurate perspective.
- Product-market fit isn’t enough as value becomes the missing link ensuring sustained growth.
- Siemens decided to pursue a different course and had a profound impact on how they structured the business solely based on the back-of-the-envelope math when the Digital Services business was created. This led to greater success.
- Companies must avoid choosing the wrong path that can limit the product-market-value fit and lead down unprofitable routes.
- Arm now seeks to shift flat-fee license agreements into revenue-sharing arrangements and make inroads into the AI and data centre space to maintain its growth.
Read Full Article
1 Like
For uninterrupted reading, download the app