Alex Osterwalder explains what product market fit is and why it's important. Determining and confirming product market fit is a journey that starts with a concept and an hypothesis and ends with evidence that shows the value proposition has traction with the target customer or market.
What is Product Market Fit?
Product market fit is basically when you get traction with your value proposition. So, you might have something great on paper that you came up with in your meeting room, looks like a brilliant idea because your best marketers, your best engineers you know came up with it and it just seems obvious that this is going to work. But that’s just a concept. That’s just a prototype of how you think, and how you intend to create value.
Then you go out and test it and you are probably going to be wrong because you know nobody knows customers as much as customers know themselves. So basically when you go and start and test these things, you will be wrong at the beginning and you’ll change your value proposition until customers get excited – until you’ve nailed it. And when you’ve got it right that’s when your value proposition gets traction.
When your value proposition gets traction, that’s when you have product market share. So it’s basically this journey from taking an idea, conceptualizing it in a value proposition, testing it until I have the right fit between my products and services and the jobs, pains and gains that my customers have.