TBM 211: Product-Reality Fit (PRF)

Product-market fit (PMF) is important, and yes, it comes "first."

But assume you have "it." Your biggest challenge is PRF: Product Reality Fit.

Here's how it works.

After a difficult period of trying to get product market fit, a company will be cranking along doing its thing. Customers love the product. Investors love the company AND the product. It's easy to get stuff done. Life is good.

People start having ideas. 

"We'll go upmarket!" 

"We'll offer new products!"

"We'll build a platform!"

"We'll create a category!"

"Let's expand into ______!"

None of those things are inherently wrong ideas. But they are also the potential seeds of poor PRF. Why?

• Overconfidence—remember, the company is riding high!

• Divergence from core competency—remember, the company is likely very good at one thing, and now they are stepping outside that zone.

• Lack of research and validation—companies may not invest enough time and resources into researching and validating their new ideas' feasibility, desirability, and viability.

• Insufficient resources—they don't have enough people and money to invest in the new thing(s) AND the old thing.

A big challenge is that people underestimate the impact of inertia and overestimate their ability to solve new problems. Each successive failure gets chalked up to poor execution, poor-fit leaders, or similar, and every success gets chalked up to genius. And this can go on for years—with an ever-increasing divergence between product and reality. 

One interesting phenomenon with PRF is that part of the issue is figuring out WHY you had product market fit in the first place. This is harder than it seems from the outside (and you can't always know because things are always fluid). When you can't pinpoint WHY things were working, it is very easy to assume they will keep working.

So how do you maintain product reality fit?

Self-awareness: Stay grounded in what made you successful in the first place.

A customer-centric approach: The paradox with companies with product market fit is that they often become too centered on their "core" customers and don't spend the same time learning about their new customers. Or the opposite. They lose touch with their core customers (based on the belief that their customers are static, which they aren't). 

Research and validation: A company that stumbles into product-market fit may have never learned how to do proper research and validation. Or they forget that muscle. You need to bring it back.

Allocate resources wisely: Avoid stretching humans too thin. Otherwise, they stop being able to make good decisions, and you're more likely to experience a reality distortion.

Open communication and cross-team collaboration can help prevent siloed thinking and ensure that issues are identified and addressed early on.

Regularly review and reassess strategy: Rapidly growing companies with good PMF don't need much strategy (other than "keep doing what you are doing"). The strategy chops increase once you try to diversify.

A good mix of hiring from within and outside: You need that balance of domain knowledge AND new perspectives to keep PRF. 

How have you seen companies maintain product reality fit during periods of scale?